GCC Markets. GCC Markets Performance March Global Research GCC Markets Performance Markets - GCC April 2013

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1 Global Research Performance Markets - GCC April 2013 Performance March 2013 All GCC markets, except the UAE, ended in the green Kuwait led the rally, with a 4.0%MoM gain, followed by Saudi Arabia Trading activity increased on MoM basis IPO activity remained subdued Global markets although mixed showed an upward bias Global equity markets traded mixed, with an upward bias in March 2013 following cautious February. Markets in the U.S. improved on optimistic economic data releases. U.S. manufacturing activity rebounded in February with a 0.8% growth, driven by a strong increase in vehicle production. Furthermore, higher job growth and strengthening housing market led to improvement in economic outlook. Cyprus banking crisis and political concerns in Italy weighed on markets in Europe. However, Cyprus bailout deal (worth EUR10bn) with international lenders taxing large depositors announced toward the end of March limited negative sentiment. The Dow Jones Industrial Average and FTSE100 gained 3.7% and 0.8%, respectively, in March. In GCC markets, major indices reported small gains. Market Performance in March Dec Jan Feb-13 4-Mar Mar-13 Saudi Kuwait Dubai Bahrain MSCI World Index Qatar Abu Dhabi Oman MSCI Emerging Markets Index Faisal Hasan, CFA Head of Research fhasan@global.com.kw Tel: (965) Raed Diab Senior Analyst rdiab@global.com.kw Tel: (965) Global Investment House Indices (MoM) (YTD) KSE Price Index 4.0% 13.3% Tadawul All Share Index 1.8% 4.8% DFM Index -5.1% 12.7% ADX Index -0.6% 15.0% Bahrain All Share 0.2% 2.4% QE Index 0.6% 2.6% MSM30 Index 0.2% 4.0% Source: Zawya, Bloomberg, Reuters & Global Research GCC markets on a rise UAE backtracks GCC equity performance remained mixed in March. All bourses, except ADX and Dubai, gained during the month. The KSE index experienced the highest growth of 4.0%MoM amongst GCC markets. During the month, the index rallied to the highest level in over two years buoyed by better-than-expected earnings and hopes of increased government spending. Saudi Arabia s Tadawul index, the second best performer, rose 1.8%MoM supported by positive global sentiments and leads from domestic news flows such as revision in Fitch Ratings. Dubai was the worst performer (down 5.1%MoM) amongst GCC markets, shedding the previous month s gains. Qatar, Oman and Bahrain experienced a marginal growth of 0.6%MoM, 0.2%MoM and 0.2%MoM, respectively, in March.

2 Combined market capitalization declined 0.2%MoM Combined market capitalization of all GCC bourses declined 0.2%MoM to USD766.5bn in March 2013; the performance was mixed during the month, with just two market gaining and the remaining five declining. Saudi Arabia, the largest GCC market based on capitalization, gained USD5.7bn in capitalization to reach USD387.3bn during March 2013 compared to USD381.6bn in February TASI s market capitalization of USD387.3bn was equivalent to 50.5% of total GCC capitalization. Qatar, the second largest GCC market based on capitalization, gained USD0.9bn from capitalization; it accounted for 16.8% of total GCC capitalization. Oman, the UAE (Abu Dhabi and Dubai), Kuwait and Bahrain together lost USD8.1bn from capitalization in March. GCC Aggregate Market Capitalization Country Market Cap March 2013 Market Cap February 2013 (MoM) % of total March 2013 Kuwait % 13.1% Saudi Arabia % 50.5% Abu Dhabi % 10.2% Dubai % 5.1% Qatar % 16.8% Oman % 2.1% Bahrain % 2.1% Total GCC % 100.0% Source: Respective stock exchanges, Zawya & Global Research GCC trading activity increased in March Overall trading activity in the GCC countries rose in March 2013, with value and volume growth of 3.8%MoM and 8.1%MoM, respectively. Except Saudi Arabia and Kuwait, all GCC markets recorded a fall in value traded. traded in Saudi Arabia and Kuwait surged 3.1%MoM to USD32.5bn and 68.2%MoM to USD4.0bn, respectively, during the month. The UAE experienced a 29.6%MoM fall in value traded to USD2.3bn. Saudi Arabia accounted for 80.4% of total value traded, while Kuwait s share increased to 9.8% of overall value traded. Total volume traded in GCC increased to 26.0bn shares primarily on a 60.4%MoM surge in volume traded in Kuwait. GCC Aggregate Trading Activity Country March 2013 February 2013 traded Volumes (mn) As a % of total value traded traded Volumes (mn) As a % of total value traded Bahrain % % Kuwait , % 2.4 9, % Oman % % Qatar % % Saudi Arabia , % , % UAE 2.3 6, % 3.3 9, % GCC Total , % , % Source: Respective stock exchanges, Reuters, Zawya & Global Research IPO activity remained muted Saudi Arabia continued to experience IPO activity in March. After Northern Region Cement Co. s listing in February, National Medical Care was listed during March The company had announced its IPO on February 10, offering 13.5mn shares at a price of SAR27.0 per share. 2

3 GCC corporate earnings grew 4.5%YoY in 2012 Corporate earnings in the GCC region continued to rise in 2012, albeit at a slower pace when compared to Overall corporate earnings grew 4.5%YoY to USD55.4bn in UAE continued its strong performance from 2011, rising 28.8%YoY in 2012 driven primarily on account of recovery in Real Estate sector. Saudi Arabia s earnings on the other hand remained at similar levels to 2011 impacted by weak performance of the petrochemical sector. Among other gainers were Kuwait and Oman which grew 12.0%YoY and 14.3%YoY, respectively. Bahrain and Qatar were the only countries to witness a decline in earnings in Bahrain was the worst performer in the GCC region, declining 34.6%YoY in 2012 owing to deterioration across majority of sectors. On the other hand, Qatar saw a marginal decline of 0.3%YoY during 2012 led by decline in Real Estate sector earnings which declined 56.0%YoY Corporate Earnings 2012 (%YoY) GCC 4.5% UAE 28.8% Oman 14.3% Kuwait 12.0% Saudi 0.0% Qatar -0.3% Bahrain -34.6% -40% -30% -20% -10% 0% 10% 20% 30% 40% Source: Gulfbase & Global Research, Data up till March 31,

