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Slide 1: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 MENA MARKETS For additional information or requests or to be added to the distribution list, please contact Samir Tiwari VP – Sales & Marketing +912261567304 stiwari@tresvista.com 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. GCC Overview Saudi Arabia Kuwait UAE Egypt Oman Jordan Morocco Bahrain Qatar Tunisia Lebanon M&A 1 Month Inde x Pe rformance 115.0 110.0 105.0 100.0 95.0 Country Saudi Arabia Kuwait UAE Egypt Oman Jordan Morocco Bahrain Qatar Tunisia Lebanon Abu Dhabi Close 5,596.5 8,080.3 2,631.3 529.0 5,612.2 2,735.2 11,588.5 1,581.7 6,491.7 3,677.5 1,429.9 2,631.3 % Change (5.0%) (0.9%) (1.8%) (2.8%) 2.0% (4.5%) 5.1% (2.5%) (7.0%) 7.8% 21.4% (1.8%) 90.0 31-05-09 05-06-09 10-06-09 Kuwait 15-06-09 UAE Egypt 20-06-09 25-06-09 30-06-09 Saudi Arabia GLOBAL MARKETS 1 Month Index Performance 108.0 106.0 104.0 102.0 100.0 98.0 Country USA USA USA EURO London Japan China Index Dow Jones S&P 500 NASDAQ DJ Euro Stoxx FTSE 100 NIKKEI 225 HANG SENG Close % Change 8,447.0 (0.6%) 919.3 1,835.0 2,398.0 4,249.2 9,958.4 18,378.7 0.0% 3.4% (1.6%) (3.8%) 4.6% 1.1% Market Buzz… 96.0 94.0 31-05-09 05-06-09 10-06-09 15-06-09 20-06-09 25-06-09 30-06-09 Dow Jones Industrial FT SE 100 Hang Seng S&P 500 DJ Euro Stoxx NASDAQ Composite Nikkei 225 COMMODITIES / CURRENCIES Commodity LME Crude Gold Silver LME Steel Open $63.32 $979.15 $15.74 € 375.00 Close % Change $69.99 10.5% $926.60 (5.4%) $13.61 (13.6%) € 375.00 0.0% Currency (USD/) GBP EUR SAR KWD Open 0.618 0.706 3.750 0.287 Close % Change 0.608 1.6% 0.713 (0.9%) 3.750 0.0% 0.288 (0.2%) GCC Snapshot …According to the International Air Transport Association (IATA), airlines based in the Middle East stand to lose a total of USD 1.5 billion in 2009, in spite of strong passenger traffic growth in the region. Middle Eastern carriers as a group last showed a combined profit in 2005. IATA’s updated estimate marks a 50.0% increase from the USD 1.0 billion loss that regional carriers showed in 2008… - Four Gulf Arab states signed a pact creating a pared – down monetary union with Saudi Arabia at its centre, after the United Arab Emirates became the second country to abandon the project last month. It comes as a confidence – building measure after the shock decision by the UAE, the second – largest Arab economy, to leave the plan in protest after a May 5 decision to base the joint central bank in the Saudi capital Riyadh - Plans by Gulf Arab states to launch a single currency could be delayed by three years to 2013. It is impossible for the single currency to be launched within six months - Demand for gas in the GCC is forecast to grow at 6.7% annually from 2007 to 2012, compared to a roughly 3.0% growth in oil demand during the same period, according to the organizers of OGS 2009, the 16th edition of the oil, gas, renewable energy, and automation event - Professional expatriates would be able to hold dual residency in GCC countries under a move recommended by the ‘Gulf nations’ immigration heads at a meeting in Abu Dhabi. The dual residency applies to ‘first – degree’ professionals, such as doctors, engineers, accountants, PR agents, and businessmen. The new system would make it easier for companies with branches in any GCC country to deploy their professionals - GCC investors invest an estimated USD 45.0 billion in currency trading monthly and the UAE has a share of 30.0%, or USD 13.5 billion. The number of individual investors in the currency trading since the beginning of 2009 is expected to be 4,500 in the region, including 1,350 UAE nationals and UAE – based foreign investors - According to Economic Intelligence Unit, the Middle East and Africa region is expected to grow at a modest 1.0% in 2009 and a more robust 4.4% in 2010. The UAE and other GCC countries would be among the first to emerge from the global meltdown thanks to oil revenues Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 1
Slide 2: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 Saudi Arabia Sectors 6,200.0 SASEIDX Index 5,900.0 5,600.0 5,300.0 5,000.0 6-3-09 6-6-09 5-31-09 6-9-09 6-12-09 6-15-09 6-18-09 6-21-09 6-24-09 6-27-09 6-30-09 1 Month Inde x Performance CAGR (5.0%) % ▼▲ (3.4%) (8.1%) (1.3%) 1.0% Company Top 5 Gainers: Weqaya Takaful Insurance Saudi Ceramics Abdullah Al Othaim Markets Fitaihi Group Holding Mediterranean And Gulf Cooperative Top 5 Losers: Jarir Mareting Saudi Industrial Export Sahara Petrochemical Saudi Investment Bank Al Gassim Agricltural % Change Telecom Banking Cement Insurance 182.0% 34.9% 31.4% 29.4% 28.7% (26.8%) (20.0%) (19.8%) (19.0%) (17.2%) Macro Economic News ▲ Saudi Arabia is offering USD 500.0 billion in investment opportunities over the next five years, according to the Council of Saudi Chambers of Commerce and Industry secretary general, Dr Fahad Saleh A. AlSultan. The sectors that need development are education, health, telecommunication infrastructure, agriculture, and railways. ▲ A sharp rise in oil revenue boosted Saudi Arabia’s budget surplus to a record high level in 2008 and decreased Saudi Arabia’s public debt to only 13.5% at the end of 2009. This means the Kingdom's public debt fell to SAR 236.0 billion at the end of last year. ▲ The Saudi Shura Council has approved modernizing the state – run Real Estate Development Fund and increasing of its capital to SAR 200.0 billion, from the current SAR 91.0 billion. ▼ Inflation in Saudi Arabia rose for the first time in 2009 to 5.5% in May, compared with 5.2% in April. Rising rents and house – related services continued to drive inflation in the Kingdom, increasing 17.7% and 33.6% respectively from the same period in 2008. ▼ Saudi Arabia's foreign assets continued to decline for the sixth straight month in May 2009, but at a slower pace, after almost a decade of steady growth driven by rising oil prices. Foreign assets controlled by the Saudi Arabian Monetary Agency, the kingdom's central bank, declined 1.1% to ~SAR 1.5 trillion (USD 395.5 billion) in May 2009, compared to a month earlier. Government Regulations - The Saudi market regulator has told shareholders owning stakes of 10.0% or more in local companies that they should receive its authorization before they sell or transfer the ownership of these stakes. The Capital Market Authority has also instructed shareholders that they should inform it and inform the company in which they own the stake of any change in their purpose for holding a stake in the company. Sector News ▲ Saudi Arabia's banks made ~SAR 11.3 billion (USD 3.0 billion) in net profits in the first four months of 2009 despite a sharp slowdown in their lending activity because of the global credit crunch, according to official figures. ~SAR 3.1 billion in net earnings were recorded in April 2009, the second highest profits after the SAR 3.6 billion achieved in January 2009, showed the figures by the Saudi Arabian Monetary Agency ▲ Mobile broadband is presenting an astounding subscriber growth in Saudi Arabia, according to figures released by Etihad Etisalat. After 24 months of operations, Mobily said it has 600,000 mobile broadband subscribers presenting 126.0% uptake on 2008 year end results of 266,000 subscribers and 445.0% growth compared to Q2 2008 results. ▲ At a symposium of the Chamber of Commerce in Dammam, Saudi Arabian General Investment Authority expects investments, in the Saudi power and energy sector as well as economic cities, could reach SAR 300.0 billion. ▼ Non – performing loans at Saudi banks are likely to peak by 2010 – 2011 while the asset quality is expected to deteriorate further, according to a Bank of America – Merrill Lynch report. NPLs at the top three Saudi banks are projected to double from 1.1% to 2.5% by 2010 as the full extent of the poor macro economic scenario feeds through. The Saudi banking sector will see deterioration in asset quality in line with the cyclical downturn but this will not be part of a systemic problem. Company News ▲ State oil company Saudi Aramco is inviting contractors to bid for the main construction packages on its second USD 10.0 billion-plus export refinery project in 2009, following the award of a raft of contracts on its Jubail refinery in the third week of June 2009. ▲ Saudi Aramco and Dow Chemical have decided to go ahead with their JV to set up a petrochemical complex and expand the Ras Tanura refinery at a total cost of more than USD 22.0 billion. ▲ Saudi Electricity Co. plans to spend USD 28.0 billion in the next three years to meet rising demand in the Saudi Arabia. Saudi Electricity also plans to invest USD 70.0 billion by 2018 to add 25,000.0 MWs and match demand spurred by a USD 400.0 billion, five – year government – spending programme and a growing population. The kingdom’s electricity use may quadruple to 140.0 GWs a year by 2032. ▲ Saudi developer Al – Rayadah Investments has invited contractors to prequalify for an infrastructure contract at its SAR 36.0 billion (USD 9.6 billion) King Abdullah Financial District development on the outskirts of Riyadh. …The MENA equity markets continued their upward trend in May 2009, with the broad regional index gaining 12.4%, thanks to resurgent oil prices, improving investor sentiment and positive corporate news. Last month’s gains brought the total gains in the MENA stock markets since January 2009 to 15.0%... Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 2
Slide 3: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 Liquidity / Capital raising …Gulf oil producers are still hopeful the UAE will eventually join the monetary union they plan to launch, possibly next year, despite the country's decision last month to withdraw… - Saudi Arabia’s Capital Market Authority approved Dar Al Arkan’s request to increase its capital by 50.0% to SAR 10.8 billion. - Saudi Arabian Monetary Agency, Saudi’s Central Bank, has lowered its overnight reverse repo rate by 25 bps to 0.25%, in an attempt to spur lending by local banks. - The annual growth of M3, the broadest measure of money circulating in the Saudi Arabian economy, was 16.9% in May 2009 down from 18.3% in April 2009. - Saudi Electricity Company sold SAR 7.0 billion Islamic bonds, priced at 160 bps over the three – month Saudi interbank offered rate. The company also announced that its sukuk was three times oversubscribed. - Saudi Arabia is unlikely to cut its benchmark lending rate in Q3 2009; the kingdom's central bank sought to boost lending by halving the rate it pays to commercial banks for deposits. Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 3
