Equity Weekly. Weekly 7 December Global Equities. MENA Markets. MENA Equity Indices (wtd % chg)

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1 Equity Weekly Global Equities Global equities consolidated its recent gains as the recovery momentum in the US continued with impressive non-farm payrolls data and as the ECB seems to remain on track to start QE. The MSCI World index (-0.1% 5d) declined marginally on the back of weakness in the MSCI Emerging Markets index (-1.9%) and the S&P Pan Arab Composite index (-1.9% 5d). G7 equity markets held on their recent gains with the MSCI G7 index adding +0.1% 5d. Volatility declined in developed markets with the VIX index and the V2X index declining -11.3% 5d and -9.4% 5d respectively. However it increased in Asia with the VHSI index adding +18.4% 5d. Weekly 7 December The focus of investors will remain on economic data and the next Fed meeting as the year winds down. Locally, investors will keep an eye on oil prices and global trends amid a lack of local catalysts. The Dubai Parks & Resorts IPO is scheduled for listing on 10 December and its performance will be keenly watched given disappointing listing of Amanat Holdings last week. MENA Markets GCC equities traded lower last week as a sharp decline in oil prices, following OC s decision to not reduce production and let prices find their floor, spooked investor sentiment. The S&P Pan Arab Composite index declined -1.9% for the week. The DFM index (-8.5% wtd) led UAE bourses lower in what was a truncated week on account of National Day holidays. Emaar Properties declined -8.5% over the week as the stock went ex-dividend which in effect removed the catalyst for investors to hold the stock in the immediate term amid heightened volatility. Air Arabia (+6.2% wtd) traded higher as lower oil prices built on an already positive sentiment around the stock following its Q3 earnings. Arabtec declined -5.5% over the week but as per data from the DFM it seems Aabar has been supporting the stock in open market. Aabar increased its stake in Arabtec from 34.93% to 35.27%. MENA Equity Indices (wtd % chg) TUSISE 0.2% MADEX -1.3% DSM -4.4% MSM -5.2% Bahrain -1.1% KWSE -3.0% EGX % Aditya Pugalia Analyst adityap@emiratesnbd.com ISE 100 Tadawul ADX -1.1% -1.1% -2.0% DFM -7.2% -8% -6% -4% -2% 0% 2% Source: Bloomberg

2 Last week, the Tadawul (-1.1% wtd) showed encouraging signs of return of retail investor appetite following a couple of weeks of volatile trading. The index recovered most of its early week losses to inch close to 9,000 levels. The interest of retail investors was evident in sharp rally in insurance stocks with the sector adding +5.0% over the week. Telecom stocks continue to remain a drag on the index with reports of an arbitration request in the Zain KSA and Etihad Etisalat dispute. Both stocks closed lower with Zain KSA losing 16.5% and Etihad Etisalat dropping -6.8% over the week. Elsewhere, the EGX 30 index added +1.7% over the week to become the second best performing equity market in the world with gains of +36.0% ytd in USD terms. There was no real news except the general refrain that lower oil prices should help the economy. Developed Markets Most developed equity markets traded higher as strong non-farm payrolls data from the US overshadowed a non-committal ECB meeting. The S&P 500 index added +0.4% 5d, the Euro Stoxx 600 index gained +1.1% 5d while the Nikkei index rallied +2.6% 5d. European equities closed higher even though the ECB President Draghi said that the central bank would wait until next year to decide on the stimulus. However, there was enough in the press briefing to suggest that the QE is more of a question of how and when rather than if. For example, the language surrounding balance sheet expansion was changed from expected to intended. Japanese equities continue to benefit from lower yen as the JPY breached levels and as opinion polls indicated that Prime Minister Abe is on track to secure an easy win in elections scheduled for 14 December. Emerging Markets Emerging market equities underperformed broader equity markets with the MSCI Emerging Markets index losing -1.9% 5d compared to a drop of -0.1% in the MSCI World index. The decline in emerging markets was led by weakness in Brazil s Bovespa index (-5.0% 5d) and the MSCI Russia index (-7.0% 5d). The Shanghai Composite index was a notable exception with gains of +9.5% 5d. The sharp rally in Chinese equities was its biggest one-week rally in seven years. While the market lacked any specific catalysts, there was a lot of focus on a surge in new investors, trading volume and margin buying. According to a report from Reuters, retail investors opened over 1 million new brokerage accounts last months, up 280% y/y. Official data also showed that last week on Wednesday, combined trading volume on the Shanghai and Shenzhen markets increased to an all-time high of CHY 897.7bn. Similarly, the outstanding amount of money investors borrowed for margin trading reached a record CHY bn last week from CHY bn at the start of the year. The market also received a boost from reports that the central bank is closer to cutting the reserve ratio requirements for the first time since 2012 following a surprise rate cut late last month. Page 2