4 1 year forward PE Global Research GCC GCC market valuation remains fairly attractive GCC equity markets had a good start to 2013 largely due to an uptick in earnings across key cyclical sectors such as Banking and Real Estate. Despite the recent surge, GCC markets continue to remain fairly attractive. In terms of one-year forward PE, the six GCC markets trade in the range of 9.4x 11.3x. This is fairly below the three- and fiveyear historic average of 13.5x and 13.4x, respectively, for the region as a whole. Valuation is also lower compared to similar frontier markets and key emerging markets. Within GCC, we are in favor of Saudi Arabia given its current compelling valuations coupled with a robust earnings outlook for GCC Market Valuation EPS Growth versus Price to Earnings Kuwait Indonesia India 14.0 Malaysia South Africa US 12.0 Dubai Saudi Arabia UK 10.0 Qatar Bahrain China Oman 8.0 Abu Dhabi % 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% EPS growth 2013 Source: Bloomberg & Global Research Development on the global macroeconomic front to be a key factor in the short term We continue to maintain optimistic outlook for the GCC equity market in 2013, largely due to the presence of regionspecific triggers such as continued momentum on reforms, healthy economic growth, investment in non-oil sectors, stabilization in oil prices and recovery in the real estate sector. However, the market remains exposed to spells volatility that could potentially emanate from lack of institutional participation. In the short-term, developments on the global macroeconomic front would play a key role in deciding the course of GCC markets due to lack of regionspecific triggers in the post-earnings season. Recent spending cuts in the US and slow pace of recovery in Europe could put pressure on oil prices and dampen investor sentiments in short-term. 4

5 3-Mar 6-Mar 13-Mar 18-Mar 21-Mar 26-Mar 31-Mar in mn Global Research GCC Bahrain BSE ended in the green The Bahrain bourse (BSE) maintained the positive momentum that commenced toward the end of December 2012 and rose 0.2%MoM in March The index registered an increase of 2.4% on year-to-date basis. During the month, the Central Bank released its GDP estimates for 2013 that stood at 4.0%, which is broadly at a similar level witnessed in However, the estimate is much lower than the 6.2% (2013) forecasted by Economic Development Board. The positive momentum in Services and Investment sectors provided support to BSE. Bahrain Telecommunication Co. (BATELCO), a major constituent of the Services sector, is in initial negotiations to buy a stake in India-based Reliance Communication. The deal would aid in expanding BATELCO s international footprint and offset declining domestic income. The growth in BSE was restricted by a decline in heavyweight Al Ahli United Bank (AUB), the Kingdom s largest company (by market capitalization), as it experienced a decline in share prices (down 7.2%). INOVEST and Ithmaar Bank topped the gainers, while Nass Corporation and National Bank of Bahrain led the losers. The market breadth remained positive with gainers outnumbering the decliners by 11:8 during the month. BSE Index and Volume Performance and Sectoral Performance 1, ,130 1, BSE Services 0.2% 2.6% 1,110 1, Investment Insurance 0.5% 2.3% 1,090 1, Hotel & Tourism Industrial -0.4% 0.0% Volume (RHS) Index (LHS) Commercial Banks -2.5% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% Source: Zawya, Gulfbase & Global Research Sectoral Performance The Services sector was the best performer (up 2.6%MoM) during the month, followed by Investment (2.3%) and Insurance (0.5%). Growth in the Services sector was led by heavyweight BATELCO (up 5.4%) and Bahrain Cinema Co. (up 4.6%). Other stocks, Bahrain Duty Free Shop Complex Co. and Nass Corporation declined 7.1%MoM and 10.2%MoM, respectively. Majority of stocks in the Investment sector ended in the green, led by INOVEST (24.4%) and Ithmaar Bank (24.2%). Ithmaar Bank narrowed its net losses and reported an improvement in income in 2012 vis-à-vis that in 2011 on improved performance across business lines. Furthermore, the company s subsidiary, Ithmaar Development, was successfully awarded the infrastructure work for the Dilmunia project.. Heavyweight Commercial Banking sector declined 2.5% led by a fall in share prices of Al Ahli United Bank and National Bank of Bahrain (down 8.9%). The Insurance sector grew a marginal 0.5% on a rise in share prices of Bahrain National Holding Co. (1.56%); all other stocks in the sector remained unchanged. 5

6 Corporate earnings BSE s consolidated earnings declined 34.6%YoY in 2012, with Industrial and Services sector (representing 29.8% of sector s 2012 earnings) declining 53.9%YoY and 15.2%YoY, respectively. The Commercial Banks sector, which accounts for 61.4% of BSE s earnings, rose 7.7%YoY in Earnings from Industrial sector the next largest contributor to BSE s 2012 earnings (15.1%) declined 53.9%YoY to USD258.1mn. This was on account of a 54.4%YoY decline in earnings of major player Aluminium Bahrain. Services sector representing 14.7% of BSE s earnings declined 15.2%YoY. The drop in earnings was led by weak performance of Bahrain Telecommunications (Batelco), which is a primary contributor (63.1%) to the sector s earnings. Batelco s earnings declined 24.6%YoY adversely affected by one-off expenses related to extensive restructuring as well as by fierce competition in the region. Insurance sector reported profits for 2012 vis-à-vis losses in Corporate Earnings 2012 (%YoY) Total Bahrain -34.6% Hotels & Tourism 23.3% Commercial Banks 7.7% Services -15.2% Industrial -53.9% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Source: Gulfbase & Global Research, Data up till March 31, 2013 Trading activity mixed in March 2013 Total volume traded on the BSE index rose 60.6% to 119.5mn shares in March vis-à-vis 74.4mn shares in February. traded declined 6.9% to USD34.1mn from USD36.6mn in February. Ithmaar Bank accounted for 39.2% of overall volume traded, and was the most actively traded stock in terms of turnover (USD28.1mn). Gulf Finance House was the second largest traded stock in terms of value and volume. BSE Trading Statistics Top 5 Top 5 Gainers Close* High* Low* Inovest BSC** % NA Ithmaar Bank BSC** % NA Bahrain Islamic Bank BSC % NA Gulf Finance House BSC** % NA Bahrain Telecommunications Co % NA