Slide 4: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 Kuwait 1 Month Index Pe rformance CAGR (0.9%) 8,600.0 KWSEIDX Index 8,400.0 8,200.0 8,000.0 7,800.0 6-3-09 6-6-09 5-31-09 6-9-09 6-12-09 6-15-09 6-18-09 6-21-09 6-24-09 6-27-09 6-30-09 Sectors Insurance Banks Food Service Real Estate Industries Investment % ▼▲ 0.7% (2.1%) (0.6%) (1.2%) (3.7%) 2.6% (1.6%) Company Top 5 Gainers: Gulfinvest International Advanced Technology Hayat Communications Boubyan Bank Ifa Hotels And Resorts Top 5 Losers: Arab Insurance Group Gulf Rocks Al Mowasat Holding Palms Agro Production Future Kid Enertainment And Real Estate % Change 193.3% 45.9% 42.2% 40.7% 35.6% (47.5%) (30.3%) (28.0%) (24.1%) (19.5%) Macro Economic News ▼ Moody’s affirmed Kuwait's sovereign rating, but with a negative outlook due to the political feud in the country that sparked worries about its ability to deal with the economic crisis. ▼ Kuwait is predicted to stay in surplus in 2009 but at levels of about 40.0% of those in 2008, according to National Bank of Kuwait. According to the Central Bank of Kuwait, oil exports in Q4 2008 dropped 41.0% from their level in Q4 2007, and further by 56.0% in Q1 2009. ▼ The National Assembly approved the FY 2009 – 2010 state budget which projects revenues of KWD 8.1 billion (USD 27.9 billion), down 36.0% from USD 43.8 billion of budgeted income previously. Projected spending is slashed by 36.2% to KWD 12.1 billion (USD 41.7 billion) from USD 65.4 billion previously. – Kuwaiti citizens are expecting new initiatives from the government to help diversify the economy. With Kuwait's GDP being heavily dependent on oil revenues, the economy might post its largest decline in 2009, according to the International Monetary Fund. With oil prices approaching USD 70.00 recently, a budget surplus of 12.3% of GDP should be possible. …With investors globally holding more than USD 1.5 trillion in Shariah – compliant investments, there is a need to create adequate and straightforward regulation for Islamic investment instruments that industry players can use to grow their activities… Sector News ▲ Kuwait's local real estate business went up by 10.0% in May 2009. The housing sector witnessed a notable rise of 20.0% in supply in May at suburbs adjacent to the capital city, according to a report, released by a local property company. ▲ A Kuwaiti governmental committee that supervised projects built on state property gave preliminary approval for the creation of an electric power plant at a total cost of KWD 300.0 million (USD 1.0 billion). The project is expected to be launched in mid 2010 and the plant, which will have a production capacity of 1,000.0 megawatts. ▼ The huge losses sustained by the investment sector resulted in aggregate corporate earnings in Kuwait declining by 50.0% for 2008 and resulted in a 25.0% decline in aggregate GCC corporate earnings on an annual basis. - The board of the Central Bank of Kuwait (CBK) approved the implementation of the amended capital adequacy ratio (Basel II) on local Islamic banks starting from June 30, 2009. Local Islamic banks will continue complying with the minimum capital adequacy ratio applied by the CBK, which is 12.0%, while the ration proposed by Basel Committee on Banking Supervision is 8.0%. Company News ▲ Agility Defense & Government Services announced that the U.S. Defense Logistics Agency exercised the third option period on the Subsistence Prime Vendor contract for the supply and distribution of food and non – food products to U.S. forces in Iraq. The total maximum value for the 18 month contract extension period is USD 1.4 billion. ▲ Kuwait Investment Authority, (KIA) plans to offer its 20.0% stake in Boubyan Bank for sale at an initial total price of about KWD 128.3 million (USD 445.3 million). It will hold the auction to sell its shares in Boubyan Bank on July 22, 2009. National Bank of Kuwait (NBK), officially applied to the local bourse asking to buy the three tranches of the offered shares consisting of 77.000 million shares each offered by KIA. ▲ National Bank of Kuwait stated that the central bank renewed its approval for it to buy up to 40.0% in Boubyan Bank. The new three month approval period started on June 28, 2009. Liquidity / Capital raising - Kuwaiti money supply growth slowed to 17.7% in May 2009 from 20.1% in April 2009, as funds in savings and time deposits slowed down. National Bank of Kuwait reported that in May 2009 monetary developments in Kuwait witnessed a slight improvement, as money supply (M2) growth accelerated to 1.1% m – o – m. - Kuwait's Zain Group is in the final stages to reschedule a USD 2.5 billion two year murabaha loan agreement signed in 2007. The loan is destined for Zain Saudi Arabia and aims to finance the development of its infrastructure and the expansion of its subscribers' base. The murabaha is being renewed by a group of banks that includes Al Rajhi Bank, Banque Saudi Fransi, and France's Calyon Bank. Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 4
