GCC Weekly Wrap - 11 March

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1. WEEKLY WRAP March 11 , 2018 UPDATE & NEWS 0.60% 0.60% 0.60% Mar-02nd - 452.3b 450.9b Canada BoC Rate Decision Mar-07th 1.25% 1.25% 1.25% Japan BoP Current Acc. Balance Jan ¥437.4b ¥607.4b ¥797.2b Japan GDP SA QoQ Q4 F 0.20% 0.40% 0.10% Japan GDP Annualized SA QoQ Q4 F 1.00% 1.60% 0.50% Eurozone ECB Main Refinancing Rate Mar-08th 0.00% 0.00% 0.00% US Mar-03rd 220k 231k 210k Germany Industrial Production SA Jan 0.60% (0.10%) (0.50%) US Feb 205k 313k 239k Initial Jobless Claims Change in Nonfarm Payrolls 2.60 2.40 2.20 Source: Bloomberg Source: Bloomberg GLOBAL NEWS  2.89 2.80 05-Mar Q4 F Gold and Forex Reserve Russia 3.00 26-Feb (3.70%) 19-Feb (3.60%) 12-Feb (3.60%) 05-Feb Jan F UST 10yr Bond 29-Jan 2.20% 22-Jan Prior 2.20% 15-Jan Eurozone GDP SA QoQ Actual 2.30% 08-Jan Durable Goods Orders Survey Feb 01-Jan US Period 25-Dec CPI YoY 18-Dec Event Russia 11-Dec Region US trade deficit rose by USD 2.7bn over a month to USD 56.6bn in Jan18, driven by monthly decline in exports by USD 2.7bn and imports by USD 0.1bn. (Source: BEA)  Saudi Arabia’s trade surplus rose by 33.0% YoY to SAR 41.4bn in Dec17, driven by rise in exports by 18.7% YoY to SAR 80.7bn while imports fell by 2.6% YoY to SAR 39.3bn. (Source: GASTAT)  Saudi Arabia is planning to issue syndicate loan worth USD 16.0bn with an objective to reduce the country’s cost of funding. (Source: Zawya)  US non-farm payrolls increased to 313,000 during February-18, as compared to 239,000 reported in January-18. The unemployment rate remained unchanged at 4.1% in the same period. (Source: BLS)  Saudi Arabia’s Crown Prince, Mohammed bin Salman, has signed a contract worth USD 10.0bn joint fund with Egypt’s President to develop a planned 1,000 sq. km. mega-city in Egypt. (Source: Reuters)  Bank of Canada has maintained its key lending rate at 1.25%.  Saudi Arabia’s Crown Prince has issued orders for the government to resolve the dispute with banks for Islamic tax liabilities worth SAR 9.8bn to avoid any negative impact on the economy. (Source: Zawya)  Total loans and advances of Omani banks rose by 6.4% YoY to OMR 23.6bn during 2017. The average interest rates on the loans stood at 4.4% to 5.0% in 2017 as compared to 4.8% in 2016. (Source: Gulf Base)  Central Bank of Bahrain has introduced a secured private network to connect the country’s retail banks with the bank to perform Real Time Gross Settlement. (Source: BNA)  Kuwait’s total value of awarded projects fell by 28.0% YoY to KWD 4.0bn during 2017. However strong growth was witnessed in power and water sectors. (Source: NBK) (Source: Bank of Canada)  Eurozone’s GDP rose by a seasonally adjusted rate of 0.6% QoQ and 2.7% YoY in Q4-17. Exports rose by 1.9% QoQ, while imports rose by 1.1% QoQ during the same period. (Source: EC Europe)  Eurozone’s industrial production prices rose by 0.4% MoM and 1.5% YoY in Jan-18. (Source: EC.Europe)  Japan’s GDP rose by 0.4% QoQ and 