GCC Daily Market Update - 20 August

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1. WEEKLY WRAP August 20 , 2017 ECONOMIC UPDATE & NEWS Region Event Period Survey Actual Prior Japan GDP SA QoQ 2Q P 0.60% 1.00% 0.40% Japan GDP Annualized SA QoQ 2Q P 2.50% 4.00% 1.50% 2.40 Japan Industrial Production MoM Jun F -- 2.20% 1.60% 2.30 UK CPI MoM Jul 0.00% (0.10%) 0.00% UK CPI YoY Jul 2.70% 2.60% 2.60% UK Jobless Claims Change Jul -- (4.2k) 3.5k EC GDP SA QoQ 2Q P 0.60% 0.60% 0.60% EC CPI YoY Jul F 1.30% 1.30% 1.30% US Initial Jobless Claims Aug-12th 240k 232k 244k Russia Gold and Forex Reserve Aug-11th -- 419.9b 420.1b Canada CPI YoY Jul 1.20% 1.20% 1.00% US U. of Mich. Sentiment Aug P 94 97.6 93.4 Source: Bloomberg GLOBAL NEWS  US consumer price index rose by 0.1% MoM and 1.7% YoY in Jul-17. Food prices rose by 0.2% MoM while energy prices declined by 0.1%. (Source: Nasdaq)  US import prices edged up 0.1% MoM in Jul-17, driven by a 0.7% rise in petroleum and a 0.6% rise for imported food. (Source: Reuters)  UK unemployment rate fell to 4.4% in the Q2-17 from 4.9% in Q2-16. Number of unemployed decreased by 57,000 from Q1-17 to 1.5mn. Average earnings including bonuses increased 2.1% YoY. (Source: Morningstar)  UK consumer prices climbed 2.6% YoY in July-17, however fell by 0.1% over the month. Core inflation came it at 2.4% in July-17. (Source: UST 10yr Bond 2.20 2.10 22-May 27-May 01-Jun 06-Jun 11-Jun 16-Jun 21-Jun 26-Jun 01-Jul 06-Jul 11-Jul 16-Jul 21-Jul 26-Jul 31-Jul 05-Aug 10-Aug 15-Aug 1.90 Source: Bloomberg profit rose 2.3% YoY to AED 11.2bn. (Source: Trade Arabia)  A total of 68 real estate projects representing a value of AED 21.0bn (USD 5.7bn) were registered with the Dubai Land Department during H1-17. (Source: Trade Arabia)  Abu Dhabi’s inflation rate went up 1.5% YoY and 0.1% MoM in July-17. For the first 7 months, consumer prices rose by 2.0% YoY. (Source: Mubasher)  Japan’s Q2-17 GDP grew at an annualized pace of 4.0%, more than the median estimate of 2.5%. Economy expanded by 1.0% QoQ during the quarter. (Source: Reuters)  Japan's industrial production climbed to a seasonally adjusted 2.2% MoM in Jun-17. The monthly growth in shipments was revised up to 2.5% from 2.3% and the capacity utilization rate rose 2.1%. (Source: Saudi Arabia's state budget deficit dropped to SAR 46.5bn in the Q217 as revenues rose moderately on the back of higher oil prices. (Source: Reuters)  Morningstar)  2.08 2.00 Saudi Arabia’s cost of living index (inflation) dropped by 0.3% YoY in July-17 due to the drop in recreation and culture by 2.7%, followed by food and beverages (2.0%) and clothing and footwear (1.8%). (Source: Mubasher)  Kuwait’s real GDP rose 2.5% in 2016 buoyed by 3.2% growth in non-oil sector and 1.9% growth in the oil sector, according to central bank of Kuwait. Indicators reflects that annual inflation reached 3.2% in 2016. (Source: Mubasher)  Interactive Investor) The Central Bank of Bahrain announced that this week’s BHD 70.0mn issue of Government Treasury Bills has been oversubscribed by 128.0%. (Source: BNA)  China's steel output rose up 10.3% MoM in