Slide 5: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 UAE Sectors 1 Month Index Pe rformance CAGR (1.8%) 3,000.0 2,900.0 ADSMI Index 2,800.0 2,700.0 2,600.0 2,500.0 5/31/09 6/3/09 6/6/09 6/9/09 6/12/09 6/15/09 6/18/09 6/21/09 6/24/09 6/27/09 6/30/09 % ▼▲ (2.8%) (11.1%) 1.2% (10.1%) (13.1%) (8.6%) 2.2% 13.1% 7.8% Company Top 5 Gainers: Abu Dhabi Aviation Oman And Emirates Investment Holding Union Insurance Abu Dhabi National Hotels Foodco Holding Top 5 Losers: United Insurance Comapany-Uae Internatonal Fish Farming Holding Fujairah Building Industries Aabar Investments Gulf Medical Projects -Sharjah % Change Insurance Index Health Care Index Telecomm Index Construction Index Energy Index Real Estate Index Bank&Finance Index Industrial Index Consumer Index 65.5% 46.6% 32.2% 25.0% 17.9% (36.9%) (24.5%) (22.8%) (18.9%) (18.3%) Macro Economic News ▲ Abu Dhabi’s foreign trade grew by 37.5% in 2008 on the back of significant rise in the value of imported commodity goods. The total size of foreign trade that includes non – oil exports, re – exports and imports expanded to AED 102.8 billion in 2008, up from AED 74.8 billion in 2007. The phenomenal growth in the foreign trade is linked to the 42.5% rise in the value of commodity imports in 2008. The exports and re – exports grew by 7.8%, and 11.1% respectively. ▲ The UAE economy has bottomed out and most sectors are on the path to recovery. Standard Chartered Bank said the three – month Emirates Inter Bank Offered Rate (Eibor) has eased to 2.46%, from a peak of 4.78% in November 2008. Rasmala, an investment bank, said UAE equity markets continued their recovery and gained a further 11.0% over the month amid increased interest from foreign investors. Kuwait's Markaz said the UAE markets are trading with the lowest PE multiple of 6.59x LTM earnings. ▲ The UAE is planning its first sovereign bond issue. According to the Undersecretary in the Ministry of Finance, a law will come out soon and it will specify where the debt must be spent. The Ministry of Finance is planning a new public debt law to govern the distribution of funding from bond sales by the federal government. ▲ The UAE took the first step to reduce public debt and limit state – owned enterprises' exposure to the debt market by enacting the Public Debt Law at the Federal National Council (FNC). According to the public debt draft law passed by the FNC, the total value of the country's public debt should not be more than 45.0% of GDP or Dh 300.0 billion whatever less of both at the time of issuing the public debt bonds. The legislation stipulates that total local public debt should be not more than 15.0% of GDP ▼ Prices in the UAE rose by just 1.9% in April 2009 compared to April 2008 – the lowest annualized rate of inflation since 2000. If the downward price trend continues, the overall rate of inflation could turn negative – a phenomenon called deflation. ▼ Though the credit default swap (CDS) spreads of Dubai has fallen by about 50.0% from the levels of 1000 basis points (bps) to about 500 bps since February, indicating a substantial fall in the risk perception on the Emirate, this has failed to reflect on Dubai bond yield so far. While Abu Dhabi bond is currently trading at about 5.0% yield, the Dubai bond, launched in 2008 and maturing in 2013, is trading at yields as high as 8.5%. During the same period, the Abu Dhabi CDS has dropped from 450 bps to just about 230 bps. Government Regulations ▲ A legislation approved by the Federal National Council (FNC) will allow the Ministry of Finance (MoF) to guarantee bank – issued bonds, medium – term notes, and Islamic sukuk. The legislation allows public and private sector banks operating in the UAE to apply to the MoF for its backing of bonds issued until October 11, 2011. The law stipulates a maximum five – year duration of the financial instruments to be covered and gives the government wide powers in the approval process. Sector News ▲ Higher interest rate offers boosted the combined deposits of the UAE's banks by nearly AED 56.0 billion to AED 961.6 billion in the first four months of 2009 while there was a slight increase in credits. Assets also climbed by AED 40.0 billion to allow the UAE to maintain its position as having the largest banking sector in the Arab World while their combined capital and reserves swelled to its highest ever level. ▲ Dubai oil retailers will increase the price of diesel at the pumps by 50 fils a gallon, following a sharp increase in international oil prices in recent weeks. The price of diesel will subsequently rise to AED 9.90 per gallon, from AED 9.40 per gallon. The three oil retailers – Enoc, Eppco and Emarat – will be closely monitoring oil prices in the international market to determine whether diesel prices locally are to be increased or lowered. ▲ Cement prices in the UAE have dropped by around 13.0% or Dh 40.00 per ton since April 2009. However, the prices are expected to go higher post – Ramadan. ▲ According to the Dubai Civil Aviation Authority, Dubai's investment in airport development could surpass USD 17.2 billion including the USD 7.2 billion invested so far. During Q1 2009, Dubai Airports recorded 2.1% passenger traffic growth. ▲ Bank loans and advances in the UAE topped Dh 1.0 trillion at the end of May 2009. Of this, Dh 207.6 billion comprised personal loans in May 2009. Personal loans totaled Dh 201.7 billion. However, while the number of loans appears to be increasing, banks are still not out of the woods as a portion of these loans may have to be written off due to defaults. ▼ Steel prices in the UAE could further rise next month as prices of billets have increased. Meanwhile, Middle East steel …Gulf investors and sovereign wealth funds are pouring more cash into regional projects in renewable energy, farmland, and infrastructure as focus turns to home, a PwC partner said… Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 5