1.6% YoY in Q4-17, driven by rise in business spending by 1.0% QoQ and private consumption by 0.5% QoQ. (Source: Bloomberg)  China’s trade surplus amounted to USD 33.7bn in Feb-18, driven by rise in exports by 44.5% YoY and imports by 6.3% YoY. (Source: III)  The Reserve Bank of Australia has left its key interest rate unchanged at 1.50%. (Source: Bloomberg)  Turkey’s CPI grew by 10.3% YoY in Feb-18, driven by a 13.2% YoY rise in transportation prices and 11.5% YoY rise in prices of hotels, cafes and restaurants. (Source: Turkstat)  Turkey’s central bank has kept its late liquidity window rate at 12.75% and repo rate at 8.0%. (Source: Reuters) QATAR NEWS  Qatari banks’ total assets and liabilities rose by 8.3% YoY to QAR 1.4tn in Jan-18. (Source: Gulf Base)  Qatar’s PPI for industrial sector grew by 18.7% YoY and 5.9% MoM to a reading of 66.1 points in Jan-18. (Source: Mubasher).  Total broad money supply (M2) rose by 19.6% YoY to QAR 598.9bn in Jan-18. Cash equivalents (including deposits) rose by 9.1% YoY to QAR 803.2bn during the same period. (Source: MDPS) GCC NEWS  Personal loans in UAE declined by 0.1% MoM to AED 337.3bn in Jan18, a report by Central Bank stated. (Source: Mubasher)   The Emirates NBD Purchasing Managers’ Index for UAE fell to a five months low to 55.1 in Feb-18, due to slower growth in output and business activity. (Source: Emirates NDB) Qatar’s GDP is expected to grow at rate of 2.6% in 2018 and would average to 2.7% for the year 2019 to 2023, driven by rise in production capacity of LNG by 30.0%, according to IMF’s report. (Source: Gulf Times)  According to IMF’s report, Qatar’s banking sector does not require additional financial aid from central bank and sovereign wealth fund.   (Source: Gulf Times) Dubai International Financial Centre reported rise in launch of new companies in the financial free zone to 315 companies in 2017 against 305 in 2016. (Source: Zawya)  Abu Dhabi’s CPI rose by 4.7% YoY in Jan-18, driven by implementation of 5.0% VAT in the region during the same period. (Source: DED)   Saudi Arabia’s PMI rose marginally to a reading of 53.2 in Feb-18, driven by non-oil growth, as per IHS Markit. (Source: Trade Arabia)  Saudi Arabia’s total bank deposits rose by 1.2% YoY to SAR 1.6tn in Jan-18. (Source: Mubasher) Qatar’s central bank has sold Treasury bills in three tranches worth QAR 900.0mn (USD 247.3mn) with maturities of 3, 6 and 9 months. (Source: Reuters) Commercial Bank of Qatar has financed an additional USD 300.0mn to its wholly owned subsidiary, Alternatif Bank, in order to support its growth and development, the bank’s CEO stated. (Source: Gulf Times) Doha bank has received approval from shareholders to issue bonds worth USD 2.0bn under Euro Medium Term Note program in order to source cost effective long-term funds. (Source: Gulf Times) 1
