GCC - Equity Market Monitor 20 June

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1. GBCM Morning Briefing Contents GCC Equity Markets Monitor MSM Statistics and Indicators MENA , Global markets, Benchmark Indices and Currencies Performance Global Commodities and Petrochemicals Oman News MSM Market Watch Regional News Coverage June 20, 2017 6/20/2017
2. GCC - Equity Market Monitor 25 .0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Daily Return Oman -0.5% Saudi 2.4% UAE (DFM) 0.4% UAE (ADX) -0.2% Kuwait - PI -0.3% Kuwait - Wtd 0.5% Qatar -1.3% Bahrain -0.5% YTD Return -9.7% -2.3% -2.1% -1.2% 18.8% 7.3% -13.1% 7.9% MTD Return -3.7% 2.6% 3.6% 1.4% 0.7% 0.9% -8.4% -0.2% QTD Return -5.9% 0.6% -0.6% 1.1% -2.8% -1.3% -12.7% -2.9% Source: Respective Stock Markets, Bloomberg, GBCM Research GBCM Morning Briefing 2
3. MSM - Net Buy /(Sell) Position Top 5 - Turnover Market Share – Previous Day Previous Day Turnover: RO 3.156 million (c. US$ 5.869 million) Value Leaders Sector Turnover (RO) Market Share Figures In RO Bank Muscat Banking 1,501,876 47.6% Invs/Hldg 387,439 12.3% OMANIS GCC Arabs OTHERS BUY SELL NET 2,071,435 2,147,560 (76,125) 953,308 853,758 99,551 Hsbc Bank Oman Banking 326,138 10.3% 6,516 3,244 3,272 Bank Sohar Banking 235,469 7.5% 125,180 151,878 (26,697) Oman Tel Services 136,065 4.3% Al Madina Invs MSM - Lead Indicators Value Indicators ** Mkt. Cap (In RO 000s) Daily Market Performance PER (X) P/BV (X) Dividend Yield (%) Indices Monitor Current Closing Previous Closing Daily % MTD % Chg Chg YTD % Chg MSM 30 5,989,432 12.5 1.1 6.2% MSM 30 5,220.94 5,249.24 -0.54% -3.71% -9.71% Financial 3,253,468 8.2 0.9 5.1% Financial 7,860.98 7,890.74 -0.38% -2.49% 2.46% Industrial 885,247 12.6 1.3 5.6% Industrial 7,158.69 7,130.58 0.39% -1.87% -3.36% Services 2,504,844 58.7 1.6 7.3% Services 2,639.70 2,662.88 -0.87% -4.75% -13.70% MSM Shariah 2,356,963 12.6 1.5 7.0% 771.57 774.59 -0.39% -2.73% -11.21% MSM Shariah 6/20/2017 GBCM Morning Briefing 3
4. MENA Markets Performance Index Global Markets Performance Closing % Chg MENA 13,508.4 0.1 Egypt Jordan Tunis Morocco Palestine Turkey %MTD 1.3 2,150.0 -0.2 -1.2 5,932.5 0.7 4.1 24,433.1 -0.7 0.9 540.4 0.4 2.3 99,332.1 1.2 1.8 MENA Benchmark (S&P/ MSCI) S&P GCC LMC 120.3 1.4 1.1 S&P GCC (USD) 97.7 1.3 0.8 984.9 0.3 -1.6 S&P GCC (40 Index)- Price return S&P GCC (40 Index)- Total return 1,602.1 0.3 -1.6 MSCI GCC 471.6 1.6 1.6 MSCI Frontier 568.8 1.1 1.3 MSCI Frontier ex GCC 878.2 0.4 1.3 MSCI Arabian Index 514.7 1.5 1.5 %QTD %YTD 4.0 -4.5 7.0 2.3 0.3 11.7 9.4 -0.9 8.1 -0.1 1.9 27.1 -0.1 -1.0 -3.2 -2.4 -0.1 5.9 6.6 0.1 -1.2 -1.8 -1.8 1.9 -1.1 13.9 16.6 -0.9 Index Closing % Chg Americas S&P 500 Dow Jones Nasdaq Brazil 2,453.5 21,529.0 6,239.0 62,014.0 Index Closing Nikkei Hang Seng Sensex Shanghai Korea Russia % Chg %MTD %QTD %YTD 1,936.5 0.7 1.3 4.5 10.6 MSCI World -Ex USA 1,891.0 0.5 0.7 5.4 11.8 MSCI Europe- USD 1,683.4 0.6 -0.1 7.2 14.4 MSCI EM Index 1,012.9 1.0 0.8 5.7 17.5 Dollar Index USD Vs EURO USD Vs Canadian Dollar USD Vs Japanese Yen USD Vs GBP USD Vs Swedish Krona USD Vs Swiss Franc USD Vs Chinese Renminbi USD Vs Hong Kong Dollar USD Vs Indian Rupee USD Vs Aus Dollar USD Vs Indonesia Rupiah USD Vs Turkish Lira Spot USD Vs Omani Riyal USD Vs UAE Dirham USD Vs Saudi Riyal USD Vs Kuwait Dinar USD Vs