Slide 6: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 production in May declined by about 0.6% in contrast to global figures. Steel prices in the UAE have been going up with the destocking almost coming to an end. Prices have already increased USD 50.0 - USD 100.0 in May 2009 compared to April 2009. − The total value of land transactions in Dubai last week reached Dh 2.2 billion, of which sales exceeded Dh 1.4 billion. The total value of mortgages during the period was Dh 736.9 million. A total of 81 sale transactions were registered. During the period under review, 63 mortgages worth Dh 524.9 million were registered. …M&A activity in the Middle East totaled USD 24.5 billion during the past 12 months, with the UAE topping the list with USD 5.3 billion. Qatar came second with M&A value totaling USD 4.2 billion, followed by Saudi Arabia at USD 3.8 billion and Kuwait at USD 2.1 billion. The M&A value in the region in the previous 12 months totaled USD 34.7 billion, a decrease of 29.0%... Company News ▲ Dubai launched its first low – cost carrier – Flydubai – with an inaugural flight to Beirut. Flydubai currently operates just two aircraft but has ordered an additional 48; all of them are 737-800s. ▲ Abu Dhabi Airport Company has said it has opened the door for foreign investors and big international companies in the new Al Ain Airport. ADAC started work on the infrastructure of the new airport compound with a cost of USD 25.0 billion (AED 91.8 billion). ▲ Etihad Airways announced a USD 14.0 billion (Dh 51.5 billion) aircraft engine order at the Paris Air Show, which could become the largest engine order in commercial aviation history if the Abu Dhabi – based airline exercises all options and purchase rights. Etihad chose GE Aviation, Rolls – Royce, Engine Alliance and International Aero Engines (IAE) to power the new Airbus and Boeing fleet that the UAE's national carrier ordered at last year's Farnborough air show. ▲ Amlak Finance, which faces a liquidity gap of more than AED 12.0 billion as per the contractual asset – liability mismatch calculated for Q2 2009, hopes to resolve this soon. Discussions directly with banks as well as through the Merger Steering Committee on a long – term sustainable funding plan for Amlak are on and the results are expected to be announced soon by the government. ▲ The Cabinet approved establishing Emirates Development Bank with a capital of AED 10.0 billion. It was decided that AED 5.0 billion of the capital will be paid completely by the UAE Government. Liquidity / Capital raising - UAE’s state owned IPIC will raise USD 3.5 billion to refinance recent acquisitions. It will include a 2 – year loan at Libor + 350bps and a bond at 250bps. - Abu Dhabi Government – owned International Petroleum Investment Company (Ipic) has signed a USD 5.0 billion (Dh 18.4 billion) syndicated loan, increased from a launch amount of USD 3.5 billion. The loan, which will be used to finance Ipic's recent acquisitions, as well as for general corporate purposes, was launched in May 2009. - Emirates NBD, the UAE's largest bank by assets, announced the issue of a Dh 4.0 billion in debt securities to Investment Corporation of Dubai (ICD), the investment arm of the Dubai Government, and majority shareholder in the bank. The capital will be used to boost the bank's Tier 1 capital ratio, which the Central Bank mandates to be a minimum of 11.0%. Earlier this year, Emirates NBD disclosed its Tier 1 capital to be 9.4%, requiring a boost of over USD 1.0 billion (Dh 3.7 billion) to meet the Central Bank's requirement. Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 6
Slide 7: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 Egypt Company Top 5 Gainers: United Arab Shipping (Egypt) El Nasr Clothing And Textile National For Housing For Professional Syndicat Credit Agriole Eygpt Export Development Bank Of Egypt Top 5 Losers: 5-31-09 6-12-09 6-15-09 6-18-09 6-21-09 6-24-09 6-27-09 6-30-09 6-3-09 6-6-09 6-9-09 1 Month Inde x Pe rformance CAGR 2.8% 600.0 580.0 Hermes Index 560.0 540.0 520.0 500.0 % Change 44.0% 36.1% 35.8% 35.7% 30.9% (32.1%) (27.5%) (25.3%) (24.6%) (22.7%) Egypt Poultry Industrial And Engineering Nterprises Memphis For Pharmaceuticals And Chemical In Prime Holding Egyptian Saudi Finance Bank Macro Economic News ▲ Egypt’s production of crude oil, condensates and biogas hit 2.955 million tons in April 2009, up 7.1% from April 2008. April’s numbers were down slightly from March 2009 production levels, which reached 3.033 million tons, but up from February levels of 2.759 million tons. ▲ Egypt’s Shoura Council approved 13 agreements for the excavation of petroleum and gas involving 31 wells at investments worth at least USD 2.5 billion. Egyptian companies will be excavating for oil in Iraq, Libya, and Gabon, both independently and in cooperation with foreign