2. WEEKLY WRAP March 11 , 2018 EQUITY Index Price S&P 500 WTD %Δ MTD %Δ YTD %Δ COMMENTARY Index Price WTD %Δ MTD %Δ YTD %Δ 2,786.6 3.5 2.7 4.2 MSCI EM 1,207.2 2.1 1.0 4.2 25,335.7 3.3 1.2 2.5 S&P GCC 1,603.6 (1.5) (1.3) 0.7 Nasdaq 7,101.2 4.3 3.6 11.0 Dow Jones Islamic 3,746.3 3.2 2.0 3.0 FTSE 100 7,224.5 2.2 (0.1) (6.0) KSA (TASI) 7,562.1 2.0 1.9 4.6 12,346.7 3.6 (0.7) (4.4) UAE (DFM) 3,157.5 (1.6) (2.7) (6.3) DJIA DAX 30 CAC 40 BIST 100 5,274.4 2.7 (0.9) (0.7) UAE (ADX) 4,527.1 (1.5) (1.5) 2.9 116,914.5 0.0 (1.7) 1.4 Qatar (DSM) 8,308.3 (4.8) (4.0) (2.5) 5.8 Nikkei 21,469.2 1.4 (2.7) (5.7) Kuwait (KSE) 6,778.2 (0.4) 0.1 Sh. Comp 3,307.2 1.6 1.5 (0.0) Bahrain (BAX) 1,370.2 (0.2) 0.0 2.9 Hang Seng 30,996.2 1.3 0.5 3.6 Oman (MSM) 4,929.8 (1.6) (1.5) (3.3) Sensex 33,307.1 (2.2) (2.6) (2.2) Jordan (ASEGI) 2,215.1 (0.1) (0.2) 4.2 Source: Bloomberg GLOBAL INDICES Weekly Performance (%) YTD Performance (%) 4.3 3.6 3.5 3.3 2.7 2.2 2.1 1.6 1.4 1.3 Nasdaq DAX 30 S&P 500 DJIA CAC 40 FTSE 100 MSCI EM Sh. Comp Nikkei Hang Seng BIST 100 Jordan (ASEGI) Sensex Nasdaq S&P 500 MSCI EM Jordan (ASEGI) Hang Seng DJIA BIST 100 Sh. Comp CAC 40 Sensex DAX 30 Nikkei FTSE 100 0.0 (0.1) (2.2) (4.0) (2.0) 0.0 2.0 4.0 6.0 11.0 (0.0) (0.7) (2.2) (4.4) (5.7) (6.0) Source: Bloomberg (5.0) 0.0 5.0 10.0 15.0 Source: Bloomberg GCC INDICES Weekly Performance (%) Kuwait (KSE) 3.2 KSA (TASI) Bahrain (BAX) (0.2) Kuwait (KSE) 3.0 UAE (ADX) 2.9 (1.5) Bahrain (BAX) S&P GCC (1.5) S&P GCC UAE (DFM) (1.6) Qatar (DSM) Oman (MSM) (1.6) Oman (MSM) UAE (DFM) (4.8) (6.0) (4.0) (2.0) 0.0 2.0 2.9 0.7 (2.5) (3.3) (6.3) (10.0) 4.0 Source: Bloomberg 4.6 Dow Jones Islamic (0.4) UAE (ADX) Qatar (DSM) 5.8 KSA (TASI) 2.0 (5.0) 0.0 5.0 The S&P 500 index inched 3.5% higher, driven by gains across all the major sectors. The Stoxx Europe 600 index advanced 3.1%. However, losses in shares of Steel Exporters due to US trade tariffs capped the gains in the index. The Nikkei index climbed 1.4%, after the Bank of Japan stuck a dovish tone about its monetary stance and fading worries of trade war weighed on the JPY. Qatar The QE index ended 4.8% lower during the holiday shortened week. Increased net selling pressure from foreign institutional investors weighed on the overall losses in the index. Total trading value and volume declined with Banking, Industrial and Telecom sector together accounting for almost 80.0% of the total trading volume. Doha Bank plunged 13.0%, as the stock traded ex-dividend. Vodafone Qatar declined 13.6%, after surging significantly in the last week. Out of the total 45 listed stocks, 44 exchanged hands, 36 declined, 9 advanced and 1 remained unchanged. YTD Performance (%) Dow Jones Islamic Global equity markets ended higher during the last week, as investors shrugged off fears of a possible global trade war due to the imposition of import tariffs by the US. US equity markets ended higher, following the release of fresh batch of encouraging US jobs and manufacturing activity data. The gains were, however, limited as the resignation of the market-friendly advisor to the US President renewed political uncertainties in the nation. GCC Most GCC