July-17 to 74.0mn tonnes as mills continued to ramp up production even as Beijing intensified its war on smog. (Source: Reuters)   China's fiscal spending increased by 5.4% YoY in July-17 from 19.7% in June-17. Government spending for first 7 months rose 14.5% while revenue grew by 10.0% during the same period. (Source: Reuters) The consumer confidence index on the economic performance of Qatar rose nearly 0.1 points over the quarter during Q2-17 and stood at 183.8 points. (Source: Gulf Times)   Turkey’s budget deficit stood at TRY 24.3bn in the first seven months of 2017. Current account deficit declined by 32.4% YoY to USD 3.7bn in June-17. Import-export balance of goods stood at USD 4.6bn while the country’s income from services rose by 29.2% YoY to USD 1.7bn. Oxford Economics has revised Qatar’s growth outlook for 2017 down to 1.4%, compared with 3.4% before the Gulf crisis, and re-evaluated inflation at 1.8%, up from the anticipated 1.5%, because of higher import costs. (Source: Gulf Times)  Consumer Price Index (CPI) increased slightly by 0.2% MoM in July-17 due to higher expenses on food and beverages, recreation and culture, transport, and health. CPI inflation rose 0.2% YoY. (Source: Gulf Times)  Qatar recorded registration of 1,590 new firms including 1,241 main commercial records and 349 branch commercial records in July-17. (Source: AA) QATAR NEWS GCC NEWS   GCC urban construction sector currently has 801 construction projects with a combined estimated value of AED 117.4bn (USD 32.0bn) in the tendering stage, according to BNC network. (Source: Trade Arabia) The total value of short-term deposits in UAE banks reached AED 439.7bn by the end of June-17, rising by AED 27.9bn during the H1-17. (Source: Trade Arabia)   UAE’s consumer spending is forecast to rise at a CAGR of 7.5% over the next five years to exceed USD 261.0bn in 2021, according to the Dubai Chamber of Commerce and Industry. (Source: Trade Arabia) UAE’s total 19 listed banks net profit grew 3.8% YoY to around AED 19.0bn (USD 5.2bn) during the H1-17. Abu Dhabi’s 12 listed bank’s net (Source: Gulf Times)  The total value of real estate traded during the month of July-17 reached QAR 1.8bn. The volume of mortgage transactions during July17 amounted to 140 transactions. (Source: Qatar Tribune)  Real estate transaction during the period from 6th August-17 to 10th August-17 were worth QAR 203.9mn. (Source: Qatar Tribune)  Qatar’s exports of liquefied natural gas to Pakistan are expected to reach USD 1.0bn per year, said the president of Federation of Pakistan Chambers of Commerce & Industry. (Source: Gulf Times) 1
2. WEEKLY WRAP August 20 , 2017 EQUITY Index Price S&P 500 WTD %Δ MTD %Δ YTD %Δ COMMENTARY Index Price WTD %Δ MTD %Δ YTD %Δ 2,425.6 (0.6) (1.8) 8.3 MSCI EM 1,059.5 1.6 (0.6) 22.9 21,674.5 (0.8) (1.0) 9.7 S&P GCC 1,670.5 (0.7) (0.3) 6.3 Nasdaq 5,790.9 (0.7) (1.5) 19.1 Dow Jones Islamic 3,308.1 (0.2) (1.0) 13.8 FTSE 100 7,324.0 0.2 (0.7) 2.5 KSA (TASI) 7,179.3 0.2 1.2 (0.4) DAX 30 12,165.2 1.3 0.4 6.0 UAE (DFM) 3,601.2 (1.3) (0.9) 2.0 CAC 40 5,114.2 1.1 0.4 5.2 UAE (ADX) 4,492.7 (1.3) (1.6) (1.2) 