QNBFS Daily Market Report July 13, 2016

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1. Page 1 of 6 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 0.3% to close at 10,140.8. Gains were led by the Telecoms and Banks & Financial Services…
  • 1. Page 1 of 6 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 0.3% to close at 10,140.8. Gains were led by the Telecoms and Banks & Financial Services indices, gaining 1.5% and 0.7%, respectively. Top gainers were Salam International Investment Co. and Al Khalij, rising 3.0% and 2.8%, respectively. Among the top losers, Qatar & Oman Investment Co. fell 2.1%, while Islamic Holding Group was down 1.4%. GCC Commentary Saudi Arabia: The TASI Index rose 0.8% to close at 6,625.8. Gains were led by the Industrial Investment and Hotel & Tourism indices, rising 4.4% and 1.6%, respectively. Amanah Coop. Ins. rose 9.8%, while Al Ahlia Ins. Co. was up 8.1%. Dubai: The DFM Index gained 1.3% to close at 3,437.5. The Consumer Staples index rose 2.5%, while the Transportation index gained 2.1%. Dar Al Takaful rose 11.6%, while Dubai Islamic Insurance & Reinsurance Co. was up 4.9%. Abu Dhabi: The ADX benchmark index rose 0.1% to close at 4,542.7. The Investment & Financial Services index gained 1.4%, while the Real Estate index rose 1.1%. Al Khazna Ins. gained 14.0%, while Sharjah Islamic Bank was up 3.9%. Kuwait: The KSE Index rose 0.2% to close at 5,377.8. The Real Estate index gained 1.1%, while the Oil & Gas index rose 0.5%. First Dubai for Real Estate Dev. Co. gained 7.9%, while Gulf Franchising Holding Co. was up 6.7%. Oman: The MSM Index rose 0.5% to close at 5,848.9. Gains were led by the Financial and Services indices, rising 0.6% and 0.3%, respectively. Al Batinah Dev. Inv. Holding rose 8.8%, while Oman United Insurance was up 4.5%. Bahrain: The BHB Index gained 0.9% to close at 1,166.7. The Industrial index rose 5.4%, while the Commercial Bank index gained 0.9%. Investcorp Bank rose 6.2%, while Aluminum Bahrain was up 5.6%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Salam International Inv. Ltd 11.69 3.0 368.0 (1.1) Al Khalij 16.75 2.8 0.3 (6.8) Dlala Brokerage & Inv. Holding Co. 25.85 2.6 130.9 39.8 Doha Insurance Co. 20.00 2.6 8.0 (4.8) Zad Holding Co. 84.20 2.6 6.7 (0.7) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Qatar First Bank 11.83 2.4 797.5 (21.1) Vodafone Qatar 10.75 (0.2) 600.7 (15.4) Ezdan Holding Group 18.40 (0.3) 554.8 15.7 Salam International Inv. Ltd 11.69 3.0 368.0 (1.1) Masraf Al Rayan 34.60 0.6 258.3 (8.0) Market Indicators 12 July 16 11 July 16 %Chg. Value Traded (QR mn) 142.6 162.8 (12.4) Exch. Market Cap. (QR mn) 547,189.6 544,399.3 0.5 Volume (mn) 4.7 3.4 38.4 Number of Transactions 2,953 3,195 (7.6) Companies Traded 40 40 0.0 Market Breadth 23:13 29:8 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 16,407.12 0.3 1.8 1.2 13.7 All Share Index 2,819.37 0.4 1.6 1.5 13.3 Banks 2,762.67 0.7 2.7 (1.5) 11.7 Industrials 3,088.51 0.4 0.9 (3.1) 14.2 Transportation 2,511.47 0.2 1.1 3.3 11.6 Real Estate 2,540.61 (0.3) 0.6 8.9 20.8 Insurance 4,081.89 0.2 2.7 1.2 10.6 Telecoms 1,129.16 1.5 1.6 14.5 17.9 Consumer 6,498.44 (0.2) (0.2) 8.3 13.4 Al Rayan Islamic Index 3,890.43 (0.1) 0.6 0.9 16.5 GCC Top Gainers## Exchange Close# 1D% Vol. ‘000 YTD% Saudi Enaya Coop. Ins. Saudi Arabia 11.88 7.0 2,343.3 (28.5) National Real Estate Co. Kuwait 0.09 6.1 2,754.8 1.2 Saudi Arabian Mining Co. Saudi Arabia 39.23 5.7 2,641.3 18.3 Aluminium Bahrain Bahrain 0.34 5.6 112.3 (9.1) United Real Estate Co. Kuwait 0.10 5.4 18.2 3.2 GCC Top Losers## Exchange Close# 1D% Vol. ‘000 YTD% Ithmaar Bank Bahrain 0.11 (4.3) 365.6 (26.7) Gulf Cable & Elect. Ind. Kuwait 0.37 (2.6) 9.5 (1.3) Ajman Bank Dubai 1.66 (2.4) 1,477.1 (5.7) Jazeera Airways Co. Kuwait 0.88 (2.2) 0.6 (2.2) Abu Dhabi Nat. Energy Abu Dhabi 0.53 (1.9) 286.1 12.8 Source: Bloomberg (# in Local Currency) (## GCC Top gainers/losers derived from the Bloomberg