markets ended lower during the last week. In Dubai, Aramex retreated 5.8%, after the company recommended a cash dividend of 156.3% of the paid up capital. The Abu Dhabi benchmark retreated 1.5%, as index heavy-weight First Abu Dhabi Bank tumbled 6.0%, as the stock trade exdividend. The Saudi Arabian benchmark outperformed its regional peers by ending 2.0% higher, amid heightening prospects that international index compilers might upgrade Saudi to emerging market status. However, Saudi Arabian Mining Co fell 0.5%, after the announcements of US import tariffs on aluminum. 4.2 4.2 4.2 3.6 2.5 1.4 (10.0) Global 10.0 Source: Bloomberg DSM INDEX 10,500 9,500 8,308.3 8,500 7,500 Sep-17 Oct-17 Oct-17 Index Nov-17 50 SMA Dec-17 Dec-17 100 SMA Jan-18 200 SMA Feb-18 Feb-18 Indicator Price Last Close 8,308.3 MAVG 50 8,946.2 MAVG 100 8,488.7 MAVG 200 8,792.2 6 Month High 9,459.6 6 Month Low 7,714.3 RSI (14 Days) 85.0 Source: Bloomberg 2
3. WEEKLY WRAP March 11 , 2018 RATES & CREDIT US Treasury (%) Qatar Treasury (%) 3.50 3.00 2.50 2.26 2.90 2.65 2.43 5.00 3.16 4.00 4.73 4.21 3.82 3.82 3.00 2.10 1.50 4.64 3.41 3.00 2.58 2.00 1.00 3.17 2.81 2.00 1.66 1.36 1.00 0.50 2.35 1.94 0.00 0.00 2 Yrs 3 Yrs 5 Yrs Current 10 Yrs 2 Yrs 30 Yrs 3 Yrs 5 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 QGIB 2019 104.0 32.8 2.60 (0.1) (1.3) US 23.4 0.1 0.1 0.1 QGIB 2020 103.9 51.3 2.98 (0.0) (1.3) UK 18.3 0.5 0.6 (2.3) Qatari Diar 2020 96.9 71.3 3.36 (0.0) (1.5) QGIB 2021 103.6 78.1 3.34 (0.1) (1.4) 86.4 3.56 (0.0) (2.4) 5 Years CDS Price (BPS) WTD Δ (BPS) MTD Δ (BPS) YTD Δ (BPS) Germany 11.5 0.3 0.6 0.1 QGIB 2022 103.2 France 19.1 0.0 0.7 (0.3) QGS 2023 98.0 92.0 3.66 (0.0) (1.1) Italy 97.3 (3.1) (3.2) (23.4) QGIB 2026 94.6 114.8 4.01 (0.1) (3.0) Greece 346.3 (9.4) (9.4) (9.4) QGIB 2030 150.2 147.5 4.38 (0.1) (5.7) QGIB 2040 121.2 182.5 4.80 (0.5) (7.3) QGIB 2042 113.3 180.8 4.79 (0.3) (7.2) QGIB 2046 98.2 174.2 4.73 (1.1) (5.7) Russia 104.8 (4.2) 0.3 (29.1) Japan 19.9 (0.1) (1.9) (7.4) Turkey 168.6 (6.2) (0.6) 11.4 Brazil 148.6 (10.7) (9.6) (15.5) Egypt 270.5 4.9 8.8 (58.6) Source: Bloomberg, QCB US Swap Rates Tenor GCC Price (%) Weekly Δ (BPS) YTD Δ (BPS) 3M LIBOR 2.071 0.046 0.377 6M LIBOR 2.259 0.031 0.422 12M LIBOR 2.533 0.036 0.426 Abu Dhabi 58.0 (0.5) (0.5) 1.9 Bahrain 243.2 (4.4) (5.5) (43.5) Dubai 100.5 (3.4) (3.9) (29.0) 2 years 2.564 0.065 0.484 Qatar 84.2 (0.3) 0.4 (21.1) 5 years 2.788 0.059 0.545 Saudi Arabia 77.1 (5.1) (2.2) (18.8) 10 years 2.919 0.044 0.519 30 years 2.998 0.040 0.454 International Credit Spreads Source: Bloomberg iTraxx Europe 50.7 (3.9) (2.0) 5.5 iTraxx Europe Crossover 254.8 (18.2) (10.4) 20.9 CDX North America IG 54.8 (1.8) (1.5) 5.4 CDX North America HY 327.4 (8.6) (5.6) 20.7 iTraxxSovX CEEMEA NA NA NA NA iTraxx Europe Senior Financial 18.9 (6.5) (4.6) 2.9 iTraxx Europe Sub Financial 19.2 (17.1) (12.0) (1.2) Commentary US treasuries yields edged higher this week, driven by upbeat jobs data for February18. The yields steadied during