107,202.4 0.2 (0.3) 37.2 Qatar (DSM) 9,106.2 (1.5) (3.2) (12.7) 19.8 DJIA BIST 100 Nikkei 19,470.4 (1.3) (2.3) 1.9 Kuwait (KSE) 6,885.8 0.6 0.5 Sh. Comp 3,268.7 1.9 (0.1) 5.3 Bahrain (BAX) 1,298.9 (1.9) (2.2) 6.4 Hang Seng 27,047.6 0.6 (1.0) 22.9 Oman (MSM) 4,889.3 (2.0) (2.7) (15.5) Sensex 31,524.7 1.0 (3.0) 18.4 Jordan (ASEGI) 2,116.8 (1.1) (1.1) (2.5) Global Global markets ended mixed last week, as macro-economic data released in major countries set the tone for trading. While North Korea’s decision to abandon its plan to launch missile attacks in Guam lifted investor sentiment, terror attacks in Barcelona offset the positive impact. US markets continued to decline for the second consecutive week, as instability in the Trump administration left investors jittery. However, the release of a relatively dovish US Federal Reserve meeting minutes capped some losses. Energy, Telecom and Consumer Discretionary shares were among the notable losers during the last week. The Stoxx Europe 600 index ended 0.6% higher, helped by weakness in the EUR and a stronger than expected Eurozone GDP data. The FTSE 100 index ended 0.2% higher, aided by encouraging UK jobs data and retail sales. Japan’s index ended lower, despite broadly unchanged yen and better than expected Japanese GDP data. Source: Bloomberg GLOBAL INDICES Weekly Performance (%) Sh. Comp MSCI EM DAX 30 CAC 40 Sensex Hang Seng BIST 100 FTSE 100 S&P 500 Nasdaq DJIA Jordan (ASEGI) Nikkei YTD Performance (%) 1.9 1.6 1.3 1.1 1.0 0.6 0.2 0.2 (0.6) (0.7) (0.8) (1.1) (1.3) (2.0) (1.0) 0.0 1.0 2.0 37.2 BIST 100 Hang Seng MSCI EM Nasdaq Sensex DJIA S&P 500 DAX 30 Sh. Comp CAC 40 FTSE 100 Nikkei Jordan (ASEGI) (2.5) (10.0) 3.0 Source: Bloomberg 22.9 22.9 19.1 18.4 GCC Saudi Arabia’s benchmark rose 0.2%, with Real Estate firms leading advancers. Atheeb Telecom advanced 4.4%, after the company swung into a profit during Q2-17. In Dubai, Union Properties dropped 2.2%, as the company reported a loss of AED 2.3bn during Q2-17, due to accounting errors in one of its land plot. Index-heavyweight Emaar Properties climbed 0.2%, after the company reported 14.4% YoY increase in its net income. Abu Dhabi’s index retreated 1.3%, with Dana Gas down 6.3%, after reporting its Q2-17 earnings. 9.7 8.3 6.0 5.3 5.2 2.5 1.9 0.0 10.0 20.0 30.0 40.0 Source: Bloomberg GCC INDICES Weekly Performance (%) Kuwait (KSE) 0.6 KSA (TASI) 0.2 Dow Jones Islamic (0.2) S&P GCC Kuwait (KSE) 19.8 Dow Jones Islamic 13.8 Bahrain (BAX) 6.4 S&P GCC 6.3 (0.7) UAE (DFM) (1.3) UAE (DFM) UAE (ADX) (1.3) KSA (TASI) (0.4) UAE (ADX) (1.2) Qatar (DSM) Bahrain (BAX) Oman (MSM) Qatar QE index declined 1.5% during the last week, after a report indicated that the ongoing political rift with neighboring nations had a negative impact on food inflation and Real Estate sector. Trading volume declined, amidst higher trading value, with Banking, Industrials and Telecom sectors accounted for 77.1% of the total value. Non Qatari institutional investors were among the net sellers during the last week. Out of the total 43 stocks traded, 38 fell, 3 gained and 4 remained unchanged. YTD Performance (%) (1.5) 2.0 Qatar (DSM) (12.7) (1.9) Oman (MSM)(15.5) (2.0) (20.0) (10.0) (2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 Source: Bloomberg 0.0 10.0 20.0 30.0 Source: Bloomberg DSM INDEX 10,700 9,700 9,106.2 8,700 Feb-17 Apr-17 Index May-17 50 SMA 100 SMA Jul-17 200 SMA Aug-17 Indicator Price Last Close 9,106.2 MAVG 50 9,231.3 MAVG 100 9,713.9 MAVG 200 10,058.8 6 Month High 10,952.7 6 Month Low 8,777.7 RSI (14 Days) 39.2 Source: Bloomberg 2