7 Top 5 Losers Close* High* Low* Nass Corporation BSC % National Bank of Bahrain BSC % Ahli United Bank BSC** % Bahrain Duty Free Shop Complex % NA BBK BSC % NA Top 5 Volume Close* High* Low* Volume (mn) Ithmaar Bank BSC** % NA Gulf Finance House BSC** % NA Khaleeji Commercial Bank BSC % NA Al Salam Bank Bahrain BSC % NA Ahli United Bank BSC** % NA Top 5 Close* High* Low* Ithmaar Bank BSC** % NA Gulf Finance House BSC** % NA Ahli United Bank BSC** % BBK BSC % NA Bahrain Duty Free Shop Complex % NA Source: Reuters, Gulfbase & Global Research * Price data for stocks is in fils, **Price data in USD Market capitalization At the end of March, market capitalization of listed companies on the BSE index aggregated USD16.4bn compared to USD16.5bn over the same period the previous month. This was mainly driven by Ahli United Bank that slashed USD0.2bn from the total market capitalization during March. At the same time, National Bank of Bahrain and Aluminium Bahrain further cut USD0.12bn and USD0.01bn from the overall market capitalization, respectively. 7

8 Top 10 Listed Companies by Market Capitalization (in BHDbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% Ahli United Bank BSC % -10.0% Aluminium Bahrain BSC % -24.2% Bahrain Telecommunications Co BSC % -0.6% National Bank of Bahrain BSC % -2.5% Arab Banking Corporation BSC % -15.1% BBK BSC % 1.1% Al Baraka Banking Group BSC % -18.3% Ithmaar Bank BSC % 146.2% Investcorp Bank BSC % -16.1% United Gulf Bank BSC % -30.9% Total Market Capitalization (Top 10 stocks) % -9.1% Source: Reuters & Global Research 8

9 4-Mar 7-Mar 12-Mar 17-Mar 20-Mar 25-Mar 28-Mar in mn Global Research GCC Kuwait Better-than-expected earnings and improved outlook for spending lifts KSE to a two-year high The Kuwait Price index advanced 4.0%MoM in March to close at 6, The index has registered a year to date growth of 13.3%. During the month, the index rallied to the highest level in over two years buoyed by better-thanexpected earnings and hopes of increased government spending. The government spending hit KWD9.8bn in January 2013, up KWD1.6bn over December The rally was mainly driven by micro and mid cap stocks. However, the index corrected moderately in the last week of the month on profit booking. KSE Index and Volume Performance and Sectoral Performance 6,900 6,800 6,700 6,600 6,500 6,400 Volume (RHS) Index (LHS) KSE Real Estate Oil & Gas Parallel Market Health Care Financial Services Industrial Consumer Goods Basic Material Banks Insurance Utilities Consumer Services Telecommunication Technology -0.6% -3.5% -4.1% 4.0% 8.6% 5.5% 4.6% 4.2% 3.9% 3.6% 3.6% 3.1% 2.3% 0.4% 0.0% -15.0% -5.0% 5.0% 15.0% 25.0% Source: Kuwait Stock Exchange, Gulfbase & Global Research Sectoral Performance The Real Estate index was the best performer (up 8.6%) during the month, mainly driven by National Real Estate Co. (up 18.5%) and The Commercial Real Estate Co. (up 15.8%). The Commercial Real Estate Co. s net profit rose 3.9%YoY to KWD10.9mn in The Oil and Gas index gained 5.5% in March led by Contracting & Marine Services Co. (up 23.5%) and Gulf Petroleum Investment Co. (up 7.4%). Contracting & Marine Services net profit surged 9.5%YoY to KWD1.8mn in 2012; the company declared 5% bonus shares and 5% cash dividend for the year. The Healthcare index gained 4.2% driven by Yiaco Medical Co. (up 15.3%), which declared 10% cash dividend and 5% bonus shares for 2012 despite reporting flat earnings growth (net profit of KWD5.0mn). Financial Services (up 3.9%), Industrial (up 3.6%), Consumer Goods (up 3.6%) and Basic Material (up 3.1%) were the other sectors that experienced growth in March. Amongst the laggards, the Technology index declined 4.1% driven by Automated Systems Co. (down 18.8%), and the Telecommunication index fell 3.5% led by Zain (down 2.6%), National Mobile Telecommunications Co. (down 9.9%) and Hits Telecom Holding Co. (down 3.2%). All telecom companies reported poor results; net profit of Zain and National Mobile Telecommunications dropped 11.5% and 79.1%, respectively. Hits Telecom Holdings reported a net loss of KWD5.8mn in 2012 vis-à-vis profit of KWD0.2mn in Corporate earnings The Kuwaiti market witnessed a steady growth in its corporate earnings in 2012, maintaining the momentum gathered since Overall earnings grew 12.0%YoY in Earnings of heavyweight Banking sector grew 1.2%YoY with heavyweights National Bank of Kuwait, Kuwait Finance House and Burgan Bank registered a growth of 0.9%YoY, 9.1%YoY and 10.0%YoY, respectively. Telecommunications sector constituting 25.3% of KSE s earnings declined 50.3%YoY to USD1.1bn from USD2.3bn in Earnings growth of Mobile Telecommunications Co. which represents 78.3% of sector s earnings declined 11.5%YoY owing to impact of exchange rate fluctuations. In the Real Estate, Financial Services and Basic materials sectors, many companies are yet to report their full year financial results. As a result, the sectors are currently showing a decline in corporate earnings. 9