midweek, amidst signs that the US President may back down from the proposed imposition of tariffs. The yields however had fell following White House chief economic advisor Gary Cohn resigned. Eurozone government bond yields rose following ECB President Mario Draghi’s announcement that the central bank would refrain from expanding its quantitative easing program. UK gilt yields rose as investors shrugged off data showing muted UK manufacturing data for January-18. Source: Bloomberg 3
4. WEEKLY WRAP March 11 , 2018 COMMODITIES Commodities Price Commentary Brent (USD/bbl) 65.5 WTI Crude (USD/bbl) 62.0 Oil prices ended higher last week, as reports emerged that US oil rig count declined for the first time in seven weeks. Oil prices also found support after the US jobs data topped market expectations and as North Korea offered to suspend its nuclear program, which triggered risk-on mode in the market. Oil prices however declined mid-week after US crude production continued to rise. Natural gas prices declined on forecasts of milder-than-expected weather and lower heating demand over the next two weeks. Copper prices declined as investors’ remained skeptical over imposition of tariffs on US metal imports. Gold prices rose last week on back of strength in the USD. Natural Gas (USD/mmBTU) 2.7 Gold (USD/t oz.) 1,324.0 Silver (USD/t oz.) 16.5 Copper (USD/lb) 311.6 Source: Bloomberg Weekly Performance (%) YTD Performance (%) Brent WTI Crude 1.7 Natural Gas WTI Crude (3.5) Copper 0.5 Gold (2.1) Silver 0.9 Copper 1.1 Brent 1.3 Silver 2.7 Gold 1.4 (5.6) Natural Gas (7.5) 0.0 0.0 0.5 1.0 1.5 2.0 (8.0) Source: Bloomberg (6.0) (4.0) (2.0) 0.0 2.0 4.0 Source: Bloomberg FX Currencies Price Currencies Price GBP/USD 1.3880 USD/INR 64.6675 EUR/USD 1.2337 USD/CNY 6.3344 CAD/USD 0.7806 USD/TRY 3.8125 AUD/USD 0.7844 USD/EGP 17.6168 NZD/USD 0.7280 USD/ZAR 11.8149 106.8200 USD/RUB 56.6651 USD/JPY Commentary The USD ended higher against its major peers last week on back of data showing stronger-than-expected jobs growth in February-18. The EUR weakened after ECB President Mario Draghi warned about the low inflationary environment in the EU. The JPY ended lower on back of easing geopolitical worries in the Korean peninsula, additionally the currency was also weakened after BoJ Governor Haruhiko Kuroda reiterated a dovish stance and kept its monetary policy unchanged, citing sluggish inflation. The CAD strengthened, after the US exempted the tariffs of steel and aluminum imports from Canada. The currency also gained on back of rise in oil prices. Source: Bloomberg Weekly Performance (%) AUD ZAR NZD CAD INR GBP CNY RUB EGP EUR TRY JPY (1.5) Source: Bloomberg YTD Performance (%) JPY ZAR CNY NZD EUR GBP RUB EGP AUD TRY INR CAD 1.1 0.9 0.6 0.6 0.4 0.3 0.2 0.2 (0.1) (0.1) (1.0) (1.0) (0.5) 0.0 0.5 1.0 1.5 5.5 5.2 2.8 2.6 2.5 2.5 1.8 0.7 0.4 (0.2) (1.7) (1.9) (3.0) (2.0) (1.0) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 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