Qatar Riyal USD Vs Bahrain Dinar Fixed Income (Bloomberg/EFFAS Bond Indices) US 10+ Yr TR 588.8 -0.2 1.4 4.8 6.8 Euro Liquid 10+ Yr TR 297.1 0.1 1.3 5.1 1.2 -5.4 -7.7 Commodity (Bloomberg) Commodity 80.8 0.0 -2.5 Source: Data taken from Bloomberg GBCM Morning Briefing %YTD 1.7 2.5 0.7 -1.1 3.8 4.2 5.5 -4.6 9.6 8.9 15.9 3.0 0.1 0.5 2.2 2.7 3.7 4.7 5.3 9.2 12.3 3.2 0.9 0.8 0.9 1.0 -5.2 7.3 7.4 5.9 -2.4 9.7 -10.4 6.1 17.7 17.9 1.4 17.0 -13.4 Closing % Chg %MTD In Comparison with USD %QTD %YTD -2.8 4.7 0.7 -0.3 1.5 2.7 2.8 0.8 -0.4 0.6 -0.4 0.2 3.2 0.0 0.0 0.0 0.4 -0.8 -0.1 -4.6 6.1 1.7 4.7 3.2 4.2 4.5 1.7 -0.6 5.3 5.5 1.4 0.0 0.0 0.0 0.0 0.7 -0.8 -0.1 0.8 0.7 1.4 0.6 Global Currencies Index Global Equity (MSCI) MSCI World – USD %QTD Europe 7,523.8 0.8 5,310.7 0.9 12,889.0 1.1 Asia Pacific 20,289.1 1.1 25,903.8 -0.1 31,380.5 0.2 3,146.2 0.1 2,370.6 0.0 998.3 0.4 FTSE 100 CAC 40 DAX Global Benchmark Indices %MTD 4 97.505 1.116 1.322 111.680 1.274 8.738 0.975 6.831 7.799 64.475 0.760 13,289.000 3.523 0.385 3.673 3.750 0.304 3.670 0.377 0.0 0.1 0.0 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.1 0.0 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 -0.8 2.1 -0.8 -1.2 -0.6 -0.8 -0.2 -0.1 0.1 2.3 0.3 0.1 0.0 0.0 0.0 0.0 -0.8 0.0
5. Commodities Performance Index Closing Petrochemical Performance % Chg %MTD %QTD %YTD Index Benzene Aromatics Rotterdam Benzene FOB Korea Spot 810.0 755.0 Benzene CFR Japan Spot Benzene CFR India Spot NYMEX Crude 44.2 0.0 -8.5 -14.0 -22.1 ICE Brent Crude 46.9 0.0 -7.6 -13.1 -20.2 Crude Oil, Oman 45.6 -0.9 -8.7 -12.1 -16.0 NYMEX Natural Gas 2.9 0.1 -5.7 -12.6 -19.2 145.5 0.3 -8.9 -13.7 -21.4 Precious Metals Gold Spot 1,245.4 0.2 -1.9 -0.3 8.1 Silver Spot 16.6 0.4 -4.4 -9.3 4.1 Platinum Spot 927.6 0.3 -2.4 -2.4 2.7 Palladium Spot 857.7 0.2 5.1 7.4 25.1 Base Metals LME Aluminium-Spot 1,874.5 1.0 -2.7 -4.0 10.0 LME Copper-Spot 5,702.8 1.1 0.8 -1.9 3.3 LME Zinc-Spot 2,544.8 1.3 -1.6 -7.5 -0.5 LME Lead-Spot 2,107.0 0.8 0.4 -9.6 5.4 LME Nickel-Spot 8,952.5 0.8 0.3 -10.1 -10.2 Steel US - Hot Roll Coil Steel 589.0 0.0 2.4 -3.4 -3.1 Agriculture Corn - Active Contract 384.0 0.2 1.1 1.3 3.4 Wheat - Active Contract 487.0 0.8 9.7 7.4 8.8 CBOT - Soya bean 946.8 -0.2 3.1 -0.8 -4.3 Shipping Baltic Dry Index 848.0 -0.4 %QTD %YTD -0.6 0.0 -1.2 -6.2 -4.7 -9.0 760.0 0.0 -6.2 -9.0 765.0 0.0 -6.1 -8.9 %MTD Aromatics (in USD/ MT) Energy NYMEX Gasoline Closing -3.4 -34.6 -11.8 Condensates (in USD/ MT) European Naptha 400.0 -8.0 -12.9 -13.6 Naphtha C&F Japan 414.0 -5.2 -11.7 -16.6 Naphtha CIF NWE Cargo 393.9 -8.1 -15.9 -19.0 Naphtha fob Singapore Spot 44.8 -5.3 -11.8 -16.6 Olefins (in USD/ MT) Ethylene Spot 1,055.0 -5.0 -11.3 14.1 Ethylene FOB Korea Spot 900.0 -8.2 -17.8 -18.6 Ethylene FOB Japan Spot 895.0 -8.2 -17.9 -18.6 Propylene FOB Korea Spot 820.0 -4.7 -1.8 -5.2 5.8 Intermediate (in USD/ MT) 2EH CFR Far East Asia 920.0 -3.7 -10.7 2EH CFR South East Asia 940.0 -3.6 -10.5 5.6 DOP CFR Far East Asia 940.0 -4.6 -2.6 -4.6 Polymers (in USD/ MT) LLDPE Future Contract (CNY/ MT) Film Grd Poly HDPE Far E Spot 8,860.0 1,080.0 -3.1 -0.9 -3.2 -5.3 -9.3 -7.7 Film Grd Poly HDPE SE Asia 1,100.0 -0.9 -5.2 -6.0 Film Grd Poly HDPE India Spot 1,120.0 -0.9 -4.3 -0.9 Urea (in USD/ MT) Urea Price (RMB/ MT) 1,645.0 1.5 -0.9 6.1 UREA Cornbelt 220.0 -2.2 -12.0 -20.0 UREA Middle East 206.0 -1.9 -2.8 -15.9 US Urea Avg. Retail Price 333.2 -4.9 -10.0 -3.5 Source: Data taken from Bloomberg 6/20/2017 GBCM Morning Briefing 5