3 Market Data MENA Equity Indices Index Last Price wtd % chg T.Value 5d avg (USDmn) P/E P/B Div Yield % above 200d MA DFM 4, % (USD mn) ADX 4, % Tadawul 4, % 2, ISE , % 2, EGX 30 9, % KWSE 6, % Bahrain 1, % MSM 6, % Qatar Exchange 12, % MADEX 8, % TUSISE 4, % Developed Market Indices Dow Jones 17, % 5, S&P 500 2, % 30, Nasdaq 4, % 18, FTSE 100 6, % 6, Dax 10, % 4, Cac 40 4, % 4, Swiss 9, % 2, Nikkei 17, % 12, Australia 5, % 3, Stoxx % 32, Emerging Market Indices Hong Kong 24, % 5, Shanghai 2, % 80, Korea 1, % 3, Sensex 28, % Nifty 8, % 1, Karachi 32, % Taiwan 9, % 2, Bovespa 51, % 1, Micex 1, % Jo'burg 1, % 1, Vietnam % Jakarta % Source: Bloomberg, Bloomberg Estimate Page 3

4 Relative Valuations Benchmark Equity Indices Index Last Price wtd % chg 1m % chg Ytd % chg P/E P/B Div Yield MSCI World 1, % 1.8% 4.7% MSCI G7 1, % 2.0% 5.7% MSCI EM % -0.2% -1.7% MSCI FM % -2.0% 6.1% S&P Pan Arab % -5.5% 5.2% DUAE INDEX 4, % -1.5% 20.4% DKUW INDEX 3, % -3.5% -1.2% DQAT INDEX 6, % -6.5% 9.5% DKUS INDEX 2, % -4.8% -7.6% DQAS INDEX 9, % -6.0% 15.0% Relative to S&P Pan Arab Composite Index Index PB Dvd Yield Index PB Dvd Yield DFM 10.6% -5.5% 31.3% Bahrain % ADX -9.2% 3.5% -3.1% MSM -25.3% -23.6% 24.0% Tadawul 1.1% 10.0% -12.0% Qatar 6.0% 33.0% 2.0% KWSE % Exchange TUSISE 107.3% #VALUE! -62.7% Relative to MSCI G7 Index Dow Jones -5.1% 36.3% -4.2% Cac % -33.4% 40.4% S&P % 22.9% -15.2% Swiss 7.1% 21.2% 36.0% Nasdaq 42.8% 63.3% -52.3% Nikkei 18.1% -21.4% -34.6% FTSE % -17.5% 67.4% Australia -10.6% -15.4% 112.4% Dax -15.1% -23.9% 26.7% Stoxx % -18.4% 47.1% Relative to MSCI Emerging Market Index Hong Kong -10.2% -10.3% 40.5% Jo'burg 24.1% 36.5% 14.9% Shanghai -1.8% 11.1% -15.7% Vietnam 9.4% 42.5% 37.1% Korea 9.5% -25.6% -59.8% Jakarta 40.4% 98.3% -28.1% Sensex 46.2% 85.5% -47.7% Nifty 45.4% 85.0% -49.9% Karachi -28.3% 26.3% 71.6% Taiwan 15.5% 21.4% 17.9% Bovespa -3.4% -13.9% 67.8% Micex -60.9% -63.6% 46.2% Source: Bloomberg, Bloomberg Estimate Page 4