GCC 200 Index comprising of the top 200 regional equities based on market capitalization and liquidity) QSE Top Losers Close* 1D% Vol. ‘000 YTD% Qatar & Oman Investment Co. 11.00 (2.1) 42.9 (10.6) Islamic Holding Group 68.50 (1.4) 59.6 (13.0) Al Khaleej Takaful Group 24.05 (1.4) 0.5 (21.1) Qatari Investors Group 47.90 (1.0) 17.4 27.1 Al Meera Consumer Goods Co. 212.90 (0.9) 17.5 (3.2) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 147.30 1.0 14,843.6 1.0 Ezdan Holding Group 18.40 (0.3) 10,157.3 15.7 Industries Qatar 99.50 (0.3) 9,981.4 (10.4) Qatar First Bank 11.83 2.4 9,434.9 (21.1) Masraf Al Rayan 34.60 0.6 8,868.7 (8.0) Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 10,140.79 0.3 1.8 2.6 (2.8) 39.17 150,313.0 13.7 1.6 4.0 Dubai 3,437.51 1.3 2.0 3.8 9.1 134.49 90,859.7 11.5 1.3 4.0 Abu Dhabi 4,542.74 0.1 (0.7) 1.0 5.5 59.90 120,533.8 12.0 1.5 5.4 Saudi Arabia 6,625.78 0.8 1.9 1.9 (4.1) 1,165.26 407,006.2 15.2 1.5 3.7 Kuwait 5,377.75 0.2 (0.2) 0.2 (4.2) 32.95 79,686.9 17.9 1.0 4.4 Oman 5,848.89 0.5 0.6 1.2 8.2 8.64 23,224.0 11.1 1.3 4.4 Bahrain 1,166.72 0.9 1.2 4.3 (4.0) 2.35 17,899.6 9.7 0.4 4.7 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Exchange, Dubai Financial Market and Zawya (** TTM; * Value traded ($ mn) do not include special trades, if any) 10,000 10,050 10,100 10,150 10,200 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  • 2. Page 2 of 6 Qatar Market Commentary  The QSE Index rose 0.3% to close at 10,140.8. The Telecoms and Banks & Financial Services indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari and GCC shareholders.  Salam International Investment Co. and Al Khalij were the top gainers, rising 3.0% and 2.8%, respectively. Among the top losers, Qatar & Oman Investment Co. fell 2.1%, while Islamic Holding Group was down 1.4%.  Volume of shares traded on Tuesday rose by 38.4% to 4.7mn from 3.4mn on Monday. Further, as compared to the 30-day moving average of 4.0mn, volume for the day was 17.5% higher. Qatar First Bank and Vodafone Qatar were the most active stocks, contributing 17.0% and 12.8% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Earnings Releases, Global Economic Data and Earnings Calendar Earnings Releases Company Market Currency Revenue (mn) 2Q2016 % Change YoY Operating Profit (mn) 2Q2016 % Change YoY Net Profit (mn) 2Q2016 % Change YoY Jarir Marketing Co. Saudi Arabia SR – – 116.1 -23.5% 128.5 -17.0% Oman Cement * Oman OMR 30.1 18.0% – – 6.8 24.9% Oman Refreshment * Oman OMR 36.0 1.0% – – 4.1 15.3% Al Kamil Power * Oman OMR 6.9 -3.0% 2.1 1.3% 1.7 11.9% Packaging Co. Ltd Oman OMR 4.7 14.5% – – 0.5 124.6% Al Batinah Dev. Inv. Holding* Oman OMR 0.3 -13.7% – – 0.3 41.5% Al Anwar Ceramic Tiles* Oman OMR 12.2 -17.1% 2.3 -47.7% 2.2 -45.6% Source: Company data, DFM, ADX, MSM (*6M2016 results) Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 07/12 Germany Destatis CPI MoM June F 0.10% 0.10% 0.10% 07/12 Germany Destatis CPI YoY June F 0.30% 0.30% 0.30% 07/12 Japan Bank of Japan PPI MoM June -0.10% -0.10% 0.10% 07/12 Japan Bank of Japan PPI YoY June -4.20% -4.20% -4.30% 07/12 India India Central Statistical Org. CPI YoY June 5.77% 5.79% 5.76% 07/12 India India Central Statistical Org. Industrial Production YoY May 1.20% -0.30% -1.30% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) Earnings Calendar Tickers Company Name Date of reporting 2Q2016 results No. of days remaining Status QEWS Qatar Electricity & Water Company 13-Jul-16 0 Due QGTS Qatar Gas Transport Company (Nakilat) 13-Jul-16 0 Due UDCD United Development Company 18-Jul-16 5 Due QIBK Qatar Islamic Bank 18-Jul-16 5 Due QATI Qatar Insurance Company 19-Jul-16 6 Due QIIK Qatar International Islamic Bank 19-Jul-16 6 Due MARK Masraf Al Rayan 19-Jul-16 6 Due IHGS Islamic Holding Group 19-Jul-16 6 Due CBQK Commercial Bank 19-Jul-16 6 Due DHBK Doha Bank 20-Jul-16 7 Due KCBK Al Khaliji 20-Jul-16 7 Due ABQK Al Ahli Bank 20-Jul-16 7 Due NLCS National