6. Oman News Fitch Revises Oman 's Outlook to Negative; Affirms at 'BBB’ (Source: Reuters)  Fitch Ratings has revised Oman's Outlook to Negative from Stable and affirmed the sovereign's Long Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB'.  The issue ratings on Oman's senior unsecured foreign-currency bonds and on the sukuk trust certificates issued by Oman Sovereign Sukuk S.A.O.C. have also been affirmed at 'BBB'. The Country Ceiling has been affirmed at 'A-' and the Short-Term Foreign- and Local-Currency IDRs at 'F2'.  Oman's fiscal deficit widened to 21.4% of GDP in 2016, the highest of any Fitch-rated sovereign, after 16.6% in 2015. Although government spending fell nearly 6% from 2015, it was still 8% above budget against a fall in revenue of 17%.  High defence spending and the policy of completing infrastructure projects thwarted the government's efforts to achieve the much sharper spending adjustment outlined in the 2016 budget.  A forecast recovery in oil prices, expenditure adjustment, and the implementation of new hydrocarbon projects play a key role in the expected fiscal consolidation in Oman. We forecast that the budget deficit will narrow to 11.9% of GDP in 2017 on the back of higher oil prices and lower defence and investment spending. More fiscal measures are also in the pipeline.  A review of corporate tax exemptions and an increase of tax rates is effective from January 2017 and will begin to have a cash flow impact in 2018. The government expects to implement an excise tax this July and VAT in 2018, which Fitch expects to have a meaningful impact on revenue starting in 2019.  The risks to fiscal consolidation are high and the credibility and cohesion of the government's approach continues to be tested. The government could be reluctant to let infrastructure spending fall because of its importance to growth and to the diversification plan.  A small annual increase in civil service salaries highlights the social sensitivity of wage restraint. Similarly, the government's decision to cap the price of a particular grade of fuel pending the introduction of a compensatory mechanism for poorer citizens highlights that subsidy reforms are not yet entrenched.  Oman's external balance sheet strengths are dwindling as the government issues debt and uses its wealth funds to finance deficits and bolster central bank reserves. GBCM Morning Briefing 6
7. Oman News Oman ’s Outlook to Negative From Stable by Fitch (Contd…)  Sovereign net foreign assets will fall to 14% of GDP in 2018 in our forecast, little more than a quarter of their peak of nearly 58% of GDP in 2015.  We estimate that the country moved into an overall net external debtor position in 2016. Under our baseline assumptions, which include a moderate rise in oil prices, implementation of identified fiscal measures and no draw-downs from wealth funds beyond 2019, Oman's government debt will surpass 50% of GDP in 2026 (from 13% of GDP in 2015).  As a result, it will soon compare unfavourably with the 'BBB' median government debt ratio of nearly 43% of GDP.  