3. WEEKLY WRAP August 20 , 2017 RATES & CREDIT US Treasury (%) Qatar Treasury (%) 2.78 3.00 2.50 1.50 2.01 3.00 1.58 3.29 3.07 2.86 2.29 1.43 4.36 4.00 1.31 1.00 0.50 2.20 1.76 2.00 5.00 3.94 2.15 2.80 2.00 1.17 2.02 2.19 5 Yrs 7 Yrs 1.00 0.75 1.10 0.00 0.00 2 Yrs 5 Yrs 7 Yrs Current 10 Yrs 2 Yrs 30 Yrs Current Last Year Source: Bloomberg 10 Yrs 30 Yrs Last Year Source: Bloomberg CDS Qatar Govt. Int. Bonds Maturity Price (USD) Z Spread (BPS) Yield (%) WTD Δ (USD) YTD Δ (USD) Global QGS 2018 100.1 42.3 1.38 0.0 (0.2) US 29.9 0.0 0.6 0.0 QGIB 2019 107.0 61.3 2.05 0.0 (3.0) UK 20.2 1.4 1.7 (12.9) QGIB 2020 106.6 80.7 2.36 (0.0) (1.5) Qatari Diar 2020 99.1 89.8 2.58 0.2 1.0 5 Years CDS Price (BPS) WTD Δ (BPS) MTD Δ (BPS) YTD Δ (BPS) Germany 15.8 1.2 0.9 (8.2) QGIB 2021 105.8 125.0 2.91 NA (3.1) France 21.7 0.4 2.0 (17.6) QGIB 2022 106.8 107.7 2.82 0.3 (0.4) Italy 140.0 (1.2) 3.9 (22.4) QGS 2023 101.2 113.9 2.94 0.1 (1.0) Greece 604.9 (17.8) (29.9) (521.4) QGIB 2026 99.7 122.0 3.26 0.4 2.9 QGIB 2030 158.8 170.0 3.83 0.4 3.9 QGIB 2040 129.5 198.3 4.30 0.1 4.2 QGIB 2042 121.1 197.1 4.31 0.5 4.3 QGIB 2046 104.4 196.4 4.34 0.7 4.0 Russia 152.8 (0.4) (12.8) (81.3) Japan 29.6 0.1 2.5 (2.4) Turkey 180.4 2.5 (3.8) (95.0) Brazil 205.2 (1.2) (6.5) (78.2) Egypt 358.6 (10.5) (48.8) (100.7) Abu Dhabi 60.0 2.2 0.9 (4.4) Bahrain 236.1 (0.1) (12.5) (76.3) Dubai 124.9 2.8 (2.1) (29.9) Qatar 95.6 (0.1) 0.3 2.9 Saudi Arabia 93.7 0.6 (2.7) 5.4 Source: Bloomberg, QCB US Swap Rates GCC Tenor International Credit Spreads iTraxx Europe 58.2 0.1 5.4 (14.6) iTraxx Europe Crossover 249.2 (3.0) 14.1 (42.2) CDX North America IG 62.5 0.5 5.0 (5.3) CDX North America HY 345.8 3.0 26.0 (8.3) iTraxxSovX CEEMEA NA NA NA NA iTraxx Europe Senior Financial 29.4 (2.2) 2.8 (40.6) iTraxx Europe Sub Financial 34.0 (5.3) 1.1 (90.7) Price (%) Weekly Δ (BPS) YTD Δ (BPS) 3M LIBOR 1.316 0.001 0.319 6M LIBOR 1.457 0.001 0.140 12M LIBOR 1.733 0.008 0.047 2 years 1.575 0.020 0.118 5 years 1.831 0.006 (0.146) 10 years 2.144 (0.006) (0.195) 30 years 2.438 (0.020) (0.157) Source: Bloomberg Commentary US treasury yields rose earlier in the week, on back of ease in US – North Korea geopolitical tensions and upbeat US economic data. The yields however fell later after political worries escalated at White House following the removal of White House chief advisor by President Donald Trump. UK gilt bond yields rose after data showed unemployment rate dropped to the lowest since 1975 and wages rose more than forecast. Eurozone government bond yields rose after data showed better-thanexpected recovery in Eurozone economy in Q2-17. Source: Bloomberg 3