Leasing (Alijarah) 21-Jul-16 8 Due GWCS Gulf Warehousing Company 21-Jul-16 8 Due QIGD Qatari Investors Group 25-Jul-16 12 Due ORDS Ooredoo 26-Jul-16 13 Due VFQS Vodafone Qatar 26-Jul-16 13 Due QIMD Qatar Industrial Manufacturing Company 26-Jul-16 13 Due ERES Ezdan Real Estate Company 27-Jul-16 14 Due Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 25.99% 41.56% (22,205,949.82) Qatari Institutions 16.16% 13.66% 3,569,102.32 Qatari 42.15% 55.22% (18,636,847.50) GCC Individuals 1.69% 1.77% (118,256.16) GCC Institutions 2.04% 3.37% (1,900,449.23) GCC 3.73% 5.14% (2,018,705.39) Non-Qatari Individuals 9.50% 10.56% (1,524,717.48) Non-Qatari Institutions 44.62% 29.07% 22,180,270.37 Non-Qatari 54.12% 39.63% 20,655,552.89
  • 3. Page 3 of 6 AKHI Al Khaleej Takaful Insurance 2-Aug-16 20 Due QISI Qatar Islamic Insurance 10-Aug-16 28 Due Source: QSE News Qatar  QNB Group maintains solid earnings expansion in 1H2016 – QNB Group (QNBK) reported a 12% YoY increase in its 1H2016 net profit to QR6.2bn, driven by operating income, which increased to QR11.5bn, up by 40% YoY, demonstrating the Group’s success in maintaining strong growth across the range of revenue sources. Net interest income increased by 40% YoY in 1H2016 to reach QR8.9bn. Net fee & commission income also contributed notably to earnings growth, rising 59% YoY to QR1.80bn, while net gain on foreign exchange rose 3% YoY to QR0.42bn. The Group’s cost-to- income ratio rose to 30.4% in 1H2016 vs. 21.0% in 1H2015. Total assets jumped 28% YTD to QR692bn in 1H2016, the highest ever achieved by the Group, on the back of a 28% YTD increase in loans and advances to QR497bn. Customer deposits grew by 24% YTD to QR488bn in 1H2016. Accordingly, the loan to deposit ratio came in at 101.7% in 1H2016 as compared to 98.3% in FY2015. On the asset quality front, QNB Group’s NPL ratio reached 1.8% in 1H2016 vs. 1.4% in FY2015. The capital adequacy ratio, as per the Qatar Central Bank (QCB) and Basel III requirements, stood at 14.2% as at 30 June 2016, higher than the regulatory minimum requirements of the QCB and Basel Committee. QNB Group successfully raised QR10bn in Additional Tier 1 Perpetual Capital Notes, to strengthen the Group’s Capital Adequacy Ratios and to support future growth across the Group. QNB Group completed the acquisition of 99.81% stake in Finansbank, Turkey. (QNB Group Press Release)  QCB auctioned T-bills worth QR1.2bn on July 12 – Qatar Central Bank (QCB) has auctioned Treasury bills worth QR1.2bn on July 12, 2016, for which it received bids totaling QR3.16bn, as yields fell from last month's sale, suggesting an easing of liquidity. The three-month bills were sold at a yield of 1.51%, down from 1.64% for the three-month bill sale in June 2016, while the six-month bills were sold at 1.67% against 1.76% and the nine-month bills were sold at 1.72% against 1.79%. (QCB, Zawya)  Qatar ‘invests $30bn a year on infrastructure’ – Minister of Municipality and Environment, HE Mohammed bin Abdullah Al Rumaihi said Qatar has been investing $30bn annually since 2010 on infrastructure, industry and housing. Speaking at the Singapore International Water Week, he also highlighted Qatar’s main strategies regarding the environment and water, as part of Qatar National Vision 2030. He said Qatar has three main challenges — water, environment and development. Qatar is located in a desert area that poses a challenge when it comes to water production and increasing agricultural land. He further added that Qatar’s water production will reach 500mn gallons a day by 2019. He also spoke about the new highways, economic areas and new cities and stadiums that will host the 2022 FIFA World Cup. (Peninsula Qatar)  QA plans to pick up 10% stake in LATAM Airlines – Qatar’s national carrier Qatar Airways (QA) and LATAM Airlines, Latin America’s leading airline group, both members of the oneworld alliance, have entered into a subscription agreement