10 Corporate Earnings 2012 (%YoY) Total Kuwait 12.0% Oil & Gas 123.1% Insurance 41.1% Health Care Banks 5.2% 1.2% Industrials Consumer Goods -5.1% -7.7% Telecommunications -50.3% -60% -10% 40% 90% 140% Source: Gulfbase & Global Research, Data up till March 31, 2013 Trading activity surged Total volume traded and value surged 60.4%MoM to 15.1bn and 68.7%MoM to KWD4.0bn, respectively, in March The Financial Services index accounted for 42.3% of overall volume traded and 36.5% of total turnover in March. Total volume traded and value traded surged 94.2%MoM to 6.4bn and 100.8%MoM to KWD0.4bn, respectively. The Real Estate index contributed 35.2% to total volume traded and 25.0% to overall turnover. Total volume traded and value traded grew 41.8%MoM to 5.3bn and 74.0%MoM to KWD0.3bn, respectively. The Industrial index accounted for 9.7% of total volume traded and 13.8% of overall turnover. Total volume and value traded rose 21.8%MoM and 67.9%MoM, respectively. The Banking index contributed 6.1% to total volume traded and 13.6% to overall turnover. Total volume traded and turnover surged 131.8%MoM and 70.7%MoM, respectively. The Healthcare index experienced the maximum growth in volume traded (235.9%MoM) and turnover (526.5%MoM). KSE Trading Statistics Top 5 Top 5 Gainers Close* High* Low* Munshaat Real Estate Projects Co % Bayan Investment Co KSCC % NA Equipment Holding Co KSCC % NA Amwal International Investment Co % NA Mena Real Estate Co KSCC % NA

11 Top 5 Losers Close* High* Low* Wethaq Takaful Insurance Co % NA Industrial and Financial Investments % NA Kuwait Business Town Real Estate % NA Kuwait Commercial Market Comp % NA Al Madar Finance and Investment % NA USDbn) Top 5 Volume Close* High* Low* Volume (mn) Gulf Finance House BSC % , Investors Holding Group Co KSCC % NA 0.6 1, Gulf Investment House KSCC % NA 1.2 1, Abyaar Real Estate Development % NA National Ranges Co KSCC % NA Top 5 Close* High* Low* Gulf Finance House BSC % Gulf Investment House KSCC % NA Equipment Holding Co KSCC % NA Abyaar Real Estate Development % NA Investors Holding Group Co KSCC % NA Source: Reuters, Gulfbase & Global Research *Price data for stocks is in fils Market Capitalization At the end of March 2013, market capitalization of listed companies on the KSE index decreased 2.1%MoM to USD100.4bn. The fall was mainly led by National Bank of Kuwait (down 5.6%), National Mobile Telecommunications Co. (down 9.9%) Mobile Telecommunications Co. (down 2.6%), Ahli United Bank BSC (down 6.6%), Kuwait Finance House (down 2.5%) and Burgan Bank (down 3.7%). Total market cap of the top 10 listed companies declined 2.7%MoM to KWD16.7bn during the same period. 11

12 Top 10 Listed Companies by Market Capitalization (in KWDbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% National Bank of Kuwait SAK % -12.0% Mobile Telecommunications Co KSC % -10.4% Kuwait Finance House KSC % 2.5% Boubyan Bank KSC % 24.3% Gulf Bank KSC % -7.7% National Mobile Telecommunications Co KSC % 0.8% Al Ahli Bank of Kuwait KSC % -6.3% Commercial Bank of Kuwait SAK % -10.2% Ahli United Bank BSC % -7.6% Burgan Bank SAK % 25.4% Total Market Capitalization (Top 10 stocks) % -4.7% Source: Reuters & Global Research 12

13 3-Mar 6-Mar 11-Mar 14-Mar 19-Mar 25-Mar 28-Mar in mn Global Research GCC Oman MSM30 breaches 6,000 mark, reaching 22-month high during the month The MSM30 index rose a marginal 0.2%, up 14.1 points, in March. It registered an increase of 4.0% on year-to-date basis. The index gained momentum in the beginning of the month, breaching the 6,000 mark, and closed at 6,174.3 on March 26, 2013, a 22-month high. Growth was primarily due to rising optimism in global and regional markets along with strong macroeconomic fundamentals. Improved financial performance of MSM-listed companies, coupled with better-than-expected dividend announcements, raised investor confidence and led to an increase in market activity. However, the market contracted below 6,000 levels and closed at on March 31, 2013 due to effect of dividend adjustments. MSM30 - Index and Volume Performance and Sectoral Performance 6, , MSM % 6,100 6, Banking & Investment 3.1% 6, Services & Insurance 1.1% 5, Industrial -0.4% Volume (RHS) Index (LHS) -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% Source: Muscat Securities Market, Gulfbase & Global Research Sectoral Performance The Banking and Investment sector was the best performer (up 3.1%), followed by Services and Insurance, and Industrial. The Banking and Investment index advanced 3.1% during the month. Growth was led by heavyweight Bank Dhofar, which registered an 11.1%MoM increase in share price. On March 26, 2013, the bank received OMR26.1mn from HSBC Oman following a legal case, which was filed in 2011; this resulted in a rise in stock price (7.1%) in one trading session. Other top gainers include Transgulf Investment Holding Co. (19.8%), Al Batinah Development & Investment Holding Co. (35.2%) and Sharqiya Investment Holding Co. (25.9%). The Services and Insurance index gained 1.1% during the month, led by ACWA Power Barka (up 27.1%) and SMN Power Holding Co. (up 19.1%). Heavyweight Oman Telecommunications Co. and Oman Qatari Telecommunications Co. declined 2.4% and 1.3%, respectively. Oman United Insurance Co. s share price rose 13.5% on account of strong growth in profitability in 2012, attractive dividend yield and expectations that it would obtain license for Takaful insurance. The Industrial sector (down 0.4%) was dragged by Majan Glass Co. (down 18.5%), Gulf International Chemicals Co. (down 11.2%) and Oman Refreshment Co. Ltd. (down 9.5%). Al Anwar Ceramic Tiles Co., a major player in the index, registered an increase in share price (up 6.7%). Amongst cement majors, the share price of Oman Cement Co. declined 1.9%MoM, while that of Raysut Cement Co. rose 0.8%MoM. The stock price of National Aluminum Products Co. rose 28.2% driven by above average trading volumes. 13