4. WEEKLY WRAP August 20 , 2017 COMMODITIES Commodities Price Commentary Brent (USD/bbl) 52.7 WTI Crude (USD/bbl) 48.5 Oil prices got pressurized earlier in the week, weighed by concerns over growing production from OPEC members and US shale-oil producers. Data released by EIA revealed a weekly rise in domestic US production to the highest level in over two years. Trends changed later during the week, as the global benchmark Brent, reversed losses and swung to a weekly gain of 1.2% after Baker Hughes reported decline in oil rigs count. Natural gas prices ended lower as EIA reported higher-thanforecasted rise in natural gas inventory. Copper prices rose on expectations of that China's reform of its metals industry will curb supply against a background of robust demand. Gold and silver prices fell as market saw ease in risk aversion. Natural Gas (USD/mmBTU) 2.9 Gold (USD/t oz.) 1,285.7 Silver (USD/t oz.) 17.0 Copper (USD/lb) 294.0 Source: Bloomberg Weekly Performance (%) YTD Performance (%) Brent Copper Gold Silver Brent WTI Crude Natural Gas 1.2 Copper 0.9 Gold (0.2) Silver (0.4) WTI Crude (0.6) Natural Gas (3.0) (4.0) (3.0) (2.0) (1.0) 0.0 1.0 17.3 11.6 6.3 (7.2) (9.7) (22.3) (30.0) 2.0 Source: Bloomberg (20.0) (10.0) 0.0 10.0 20.0 Source: Bloomberg FX Currencies Price Currencies Price GBP/USD 1.2900 USD/INR 63.6463 EUR/USD 1.1791 USD/CNY 6.6704 CAD/USD 0.7946 USD/TRY 3.5185 AUD/USD 0.7929 USD/EGP 17.7687 0.7313 USD/ZAR 13.1582 109.1800 USD/RUB 58.9697 NZD/USD USD/JPY Commentary USD fell this week, as political tensions weighed on greenback after Donald Trump ousted White House chief strategist Steve Bannon. The disbanding of business councils by the Trump admiration, further weighed on sentiments. The currency was also pressured after Fed minutes for July meeting showed divided opinions for further interest rate hikes. CAD strengthened against the USD, led by upbeat inflation data and rally in oil prices. Weakness in GBP was majorly due to downbeat inflation for July, however upbeat UK labor data and retail sales lent some support. EUR ended lower after ECB minutes indicated concerns over the strength of the currency. Source: Bloomberg Weekly Performance (%) ZAR RUB CAD TRY AUD EGP NZD INR JPY CNY EUR GBP (1.1) (1.5) YTD Performance (%) EUR AUD JPY CAD INR NZD ZAR RUB GBP CNY EGP TRY 2.4 1.6 0.7 0.6 0.4 0.2 0.0 0.0 (0.0) (0.1) (0.5) (1.0) Source: Bloomberg (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 11.8 10.0 7.1 6.8 6.1 5.5 4.4 4.4 4.3 4.3 2.0 0.2 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Source: Bloomberg DISCLAIMER It is understood that any opinions expressed by Commercial Bank or its affiliates as to the commentary, market information, and future direction of prices of specific securities reflects the views of the individual analyst who issued them, and not necessarily represent the views of Commercial Bank or its affiliates in any way. In no event shall CBQ or its affiliates have any liability for any direct or indirect losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this materials or for any delays, inaccuracies, errors in, or omissions of the said information. 4