companies, said Petroleum Minister Sameh Fahmi. ▲ Egypt Hydrocarbon Corporation is planning to construct a new complex for petrochemical industries with investments estimated at USD 3.0 billion. Government Regulation ▲ The Egyptian government created a new regulatory authority to oversee all non – banking financial markets as part of a long term process to reform and develop the nation’s financial sector. General Authority for Financial Supervision was established incorporating various oversight committees into a single umbrella organization that will account for recent growth and the development of new, more complicated financial instruments in the Egyptian market - Egypt’s Industrial Development Authority approved the temporary exemption of 67 products from sales taxes. The exempted products include electric transformers, vacuum systems used in vacuum cleaners, air conditioners, packaging machines and equipments used in the textiles industry. Sector News ▲ Egyptian textile exports to the USA witnessed a 10.7% y – o – y increase in Q1 2009, amounting to USD 237.7 million. This …Only one of the oil – rich Gulf nations' 11 sovereign wealth funds has improved its transparency score in Q1 2009 compared to the previous quarter based on the Linaburg – Maduell Transparency Index developed by the US – based Sovereign Wealth Fund Institute. Saudi Arabia's SAMA Foreign Holdings, the fund operated by the kingdom's central bank with assets worth USD 431.0 billion, improved its transparency score from two in Q4 2008 to three in Q1 2009, but is still far below the highest score of 10 globally… came despite the 12.7% decline in total American imports. Company News ▲ The National Bank of Egypt is preparing to offer loans worth EGP 14.0 billion starting from Q3 2009. They are expected to be distributed as follows: EGP 4.8 billion to the industrial sector, EGP 3.5 billion to the aviation sector, EGP 2.5 billion to the fertilizers sector, EGP 1.4 billion to the electricity sector, EGP 900.0 million to the real estate and tourism sectors, EGP 600.0 million to the petroleum sector, and EGP 300.0 million for the contracting sector. ▲ EFG-Hermes, Egypt's largest investment bank by market value has a solid balance sheet with capital in excess of $400.0 million and does not need a capital hike. ▼ The Ministry of Investment announced that it would either liquidate or sell state – owned El Nasr Automotive Manufacturing Company because it had long since ceased generating revenue. Furthermore, the company had begun acquiring debts, which, officials announced, topped over EGP 2.0 billion − France Telecom will not raise its offer of EGP 237.00 (USD 42.28) per share to buy out the minority shareholders at Egypt’s largest mobile phone operator Mobinil, after Egyptian market authorities rejected it, a senior France Telecom official said. Liquidity / Capital Raising - The Egyptian central bank accepted offers worth EGP 3.0 billion (USD 535.5 million) in an auction of seven – year bonds at rates of between 10.6% and 11.5%. - Agrium Egypt is currently negotiating with a number of banks to obtain a USD 1.0 billion credit facility. The loan will be used to finance its new fertilizers factory that is jointly owned with Misr Oil Processing Company, and to refinance a USD 120.0 million loan received several years ago. Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 7
Slide 8: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 Other Countries Oman ▲ Oman posted a surplus of OMR 101.0 million in the first four months of 2009, compared to an OMR 1.16 billion surplus in the January 2008 – April 2008 period, according to the Ministry of National Economy. The country posted a 50.5% drop in net oil revenues in the first four months of 2009, but increased spending by 7.2%. ▲ Oman's money supply grew 10.9% in the four month period to April 2009 from the same period in 2008 with central bank foreign assets climbing by 12.0%, CBO data showed. Money supply measured as M2 stood at OMR 7.6 billion on April 30, 2009, compared with OMR 6.8 billion in April 2008. The central bank's foreign assets, including gold holdings, rose to OMR 4.4 billion in April 2009 from OMR 3.9 billion in April 2008. ▲ The consumer price index figures released by the National Economy Ministry pointed out to a decline in inflation index for May 2009 to reach 3.9%; the least recorded since 31 months. ▲ The new tax law specifically provides for a deduction for loan loss provisions established by banking companies as defined in the banking law. The new tax law provides that loan loss provisions to the extent required by Central Bank regulations would be allowable for all banks as defined in the banking law. …Major national oil companies, in the Middle East, are planning to invest USD 29.0 billion in oil and gas industries in 2009, despite ongoing concerns around oil demand… ▲ Bank lending in Oman rose 26.0% in the first four months of 2009 but its growth rate dropped by nearly half compared to the same period in 2008 due to less credit to the public sector. The combined credit extended by the local banks climbed 26.0% to OMR 9.5 billion. The total lending of local financial institutions increased 49.7% to OMR 7.5 billion in the first four months of 2009 compared to 2008. Deposits