14 Corporate earnings Corporate earnings in Oman increased 14.3%YoY to USD1.7bn in 2012, led by robust growth across all sectors barring Industrial. Financial sector, which contributed to 48.8% of the MSM s 2012 earnings, witnessed a strong 26.4%YoY growth in earnings in Services and Insurance sector, the next largest contributor to MSM s earnings (39.6%), grew 7.6%YoY. While heavyweight Oman Telecommunications (Omantel) witnessed a 4.1%YoY growth in net profit, Omani Qatari Telecommunications (Nawras) witnessed a 22.1%YoY fall in 2012 earnings. The earnings of Industrial sector on the other hand declined 4.2%YoY led by decline in earnings for National Aluminium Products Co. and National Gas Co. Increase in government expenditure led to an improved performance of cement majors. Corporate Earnings 2012 (%YoY) Total Oman 14.3% Banks & Investment 26.4% Services & Insurance 7.6% Industrial -4.2% -10% 0% 10% 20% 30% Source: Gulfbase & Global Research, Data up till March 31, 2013 Trading activity remains mixed Trading activity rose in March, with volumes increasing 7.3%MoM to 556.6mn shares from 518.6mn in February. On the other hand, value traded declined 1.3%MoM to OMR147.3mn vis-à-vis OMR149.3mn in the previous month. Gulf Investment Services was the most traded stock with a total volume of 100.8mn shares, while Bank Muscat continued to top in terms of value traded with OMR17.3mn. MSM30 Trading Statistics Top 5 Top 5 Gainers Close* High* Low* Al Batinah Development & Inv % NA Gulf Investment Services % National Aluminium Products % ACWA Power Barka SAOG % A Sharqiya Investment Holding %

15 Top 5 Losers Close* High* Low* Majan Glass Co SAOG % United Finance Co SAOG % Port Services Corporation % United Power Co SAOG 1, % 1, , Gulf International Chemicals % Top 5 Volume Close* High* Low* Volume (mn) Gulf Investment Services % Transgulf Investment Holding % Bank Sohar SAOG % Oman and Emirates Investment % Oman Investment and Finance % Top 5 Close* High* Low* Bank Muscat SAOG % Gulf Investment Services % Bank Sohar SAOG % Oman Investment and Finance % Oman Telecommunications Co 1, % 1, , Source: Muscat Securities Market, Gulfbase, Reuters * Price data in Baizas Market capitalization Total market capitalization of listed companies on MSM30 totaled OMR6.1bn at the end of March compared to OMR7.3bn in February. Majority of heavyweights, except Bank Dhofar (up 10.9%MoM to OMR463.5mn) and Raysut Cement (up 0.9%MoM), experienced a fall in market capitalization. Market cap of HSBC Bank Oman fell 7.2%MoM the most amongst the heavyweights while that of Shell Oman Marketing declined 3.8%MoM to OMR211.6mn. 15

16 Top 10 Listed Companies by Market Capitalization (in OMRbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% Bank Muscat SAOG % 14.0% Oman Telecommunications Co SAOG % 11.1% Bank Dhofar SAOG % -13.6% HSBC Bank Oman SAOG % 44.7% Omani Qatari Telecommunications Co SAOG % -11.5% National Bank of Oman SAOG % -0.7% Raysut Cement Co SAOG % 57.6% Shell Oman Marketing Co SAOG % 2.8% Ahli Bank SAOG % 13.7% Oman Cement Co SAOG % 20.8% Total Market Capitalization (Top 10 stocks) % 10.4% Source: Reuters, Zawya & Global Research 16

17 4-Mar 10-Mar 14-Mar 20-Mar 26-Mar in mn Global Research - GCC Qatar Qatar Exchange ends in the red The Qatar Stock Exchange gained 0.6% in March to close at 8,577.7 compared to in February. The index registered a year to date growth of 2.6%. The market remained range bound during the first week of the month, and experienced a rise in the second week on account of better-than-expected corporate results. However, profit booking by domestic institutions amid strong buying by foreign institutions kept the index range bound toward the end of the month. Market heavyweight Industries Qatar attracted investors interest as the company announced 85% cash dividend and 10% bonus issue. Qatar Index and Volume Performance and Sectoral Performance 8, QE 0.6% 8,600 8, Industrial Consumer Goods & Services Insurance Transportation 1.4% 3.4% 3.4% 7.3% 8,400 0 Banks & Financial Services Telecommunication -0.6% 1.1% Real Estate -5.1% Volume (RHS) Source: Zawya, Gulfbase & Global Research Index (LHS) -10.0% -5.0% 0.0% 5.0% 10.0% Sectoral Performance In March, growth in Industrial (up 7.3%), Consumer Goods and Services (up 3.4%), Insurance (up 3.4%), Transportation (up 1.4%) and Banks and Financial Services (up 1.1%) sectors was partially offset by a fall in Real Estate (down 5.1%) and Telecommunications (down 0.6%). The rise in the Industrial sector was led by Industries Qatar (up 3.9%), Gulf International Services (up 5.4%) and Qatar Electricity & Water (up 5.3%). Industries Qatar attracted the interest of investors as the company announced 85% cash dividend and 10% bonus issue. The decline in Real Estate index can be ascribed to a drop in stock prices of all real estate players: Ezdan Real Estate (down 5.0%), Barwa Real Estate (down 6.9%), United Development (down 2.1%) and Mazaya Qatar Real Estate Development (down 9.2%). Corporate earnings QE s corporate earnings fell 0.3%YoY in Consumer goods and Real Estate sector were the only losing sectors during the year, declining 9.7%YoY and 56.0%YoY, respectively. This offset the gains posted by heavyweights Banks & Financial Services and Industrial sector which grew 6.6%YoY and 10.1%YoY, respectively. Loan books of banks surged with increasing demand from public sector companies as well as from real estate and construction companies in the private sector. Growth in the sector was led by heavyweights Qatar National Bank (up 10.5%YoY) and Commercial Bank of Qatar (up 6.7%YoY). However, the sector s growth was restricted by Qatar Islamic Bank (down 9.2%YoY) and National Leasing Holding Co. (down 11.8%YoY). Industrial sector, representing 32.1% of the QE s earnings rose 10.1%YoY to USD3.3bn supported by government spending. 17