enabling the former to acquire up to 10% of LATAM’s total shares, which will be acquired in connection with a capital increase. Under the terms of the subscription agreement, the LATAM Airlines Group will hold an extraordinary shareholders meeting before September 2, 2016 to propose a capital increase of $613mn through the issuance of new shares at a price of $10 a share. Meanwhile, a source said that QA may pick up significant stake in Italy's Meridiana airline. QA had said in June that it had reached an impasse in negotiations to buy 49% of the Italian airline, due to disagreements over working conditions. Furthermore, QA received three separate accolades at the ‘2016 Skytrax World Airline Awards’ held at the Farnborough International Airshow in the UK. Air travelers chose QA as the ‘World’s Best Business Class’ in the 2016 World Airline Awards, also voting the airline top for ‘Best Business Class Airline Lounge’ and the ‘Best Airline Staff Service in the Middle East’. (Gulf- Times.com, Reuters)  Qatar to build tower shaped like desert flower near World Cup final venue – Sheikh Mohammed bin Hamad al-Thani said Qatar will construct two buildings designed by late Iraqi-British architect Zaha Hadid, including a tower shaped like a desert flower close to the site of the 2022 FIFA World Cup final. Sheikh Mohammed bin Hamad al-Thani, the brother of Qatar's Emir, had commissioned Hadid in 2013 to create the structures, one a 38-story hotel in the form of a hyacinth and featuring a nine-pointed base to shield visitors from the searing sun. (Reuters)  S&P affirms ORDS at ‘A-’; outlook stable – Standard & Poor’s (S&P) has affirmed its long-term corporate credit rating on Ooredoo (ORDS) at ‘A-’ with a “stable” outlook. In its latest research update, S&P highlighted its view of ORDS’ significant revenue and EBITDA (earnings before interest taxes depreciation and amortization) geographic diversification, its leading market positions, and improving leverage in 2016 and thereafter. (Gulf-Times.com, QSE) International  Weak US wholesale inventories seen weighing on 2Q2016 GDP growth – The US Commerce Department said that the country’s wholesale inventories barely rose in May as automobile stocks recorded their biggest drop in more than 2-1/2 years, suggesting inventory investment likely remained a drag on economic growth in 2Q2016. The Commerce Department said that wholesale inventories edged up 0.1% after increasing 0.7% in April. (Reuters)  IMF sees 'negligible' Brexit impact on US growth – The International Monetary Fund (IMF) said that Britain's vote in a referendum to leave the European Union has caused uncertainty and increased risks to the US economy but thus far it looks likely to have a pretty "negligible" impact on US growth. The IMF said that the US economy and policies that the June 23 "Brexit" vote has prompted a rise in the dollar that has been less than feared, up about 1% in nominal effective terms, while stock markets have recovered losses incurred right after the vote. Meanwhile, a safe- haven rush into US Treasuries has lowered yields, and home and business financing costs, considerably. The IMF kept unchanged its previous US economic growth forecasts of 2.2% for 2016 and 2.5% in 2017 issued a day before the British referendum. (Reuters)  IMF sees French fiscal targets at risk, trims 2017 outlook – The International Monetary Fund (IMF) said that France's public deficit targets are at risk in the coming years because the government may fail to rein in spending fast enough. In an annual in-depth review on the French economy, the IMF stuck with a preliminary forecast for growth 1.5% in 2016, in line with the government's estimate. However, it cut its outlook for 2017 to 1.25% from 1.5% previously, due to expectations that business investment would suffer from uncertainty caused by Britain's vote to leave the European Union. (Reuters)