at Omani banks rose to OMR 6.3 billion in the four months to April 2009 from OMR 5.9 billion. ▲ The Sultanate’s total crude oil exports in the first four months of 2009 rose 10.8% to 79.680 million barrels, against 71.360 million barrels during the same period in 2008. The monthly statistical bulletin published by the National Economy Ministry showed that the Sultanate’s total production of crude oil and condensates stood at 94.330 million barrels by the end of April 2009, against 89.930 million barrels during the same period in 2008. ▲ Oman’s tax rates are now the lowest in the region amongst countries which impose taxes with the promulgation of Royal Decree No. 28/2009, according to KPMG. An important change is that the new tax law removes the disparity in rates between foreign and local companies. Tax rates for branches of foreign companies have now been reduced to 12.0%. ▼ The preliminary estimates of the National Economy Ministry indicated that the GDP during Q1 2009 fell by 19.8% to OMR 4,087.3 million as compared to OMR 5,096.5 million during the same period of 2008. Oman posted a 56.0% drop in net oil revenues in Q1 2009 from the same period in 2008, as oil prices weakened, forcing the government to turn a deficit to sustain 10.0% growth in spending. − Oman's economy is expected to grow at ~3.0% in 2009 as a result of lower hydrocarbon export revenue because of the global financial distress, according to Arab Monetary Fund. It also said that inflation could also dip below its 2008 level. − Oman plans to issue bonds worth between OMR 50.0 million to OMR 80.0 million during H2 2009 to help finance development programs, according to the CBO. This is the first and only bond issue from the Government of Oman during 2009. An earlier bond of OMR 80.0 million is maturing in H2 2009. − Lending in Oman recorded a slow growth rate in the first four months of 2009, rising from about OMR 9.3 billion at the end of 2008 to OMR 9.5 billion at the end of April 2009. In contrast, deposits rose from OMR 6.4 billion at the end of 2008 to OMR 6.5 billion at the end of January 2009 before declining to OMR 6.4 billion at the end of February 2009. Jordan ▲ Jordan Investment Board signed a cooperation agreement with Kuwait's Foreign Capital Investment Bureau. Kuwaiti investments top the list of foreign investments in the Kingdom, at around USD 7.5 billion in various economic sectors. ▲ A proposed income tax law by the Ministry of Finance is set to overhaul the tax regime in Jordan. Under the new regime, firms in the banking, financial, insurance, leasing, and telecommunication sectors would see their income tax rates reduced to 25.0% from the current rate of 30.0% – 35.0%. Companies operating in lower bracket sectors, including industry and agriculture, would have their tax rate reduced from 15.0% to 12.0%. ▲ The impact of the financial crisis on the insurance sector has been minimal, mostly affecting companies’ investment portfolios. Insurance premiums grew by 11.0% during Q1 2009 and by 14.0% during 2008, despite the crisis. ▲ The value of crude oil imported into the Kingdom dropped during Q1 2009 by 62.2% to reach JOD 227.8 million. According to the Central Bank of Jordan, the drop resulted from a decline in fuel prices by 49.3%, during Q1 2009. ▲ Jordanian banks enjoy sound financials that have allowed them to escape the worst of the global financial crisis, but property market downturns threaten to dent their bottom line. Non-performing loans of banks however fell as a portion of the banking sector’s total loans to 4.2% in 2008 from a high of 16.0% in 2001. Banks saw loan growth outpacing that of deposits during a boom period that saw rapid credit expansion with loans growing by 15.5% in 2008. ▼ Jordan’s revenues from potash exports fell by 1.2% during Q1 2009 compared to Q1 2008, with exports securing JOD 64.5 million. According to the Central Bank of Jordan, potash prices went up by 142.7% but exported quantities were 59.3% less during Q1 2009. ▼ Pharmaceutical exports dropped by 22.6% to JOD 71.9 million during Q1 2009 compared to Q1 2008. ▼ Jordan’s trade deficit between January 2009 and April 2009 narrowed by 35.0% to JOD 1.5 billion compared to the same Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 8
Slide 9: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 period of 2008. ▼ Budget deficit reached JOD 348.0 million during January to May 2009, an increase of 258.8% compared to the same period in 2008. The Finance Secretary General attributed the deficit to the 17.0% increase in public spending and to weak growth in domestic revenues, which registered a slight increase of 4.5%. ▼ Unemployment in Jordan rose to 13.0% in Q2 2009, up from 12.1% in Q1 2009, according to the Department of Statistics. ▼ GDP grew by 3.2% during Q1 2009 at fixed market prices compared to 8.6% in 1Q 2008, according to the Department of Statistics. Bahrain ▲ Annual inflation rose to 3.5% in May 2009 from 3.1% in April 2009 as housing and utilities prices posted an increase. ▲ Revenues from the telecommunications sector in Bahrain reached the BHD 300.0 million (USD 796.0 million) mark in 2008. Employment in the sector continued to grow and broadband subscribers surged by 50.0% in 2008, the Telecommunications Regulatory Authority