18 Corporate Earnings 2012 (%YoY) Total Qatar -0.3% Telecommunications 38.9% Industrial Banks & Financial Services Insurance Transportation 10.1% 6.6% 5.1% 5.0% Consumer Goods & Services -9.7% Real Estate -56.0% -70% -50% -30% -10% 10% 30% 50% Source: Gulfbase & Global Research, Data up till March 31, 2013 Trading activity declined during March Trading activity fell in terms of volume and turnover during March. Total volume traded dropped 14.4% to 106.8mn shares over February, and turnover contracted 11.0% to QAR4.7bn. The Industrial sector led trading value during the month, accounting for 30.7% (QAR1.4bn) of overall turnover, followed by Banking (30.5%; QAR1.4bn) and Consumer Goods and Services (11.2%; QAR0.5bn). Volume growth was driven by the Banks and Financial Services sector, which contributed 27.8% to total trading volume of 29.7mn, followed by Real Estate s contribution of 22.7% with trading volume of 24.3mn. QE Index Trading Statistics Top 5 Top 5 Gainers Close High Low Qatar General Insurance & Re % Gulf International Services QSC % Qatar Electricity and Water Co % Medicare Group QSC % Doha Bank QSC % Top 5 Losers Close High Low Dlala Brokerage & Investment % Qatar Islamic Insurance Co % Ahli Bank QSC % Qatar Cinema and Film Dist % Mazaya Qatar Real Estate %

19 Top 5 Volume Close High Low Volume (mn) Qatar Gas Transport Co Ltd % Barwa Real Estate Co QSC % Masraf Al Rayan QSC % Gulf International Services QSC % Industries Qatar QSC % Top 5 Close High Low Industries Qatar QSC % Qatar National Bank SAQ % Barwa Real Estate Co QSC % Qatar Gas Transport Co Ltd % Commercial Bank of Qatar % Source: Gulfbase, Reuters & Global Research Market capitalization At the end of March, total market capitalization of listed companies on the QE index grew 0.7% to USD129.0bn (QAR469.5bn) from USD128.1bn (QAR466.1bn) in February. The rise was primarily led by Industries Qatar, which registered a QAR3.7bn (up 3.9%MoM) increase in market cap, followed by Qatar National Bank (up QAR2.9bn; 3.2%MoM) and Qatar Electricity and Water Co (up QAR0.7bn; 5.1%MoM). The rise was restricted by a fall in market capitalization of Ezdan Holding Group (down QAR2.2bn; 5.1%MoM) and Commercial Bank of Qatar (down QAR2.5bn; 13.1%MoM). Total market cap of the top 10 listed companies increased QAR2.9bn (up 0.8%MoM) to QAR361.8bn during the same period. Top 10 Listed Companies by Market Capitalization (in QARbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% Industries Qatar QSC % 25.9% Qatar National Bank SAQ % -1.1% Ezdan Holding Group % -21.6% Qatar Telecom QSC % 18.2% Masraf Al Rayan QSC % -10.2% Qatar Islamic Bank SAQ % -7.8% Commercial Bank of Qatar QSC % -14.5% Qatar Fuel QSC % 21.4% Qatar Electricity and Water Co QSC % -3.6% Doha Bank QSC % -3.3% Total Market Capitalization (Top 10 stocks) % 2.5% Source: Reuters, Zawya & Global Research 19

20 2-Mar 5-Mar 10-Mar 13-Mar 18-Mar 23-Mar 26-Mar 31-Mar in mn Global Research GCC Saudi Arabia TASI posts a gain of 1.8% in March Saudi Arabia s Tadawul All-Share Index (TASI) closed 1.8% higher at in March The index registered an increase of 4.8% on year-to-date basis. Market movement during the month was supported by positive sentiments across global economies coupled with leads from domestic news flows. The listing of National Medical Care shares was a major event, with the stock closing 351.9% higher and witnessing strong volumes, representing 28.8% of the index volumes on the day of listing. The revision in Fitch Ratings for the Kingdom to Positive from Stable also boosted investor confidence. With the issuance of final regulations on the mortgage law and significant housing shortage in Saudi Arabia, the Real Estate index experienced significant gains, driving the overall performance of TASI. In the coming month, the performance is expected to be driven by earnings for the first quarter. The market is also expected to maintain its status quo, unless significant events take place on the global front. TASI - Index and Volume Performance and Sectoral Performance 7,200 7,150 7,100 7,050 7,000 6,950 6, TASI Retail Insurance Real Estate Development Hotel & Tourism Telecom & IT Petrochemical Industries Agriculture & Food Energy & Utilities Industrial Investment Building & Construction Cement Media and Publishing Transport Banks & Financial Services Multi-Investment -1.7% -2.2% -2.5% -2.5% -6.4% 1.8% 7.7% 7.5% 7.3% 5.3% 5.2% 4.4% 4.2% 3.4% 2.2% 0.5% Volume (RHS) Index (LHS) -10.0% -5.0% 0.0% 5.0% 10.0% Source: TASI, Gulfbase & Global Research Sectoral Performance On sectoral basis, the performance was led by Retail, Insurance and Real Estate indices. Heavyweight Petrochemical Industries gained 4.4% during the month, while Banking and Financial Services declined 2.5%MoM. The Retail sector (up 7.7%MoM) was the best performer, led by heavyweights Jarir (up 5.7%MoM) and Al Hokair (up 15.1%MoM). The Insurance index (up 7.5%MoM) was driven by one of TASI s top five gainers (Saudi Indian for Co-operative Insurance, up 117.2%MoM). Developments on the mortgage law resulted in the positive performance of the Real Estate index, which reached a 10-month high and closed at , up 7.3%; Taiba Holding (29.6%) and Saudi Real Estate (15.2%) were the leading performers. Further, industry heavyweight Jabal Omar s share price rose 14.3%.The Petrochemical industries performance was led by Advanced Petrochemical (up 10.2%) while heavy weight SABIC rose 4.6% and Tasnee was up 7.0%. Among losers, Banking and Financial Services fell 2.5% owing to a decline in stock prices of majority of banks. Al Rajhi Bank (down 4.0%) and The Saudi Investment Bank (down 9.0%) were the top losers. However, the Banking index gained 2.3% on year-to-date basis. With a decline in heavyweights Southern Province Cement (2.9%) and Saudi Cement (4.8%), the Cement index plunged 1.7% in March The Multi-Investment index (down 6.4%) was dragged by Kingdom Holding, which fell 16.6%. 20