  • 4. Page 4 of 6  Commerce Ministry: China retail sales to hit $7.18tn by 2020, growth rate to fall – The Chinese Commerce Ministry said that the country’s retail sales will grow around 10% annually from 2016 to reach $7.18tn by 2020. The growth rate would be considerably slower than the 13.9% annual growth rate seen during the five years through 2015. The country’s retail sales rose by 10.7% in 2015. The Ministry added that China's economy faces downward pressure, with falling corporate profits impacting individuals' income growth, hurting consumption. Inadequate supply of mid- and high-end goods also puts a damper on spending. China's service trade volume will exceed $1tn by 2020. China will have difficulty maintaining the current levels of foreign investment inflows in 2016-2020, while cumulative outbound investment will reach $720bn. (Reuters)  Japan wholesale prices fall 4.2% YoY in June – According to Bank of Japan (BOJ) the country’s wholesale prices fell by 4.2% YoY in June. The fall in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, compares with the median market forecast for a 4.2% YoY decrease and follows a 4.3% YoY decrease in May. Overall final goods prices fell 3.7% from a year earlier. Domestic final goods prices fell 1.2% from a year earlier. (Reuters)  High retail inflation diminishes India's rate cut hopes – Soaring food prices drove India's headline inflation to its highest level in nearly two years in June, increasing the odds of the central bank keeping interest rates on hold next month. The country’s consumer prices rose by 5.77% YoY in June, marking the fastest pace since August 2014. Retail food inflation accelerated to 7.79% in June from 7.47% a month ago on the back of double-digit annual increases in prices of sugar, pulses and vegetables. (Reuters) Regional  OPEC sees tighter 2017 oil market, Brexit drag on economy – The Organization of the Petroleum Exporting Countries (OPEC) provided an upbeat outlook for the oil market in 2017, saying global crude demand would be higher than its current production and pointed to a supply deficit rather than a sizeable surplus that has weighed on prices. However, the OPEC in its monthly report has also cut its forecast for world economic growth for 2016, citing increased uncertainty following Britain's vote to leave the European Union and said the pace of oil demand growth would slow slightly next year. (Reuters)  Kingdom Holding: Brexit costs SR150mn on AccorHotels deal – Saudi Arabia's Kingdom Holding said that it will record SR150mn less revenue from its share-swap deal with AccorHotels due to foreign currency fluctuations caused by Brexit. (Reuters)  Saudi Telecom to weigh tower merger options – According to sources, Saudi Telecom Company has approached potential bidders for its phone towers as the Kingdom’s biggest telecommunications operator weighs options for its infrastructure assets. The company has also spoken to competitors Etihad Etisalat and Zain Saudi Arabia about merging the towers of three firms into a single entity. (Bloomberg)  OPEC forecasts rising crude demand in 2017 – OPEC forecast higher crude demand in 2017 as the global surplus fades, while Saudi Arabia pumped near-record levels amid peak summer consumption. Saudi Arabia’s production increased by 280,000 barrels a day to 10.55mn. That is close to the record 10.564mn pumped in June, 2015. The country’s output typically peaks in the summer as domestic power demand for air-conditioners surges. (Bloomberg)  Khalid: Oil price above $50 needed for investment – Saudi Arabia’s Energy Minister Khalid al-Falih said that the oil industry needs a price of more than $50 per barrel to sustain investments. The downward pressure on prices would prevail because of a huge stocks overhang. (Reuters)  UAE tops region in IT investments – According to sources, the UAE is leading the Arab world when it comes to generating
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