report said ▲ Bahrain's insurance market posted its strongest ever annual growth in 2009, with gross premiums surging by 34.0% to BD 183.3 million (USD 486.3 million). The number of people employed in the industry rose from 1,224 to 1,394, of whom 62.0% are Bahrainis. A significant part of this increase is attributed to a surge in life insurance from BD 37.7 million in 2007 to BD 52.0 million in 2008, a 38.0% increase, according to the Central Bank of Bahrain. ▲ Investcorp said it planned to buy stakes in homegrown Middle Eastern luxury goods companies as part of a wider plan to invest USD 650.0 million in the region in the next two years. - Bahraini money supply growth fell to 13.9% in April 2009, the slowest rate in more than two years, central bank data showed. M3, the broadest measure of money circulating in the economy, stood at BD 8.0 billion (USD 21.2 billion) on April 30, 2009 compared with BD 7.0 billion a year earlier. Growth in money supply has decelerated rapidly since peaking at an annual rate of almost 37.0% in June 2008. April's annual money supply growth was the slowest since March 2007. - The Central Bank of Bahrain announced that the latest Sukuk issuance of the government of Bahrain was successfully placed. The initial size of the sukuk offering was USD 500.0 million, but the issue was oversubscribed by almost eight times. As a result, the value of the sukuk was raised to USD 750.0 million. - Bahraini annual money supply growth fell to 8.8% in May 2009 to the slowest rate since December 2004. M3 stood at BHD 8.0 billion (USD 21.3 billion) on May 31, 2009 compared with BHD 7.4 billion in the same period in 2008. Growth in money supply decelerated rapidly since peaking at an annual rate of 37.0% in June 2008. The central bank's net foreign assets dipped to BHD 1.3 billion from BHD 1.4 billion in April 2009, its fourth straight month of declines. Qatar ▲ M2 money supply declined 5.7% to QR 176.9 billion in April compared with a year earlier. Total domestic credit of commercial banks rose 1.0% in April from March to QR 20 9.9 billion. ▲ Qatar Statistical Authority (QSA) reported that the estimate of the country's Gross Domestic Product (GDP) at current prices for the 1Q went down by 17.5%. ▲ Qatar’s inflation inched up 0.6% month – on – month in May 2009 mainly on higher entertainment and medical expenses as well as rents and transportation costs. The average price level rose for the second consecutive month after an increase of 0.2% in April 2009. ▲ The government bought real estate loans of local banks and disbursed QR 15.0 billion which it allocated recently for the purpose. ▲ Qatar’s total cement production is expected to more than double to 6.52 million tonnes per annum (mtpa) in 2009 but will still not be enough to satisfy the local demand, thus making imports imperative. ▲ Industries Qatar, the second – largest Gulf chemical producer by market value, said the government approved a total of QR 1.2 billion (USD 318.8 million) in settlement for steel prices caps. Industries Qatar said earlier in May it had asked for QR 1.8 billion in compensation for the government’s capping of steel prices in 2008. ▼ Nakilat Inc, a wholly owned subsidiary of Qatar Gas Transport Company Ltd, raised USD 950.0 million of debt under its existing Programme Financing from a group of 17 international and regional banks. The completion of this financing will keep Nakilat fully funded and solidly on track to complete its acquisition of a fleet of 25 LNG vessels. Tunisia – No. 1 2 3 4 Servicom will list 1.000 million shares on Tunis Stock Exchange starting June 25, 2009. Mergers & Acquisitions Announced Completion date 07/12/09 05/09/09 09/15/09 Pending Transaction Value (In USD mn) 66.4 209.4 138.7 192.9 TV/LTM Revenues 2.06x 2.14x NA 0.35x TV/ LTM EBITDA NA 5.1x NA 4.5x Acquirer Al-Salam Bank Almarai Co. Ltd American Guardian Co. Emaar Properties PJSC Industry Commercial banks Non-US Agricultural Operations Containers-Metal/Glass Retail-Sporting Goods date 04/21/09 11/08/08 06/15/09 06/19/09 Target Baharaini Saudi bank Bsc Hail Agriculture Egyptian Glass Co. RSH Ltd. Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page 9
Slide 10: Issue No. 1.10 MENA MONTHLY NEWS Month of June 2009 About Us: Headquartered in Mumbai, India, TresVista Financial Services Pvt. Ltd provides research, analytics, advisory, investor relations, and other customized services for asset managers, private equity funds, investment banks, operating companies, and other institutions. This document is provided for assistance only and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. This newsletter is provided for information purposes only. The information is believed to be reliable and is based on publicly available information, but TresVista does not warrant its completeness or accuracy. Opinions, estimates, and assumptions constitute our judgment as of the date hereof and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Additional information is available upon request. © 2009 TresVista Financial Services. TresVista Financial Services Premier House, Plot No.38, 2nd Floor, New Wing, Central Road, MIDC, Andheri (East), Mumbai 400 093 Product 2009. TresVista Financial Services, Pvt. Ltd ©. Mumbai, India. www.tresvista.com Page