21 Corporate earnings TASI s consolidated earnings remained flat and stood at USD25.5bn similar to the level witnessed in 2011.This was primarily due to the 16.8%YoY decline in earnings of petrochemical companies, which accounted for 35.4% of overall earnings in Performance of petrochemical firms continues to remain pressurized due to price volatility and weak demand. Saudi Basic Industries Corporation (SABIC), the leading player, reported a 15.5%YoY decline in earnings owing to higher cost of sales and lower price realizations. Heavyweight Banking sector, contributing to nearly 30% TASI s earnings, grew 11.9%YoY in Al Rajhi Bank, the leading lender in the Kingdom, registered a 6.9%YoY increase in earnings to USD2.1bn, representing 27.5% of the sector s total earnings. Telecommunication & Information Technology, the next largest contributor to TASI s earnings (12.1% of total earnings) grew at 6.8%YoY, led by improved performance of Etihad Etisalat Co. whose earnings grew 18.4%YoY in Cement companies in the Kingdom continue to enjoy robust demand given the increased focus on government expenditure Corporate Earnings 2012 (%YoY) Total Saudi Transport Building & Construction Media and Publishing Industrial Investment Insurance Hotel & Tourism Energy & Utilities Agriculture & Food Industries Banks & Financial Services Cement Telecommunication & Information Technology Multi-Investment Real Estate Development Retail Petrochemical Industries -11.9% -16.8% 0.0% 66.4% 58.4% 44.6% 35.1% 24.7% 16.7% 16.2% 11.9% 11.1% 6.8% 6.3% 5.4% 110.2% -40% -20% 0% 20% 40% 60% 80% 100% 120% Source: Gulfbase & Global Research, Data up till March 31, 2013 Trading activity remains mixed TASI experienced a decline in trading activity in March, reflecting the cautious mood of investors. Total volume traded declined 15.5% to 3.9bn shares during the month from 4.7bn shares the previous month. However, total turnover rose 3.1% to USD32.5bn (SAR122.0bn) in March. The Cement sector, which contributed to nearly 8.1% of volume traded, experienced a significant decline in trading volumes (69.0%). On the other hand, the Retail index witnessed a rise in volume traded (144.4%), led by the listing of National Medical Care. In terms of value traded, Insurance and Retail indices were the primary contributors, driven by National Medical Care (SAR14.5bn) and WAFA Insurance (SAR5.9bn). TASI Trading Statistics Top 5 Top 5 Gainers Close High Low National Medical Care Co JSC % , WAFA Insurance % NA , Saudi Automotive Services Co % Allianz Saudi Fransi Coop % Salama Cooperative Insurance % NA

22 Top 5 Losers Close High Low Al Alamiya for Coop. Insurance % Kingdom Holding Co % Northern Region Cement Co % , Al Baha Investment & Dev. Co % NA Dallah Healthcare Holding JSC % Top 5 Volume Close High Low Volume (mn) Dar Al Arkan Real Estate % Alinma Bank % Northern Region Cement Co % Mobile Telecommunications Co % NA Emaar The Economic City % Top 5 Close High Low National Medical Care Co JSC % , Saudi Basic Industries Corp % , WAFA Insurance % NA , Northern Region Cement Co % , Alinma Bank % , Source: TASI, Reuters & Global Research Market capitalization Total market capitalization of listed companies on TASI rose 1.5% to USD387.3bn (SAR1,452.5bn) at the end of March from USD381.6bn (SAR1,431.1bn) in February. The increase was mainly driven by sector heavyweights Petrochemical Industries (4.5%). However, a decline in other heavyweights Banking (2.3%) and Cement (2.5%) limited TASI s increase to just 1.5%. In the Petrochemical Industries sector, SABIC rose to USD76.8bn (SAR288.0bn), while Al Rajhi Bank declined USD1.1bn (SAR4.1bn) in the Banking sector. The Retail sector market capitalization increase of 16.8% was on account of new listing. 22

23 Top 10 Listed Companies by Market Capitalization (in SARbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% Saudi Basic Industries Corp % -15.0% Al Rajhi Banking and Investment Corp % -17.2% Saudi Telecom Co % -2.2% Etihad Etisalat % 24.7% Kingdom Holding Co % 61.8% Saudi Electricity Co % -14.7% Saudi Arabian Fertilizers Co % 7.1% Samba Financial Group % -21.1% Riyad Bank % -9.7% Saudi British Bank % -9.0% Total Market Capitalization (Top 10 stocks) % -6.5% Source: TASI, Gulfbase & Global Research Saudi Arabia experiences continued IPO activity in 2013 Saudi Arabia continued to experience IPO activity in After Northern Region Cement Co. s listing in February, National Medical Care got listed during March The company had announced its IPO on February 10, offering 13.5mn shares at a price of SAR27.0 per share. 23