5 ROA ROA ROA Relative Valuations MENA Equity Indices / E MSM ISE 100 Tadawul EGX 30 y = x R² = MADEX DSM ADSMI DFMGI MENA Equity Indices PB/ROA E y = x R² = ISE 100 EGX 30 MSM PB DSM ADSMI DFMGI Tadawul MADEX D. Market Equity Indices / E D. Market Equity Indices PB/ROA E Dow Jones Dow Jones S&P 500 Nikkei S&P 500 Nasdaq 14.0 AS51 Index 12.0 Dax SMI FTSE 100 Nikkei 10.0 Cac Stoxx y = x R² = Stoxx 600 Dax Cac AS51 Index y = 1.127x R² = FTSE PB SMI E. Market Equity Indices / E Shanghai Karachi HSI Bovespa 5.0 Micex y = x R² = Jakarta Nifty Sensex Jo'burg Vietnam E. Market Equity Indices PB/ROA E y = x R² = Micex HSI Karachi Vietnam Nifty Shanghai Bovespa PB Sensex Jo'burg Jakarta Source: Bloomberg Page 5

6 Key Indicators Top Dividend Yielding Stocks GCC* Stock Price (LCL) M. Cap (USD) Dvd Yld P/E P/B Etihad Etisalat b 9.57% Yansab b 7.68% Safco b 7.30% Doha Bank b 7.28% Saudi Industrial Investment b 6.92% Etisalat b 6.69% NIC b 6.68% Sipchem b 6.44% *Stocks whose average daily value traded over 20 days exceeds USD 5mn are only included Source: Bloomberg Page 6

7 Stocks Avg Value Dvd Traded Price Market Cap PB ROA Yld DvdYl 3m (USD Company LLC (USD mn) d RSI mn) Telecom Sector Global Telecom Telecom Egypt NMTC Zain Oredoo Etihad Etisalat STC Zain KSA Etisalat Du Average Petrochemicals & Fertilisers Sector IQ Sahara Petchem Sabic SIPCHEM Saudi Kayan Sidi Kerir Petchem Yansab Chemanol APPC Safco Ma'aden Tasnee Average Food & Retail Sector Almarai Othaim Alhokair Jarir Marketing Savola Agthia Average Page 7

8 Stocks Avg Value Dvd Traded Price Market Cap PB ROA Yld DvdYl 3m (USD Company LLC (USD mn) d RSI mn) Real Estate Sector Aldar Barwa Real Estate Dar AL Arkan Deyaar Development Emaar Economic City Emaar Properties TMG Holding Palm Hill Developments Average Banking & Financials Sector CIB Al Rajhi Bank Samba Riyad Bank Bank Aljazira NBK Burgan Bank DIB NBAD FGB ADCB QNB CBQ DB QIB Bank Muscat DFM EFG Hermes Dubai Investments Average Page 8

9 Stocks Avg Value Dvd Traded Price Market Cap PB ROA Yld DvdYl 3m (USD Company LLC (USD mn) d RSI mn) Energy & Utilities Sector Dana Gas QEWC Saudi Electricity Tabreed Average Industrials Sector El Ezz Steel Rebars Elswedy ElectriC GB Auto Oriental Weavers Saudi Arabian Amiantit Saudi Cable KIPCO Average Transport & Logistics Sector Air Arabia Aramex DPW National Shipping Co Agility QGTS Average Construction & Building Materials Arabtec Depa DSI OCIC Average Source: Bloomberg, Bloomberg Estimate Page 9

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11 Emirates NBD Research& Treasury Contact List Emirates NBD Head Office 12thFloor Baniyas Road, Deira P.OBox777 Dubai Aazar Ali Khwaja Group Treasurer & EVP Global Markets & Treasury aazark@emiratesnbd.com Tim Fox Head of Research & Chief Economist timothyf@emiratesnbd.com Research Khatija Haque Head of MENA Research khatijah@emiratesnbd.com Jean Paul Pigat Economist jeanp@emiratesnbd.com Aditya Pugalia Analyst adityap@emiratesnbd.com Anita Yadav Head of Fixed Income Research anitay@emiratesnbd.com Sales & Structuring Group Head Treasury Sales Tariq Chaudhary tariqmc@emiratesnbd.com London Sales Lee Sims +44 (0) simsl@emiratesnbd.com Athanasios Tsetsonis Sector Economist athanasiost@emiratesnbd.com Saudi Arabia Sales Numair Attiyah numaira@emiratesnbd.com Egypt Shahinaz Foda shahinaz.foda@bnpparibas.com Singapore Sales Supriyakumar Sakhalkar supriyakumars@emiratesnbd.com Group Corporate Affairs Ibrahim Sowaidan ibrahims@emiratesnbd.com Claire Andrea clairea@emiratesnbd.com Investor Relations Patrick Clerkin patricke@emiratesnbd.com Page 11