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Kuwait Financial Centre “Markaz” INTERNATIONAL M A R K E T


International Market Update US

October 2012 Research Highlights: Monthly update on global markets

The US markets were lower in October and economic numbers suggested a slightly better economy than the month before. The Federal reserve expanded its balance sheet with a jump in the holdings of agency mortgage backed securities . The balance sheet indicated its lending to the financial system stood at US $ 2.83tn on October 17 while treasury holdings totaled US$ 1.659 tn. The Unemployment rate rose to 7.9 % in October compared to 7.8% in September, with 171,000 jobs being added to the economy. ISM activity rose 51.7 compared to 51.5 in September, indicating growth in US manufacturing from the month previous. The Production Index registered 52.4 percent, an increase of 2.9 percentage points, indicating growth in production following two months of contraction. Comments from the Federal reserve panel this month reflect “continued concern over a fragile global economy and soft orders across several manufacturing sectors." Consumer confidence rose in October to its highest in more than four years .The Index rose to 72.2 up from 68.4 in September; it was the second month in a row the sector has grown after contracting through the summer.

Europe and Japan The ECB announced it is ready to starting buying government bond as soon as the necessary conditions are fulfilled from each member state, this has slowed down the recourse for some of Europe‟s most indebted nations like Spain and Greece. The euro zone business activity hits fresh low and contracted at its fastest pace in almost three and a half years in October. The Eurozone Authors purchasing managers index which monitors prices at the whole sale level International Investments fell to 45.8 from 46.1 in September. Unemployment in the Eurozone hit a Department record level in September with 18.5m people out of work increasing unemployment in the bloc to 11.6% in September compared with 11.5% in August –significantly higher from 10.3% from a year earlier. Conversely however the Euro area retail sales unexpectedly increased for a four month in august. Kuwait Financial Centre In Britain, September saw the budget deficit contract the greatest “Markaz” since 2008”. The shortfall excluding government support for banks narrowed to 12.8bn pound from 13.5 bn pound a year earlier. House„s in Investment Advisory UK fell for the third month in a row in September, the average price dipped Services Address: P.O.Box 23444, Safat by 0.4% last month compared with August. But the retail sales in the UK posted a solid rise last month rising 1.5%. 13095, Kuwait As Spain weighs its options to take Bailout funds in agreement to Tel: +965 2224 8000 Ext: 1401 implement stiff austerity measures, the Unemployment level in Spain Fax: +965 2242 5828 climbed to a record high in the third quarter and the second highest in the European Union after Greece‟s, the unemployment rate in July rose to 25.1% from a revised 24.88% in June. The Spanish retail sales fell 10.9 % yoy in September the fastest space on record The bank of Japan reports that key measured business confidence fell to -3 from -1 in June , the fourth straight quarter the longest stint of negative territory since the economy emerged from the global recession in mid-2010. Japan announced a US $9.4bn of stimulus to revive growth as


UPDATE October 2012

consumer prices slid and political gridlock continued to threaten Japans growth. The economy has been has been hurt by falling demand for its exports amid a slowdown in key markets as well as subdued domestic consumption. Index (Global) DJIA S&P 500 NASDAQ DAX (Germany) CAC (France) FTSE 100 (UK) Nikkei 225 MSCI Emerging

Current 13096.5 1412.16 2977.23 7260.63 3429.27 5782.70 8928.29 995.326

% Monthly Change -2.54% -1.98% -4.46% 0.61% 2.21% 0.71% 0.65% -0.73%

% Yearly Change 7.19% 12.29% 14.28% 23.09% 8.52% 3.77% 5.59% 8.61%

Emerging Markets Chinas non-manufacturing industries expanded at the weakest pace since 2011 as the. The Chinese PMI fell to 53.7 in September from 56.3 in august. China‟s foreign direct investment inflows fell 3.8% in the first nine months of 2012 from a year ago extending the longest run of declines since the global financial crisis. China drew US $83.4bn in foreign direct investment between January and September, with September inflow alone down 6.8% to US $8.4bn. According to a report from HSCB china‟s manufacturing showed signs of recovery in October shrinking at a slower pace than in previous months. The Chinese purchasing manager index PMI hit 50.2 in October compared with a 49.8 in September the highest level in four months .China‟s Central bank pumped US $60bn into the country‟s money market. The bank of Korea (BOK) has cut its base interest rate for the second time this year. The bank cut the base rate by 25bp to 2.75%. The economy in South Korea grew at its slowest pace in nearly three years as a global slowdown hurt demand for the exports and firms cut their investment. The economy grew at an annual rate of 1.6% in July to September quarter down from 2.3% in the previous quarter. Overseas shipments rose 1.2% in October from a year earlier.

Kuwait Financial Centre “Markaz”



UPDATE October 2012

Index (MSCI) BRIC - Brazil - Russia - India - China

Current 282.080 2629.822 764.231 412.223 58.871

% Monthly Change 0.76% -1.45% -3.40% -3.87% 5.69%

% Yearly Change 5.32% -6.96% 3.73% 18.80% 11.44%

Asia - Korea - Malaysia - Philippines - Taiwan

420.855 397.709 483.803 450.574 251.471

-0.45% -2.89% 2.38% 2.79% -6.11%

11.14% 11.33% 10.04% 32.75% 4.89%

Europe / Middle East - Czech Republic - Poland - Turkey

377.32 449.510 790.164 591.678

-0.50% -0.29% -2.34% 10.39%

12.28% 0.48% 15.43% 49.72%

Latin America - Chile - Colombia - Mexico

3647.281 2378.892 1282.697 6732.956

-0.75% -1.63% 5.91% -0.33%

1.25% 4.89% 24.06% 20.19%

Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each securityâ€&#x;s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is historical and is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Kuwait Financial Centre “Markaz