Oman's sovereign net foreign asset position will continue to exceed the 'BBB' median of 3% of GDP, underpinned by the USD18 billion in foreign assets held by the State General Reserve Fund of Oman (SGRF) as at end-2016, which is not included in central bank reserves. This buffer supports Oman's market access and the stability of the exchange rate peg.  The reserve coverage ratio, at 5.6 months of current external payments, was slightly below the 'BBB' median and is inflated by the presence of Iranian deposits at the Central Bank of Oman (CBO) worth around USD4.4 billion. We expect real GDP to contract 0.3% in 2017 before rebounding in 2018.  The contraction is led by Oman's commitment to cut oil production in line with Opec. Non-hydrocarbon growth will also slow amid government consolidation and somewhat tighter banking sector liquidity.  Growth already slowed to 2.3% in 2016, as growing oil output and strong real estate and construction activity offset a contraction in trade and manufacturing.  We expect the Khazzan gas field to come on stream in 2018, eventually increasing gas production by 25% (worth around USD5 billion), supporting domestic industries and allowing Oman to fully utilise its existing LNG export capacity.  Oman scores in line with the 'BBB' median on World Bank governance indicators, held back by low scores on 'Voice and Accountability'. GBCM Morning Briefing 7
8. Oman News Al Ahlia Insurance plans IPO , to offer 25% shares (Source: Oman Tribune)  Al Ahlia Insurance Company has said that it will be going for an initial public offering. The company will offer 25% of its shares.  The investment banking division of Bank Muscat is to be the financial adviser and the sole issue manager for the transaction of 25 million shares which will be later listed on the Muscat Securities Market (MSM), according to a statement.  It has a net written premium of $8.2 billion. It has Ominvest, WJ Towell Group and OHI as shareholders. GBCM Morning Briefing 8
9. MSM - Market Watch Source : Bloomberg, GBCM Research Market Outlook – Range bound activity to prevail, Volumes to remain dull… During the previous trading day, the GCC indices closed on a mixed note. MSM Index continued to witness selling pressure and ended the day down by 0.54%. We anticipate the regional market to trade within a narrow range coupled with low market participation ahead of holiday season. For the local market, we expect MSM to open flat and to witness range bound activity during the day amid dull volumes. GBCM Morning Briefing 9
10. UAE News Dubai 's GEMS Education could fetch IPO valuation of $4bn (Source: Arabian Business)  GEMS Education may fetch a valuation of about $4 billion or more in a potential initial public offering in London as early as next year, according to people familiar with the matter.  The private-school operator - backed by private equity firms Blackstone Group and Fajr Capital Ltd and wealth fund Bahrain Mumtalakat Holding Co - has held meetings with investment banks in Dubai this month and is planning to make appointments in the coming weeks.  Rothschild & Co is working as the company’s financial adviser and GEMS, one of the biggest private-school companies globally, is seeking to appoint underwriting banks, the people said. No final decisions have been made and GEMS may also decide not to pursue a listing, they said. Mubadala says to sell stake in UAE's Tabreed to Engie (Source: Arabian Business)  Abu Dhabi sovereign wealth fund Mubadala Investment Company has agreed to sell a 40% stake in National Central Cooling Company (Tabreed) to energy firm Engie, it announced.  