24 3-Mar 10-Mar 17-Mar 24-Mar in mn Global Research GCC UAE Abu Dhabi Market closed flat in March Abu Dhabi s ADX index remained relatively flat in March, declining 0.6% after a rise of 5.7% in February and 9.5% in January. In the absence of adequate catalysts, the index went through cycles of profit booking and subsequent recovery throughout the month. The index experienced a sharp drop to the level of 2,970 at the beginning of the second week, as investors engaged into profit booking in Banking and Services sectors. However, it recovered quickly thereafter, breaching the 3,000 mark again, gaining support from Industrial and Services sectors. Soon, the Banking sector joined to push the index to the month s highest level of 3,037. Meanwhile, a discussion between the ADX index and the Korea Exchange (KRX) regarding a MoU provided further support to the market. The discussion resulted in positive outcomes on the activities of setting up exchange traded funds on the ADX index, dual listing of companies, Central Counterparty Clearing and development with other bourses. As a result, the market remained buoyant until the third week. At the same time, the ADX index carried out a discussion with the Qatar Exchange (QE) to improve cooperation between the two. However, the index lost its momentum again as investors engaged into profit booking. Nonetheless, the index received a last moment push from the Consumer sector, which helped it remain above the 3,000 level at the end of the month. ADX Index and Volume Performance and Sectoral Performance 3, ADX -0.6% 3,050 3,000 2, Consumer Banks Services Inv. & Fin. Serv. Insurance Industrial -0.6% -2.7% 3.5% 2.2% 2.1% 0.0% 2,900 0 Telecommunication Energy Real Estate -13.3% -4.4% -6.2% Volume (RHS) Index (LHS) -15.0% -10.0% -5.0% 0.0% 5.0% Source: ADX Stock Exchange & Global Research Sectoral Performance Five of eight sectors posted losses in March, offsetting gains by heavyweights Banks, Consumer and Services. National Bank of Abu Dhabi (NBAD), up 7.6%MoM, led the Banks sector, mainly on the approval of a cash dividend of 35%. Abu Dhabi Commercial Bank and First Gulf Bank also rose 3.2%MoM and 3.0%MoM, respectively. Emirates Foodstuff & Mineral Water (AGTHIA), up 8.2%MoM, was the sole gainer in the Consumer sector. AGTHIA s net profit grew 45% in 2012; it announced a 5% cash dividend at the end of February that helped the sector gain in March. The Services sector (+2.1%MoM) was led by Abu Dhabi National Hotels (7.7%MoM), followed by Abu Dhabi Aviation (4.9%MoM) and National Corp. for Tourism & Hotels (3.5%MoM). Among the laggards, the Real Estate sector fell the most (13.3%MoM), followed by Energy (6.2%MoM) and Telecommunication (4.4%MoM) sectors. The Real Estate sector was the worst hit as investors engaged in profit booking after experiencing a strong rally in the previous two months. Moreover, investor sentiment was slightly dampened due to a fall in oil prices in the US; this further triggered a sell-off situation in the index. The Real Estate sector fell during March, led by heavyweights Al Dar Properties (11.7%MoM) and Sorouh (13.2%MoM). 24

25 Trading activity fell sharply Trading activity on the ADX declined sharply in March. Total trading volume dropped 50.4%MoM to 2.2bn shares in March from 4.5bn shares in February. Meanwhile, total value of shares traded during the month fell 36.7%MoM to USD0.9bn from 1.4bn in February. Total number of trades also plunged 30.3%MoM to 26,540 from 38,064 in February. ADX Trading Statistics Top 5 Top 5 Gainers Close High Low Ras Al Khaimah Ceramics PSC % Insurance House PSC % NA Oman and Emirates Investment % Union Cement Co PSC % Agthia Group PJSC % Top 5 Losers Close High Low Abu Dhabi Ship Building PJSC % Ras Al Khaimah Cement Co PSC % NA RAK Properties PJSC % Invest Bank PSC % Commercial Bank International PSC % Top 5 Volume Close High Low Volume (mn) Eshraq Properties Co PJSC % Aldar Properties PJSC % RAK Properties PJSC % Sorouh Real Estate Co PJSC % Dana Gas Co PJS % Top 5 Close High Low Eshraq Properties Co PJSC % Aldar Properties PJSC % Emirates Telecommunication Corp % First Gulf Bank PJSC % Sorouh Real Estate Co PJSC % Source: Reuters, Gulfbase & Global Research 25

26 Market capitalization At the end of March 2013, market capitalization of companies listed on the ADX index aggregated USD78.1bn visà-vis USD79.6bn during the same period the previous month. Emirate Telecommunications lost USD1.0bn (down - 4.5%MoM) while real estate majors Aldar Properties and Sorouh Real Estate lost 11.7%MoM and 13.2%MoM, respectively. On the other hand, National Bank of Abu Dhabi added USD0.9mn to the total market capitalization, followed by First Gulf Bank (USD0.3mn) and Abu Dhabi Commercial Bank (USD0.2mn). Total market cap of the top 10 listed companies increased 0.5%MoM to AED235.7bn during the same period. Top 10 Listed Companies by Market Capitalization (in AEDbn) Mar-2013 Feb-2013 Mar-2012 MoM% YoY% Emirates Telecommunication Corp Ltd % 9.1% National Bank of Abu Dhabi PJSC % 42.0% First Gulf Bank PJSC % 43.8% Abu Dhabi Commercial Bank PJSC % 33.4% Union National Bank PJSC % 26.9% Abu Dhabi National Energy Co PJSC % 0.8% Abu Dhabi Islamic Bank PJSC % 6.9% National Bank of Ras Al Khaimah PSC % 21.0% Aldar Properties PJSC % 22.3% Sorouh Real Estate Co PJSC % 41.0% Total Market Capitalization (Top 10 stocks) % 24.0% Source: Reuters & Global Research 26