Mubadala will remain the single largest shareholder of Tabreed under the deal. It currently owns approximately 82% of Tabreed (on a fully diluted basis, through a combination of equity and mandatory convertible bonds).  Under the transaction, Mubadala is to convert all its MCBs into shares, with 1,086,211,654 shares (equivalent to a 40% shareholding) transferred to ENGIE at a price of approximately AED2.62 per share.  The deal is is subject to regulatory approval in the UAE and completion is expected to occur in the third quarter of 2017, Mubadala said in a statement. Goldilocks inks deal to raise Dana Gas stake to 5% (Source: Arabian Business)  Goldilocks Investment Company announced that it has acquired 350 million shares in the Abu Dhabi-listed natural gas company, Dana Gas.  The investment brings Goldilocks’ shareholding in Dana Gas to 5 percent, a statement said without giving a value to the deal.  Goldilocks said it aims to generate above-average returns while minimising the risk on capital. GBCM Morning Briefing 10
11. GCC News Qatar ’s Hammad port to begin expansion soon; target 6mn TEU container capacity by 2020 (Source: Doha News)  Qatar’s Hamad Port will begin an expansion soon, after QAR2bn worth of contracts were recently awarded, the government said this week, where the Ministry of Transport and Communications (MOTC) tweeted that the new contracts are for the second stage of works at the port.  The announcement follows more than a week of sea blockades by the UAE, Saudi Arabia and Bahrain. Shipping lines and Qatar authorities have responded by launching new routes via Sohar and Salalah in Oman.  The MOTC also announced the start of a Qatar-India Express Service, which will link Hamad Port with the Indian ports of Mundra and Nhava Sheva (near Mumbai and is India’s largest container port).  Hamad Port, the QAR27bn project, is in the south of Doha in Umm Al-Houl near Mesaieed, and was always planned to be developed in phases. Its first phase became fully operational in December 2016. The project will be completed in three stages, and to reach completion by 2020 with three terminals and a capacity of 6mn TEU. GBCM Morning Briefing 11
12. | Institutional Sales - Hunaina Banatwala, (+968) 2235 0717 |Institutional Brokerage - Talal Al Balushi, (+968) 2235 0725| | Equity Research - Kanaga Sundar, (+968) 2235 0727 | Vijay Sridharan, (+968) 2235 0728 | Disclaimer: This document has been prepared and issued by Gulf Baader Capital Markets SAOC ("the Company") on the basis of publicly available information, internally developed data and other sources believed to be reliable. While all care has been taken to ensure that the facts stated are accurate and the opinions given are reasonable, neither Gulf Baader Capital Markets SAOC nor any employee shall be in anyway responsible for the contents of this report. The Company may have a position and may perform buying/selling for itself or its clients in any security mentioned in this report. This is not an offer to buy or sell the investments referred therein. 6/20/2017 GBCM Morning Briefing 12