Kuwait Financial Centre “Markaz” R E S E A R C H What to expect in 2010? Outlook for GCC Stock Markets GCC stock markets significantly underperformed the emerging markets during 2009. As against a 74% increase in emerging markets during 2009, GCC market returned a pale 18%. Surprisingly oil prices remained strong throughout 2009 with a YTD increase of 85%. The financial crisis of 2009 laid bare the fragilities of the GCC stock markets. While market specific bad news was mainly responsible for the lackluster performance, lack of progress in regulatory structure (a key determining factor for attracting credible foreign money), and steep fall in liquidity (value traded) added to the woes. Earnings destruction was significant to recoup within a short span of time. Asset quality impairment for banks revealed the overall economic weakness and corporate governance failures came to the fore. In the past a strong oil price was enough to lift the market to speculative heights. Money was easy to make in that environment with north being the only direction where price of any stock can move. Transparency and research was never demanded (due to lack of institutional investors) and even when demanded, they were not heeded to. In the “new normal” world, oil price is not the only variable affecting the fortunes, hence, the relevance of our 7-force framework. When looked at the markets with this prism, we are bullish for Saudi Arabia and Qatar while being neutral on all other GCC countries. Wishing you the best for 2010… January 2010 Research Highlights: Reviewing the year that was (2009) and projecting the year that will be (2010) based on an assessment of various drivers that specifically affect the performance of GCC stock markets. Markaz Research is available on Bloomberg Type “MRKZ” <Go> M.R. Raghu CFA, FRM Head of Research +965 2224 8280 [email protected]Amrith Mukkamala Senior Analyst +965 2224 8281 [email protected]Layla Al-Ammar Investment Analyst +965 2224 8000 Ext: 1205 [email protected]Kuwait Financial Centre “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
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Kuwait Financial Centre “Markaz” R E S E A R C H
What to expect in 2010? Outlook for GCC Stock Markets
GCC stock markets significantly underperformed the emerging markets during 2009. As against a 74% increase in emerging markets during 2009, GCC market returned a pale 18%. Surprisingly oil prices remained strong throughout 2009 with a YTD increase of 85%.
The financial crisis of 2009 laid bare the fragilities of the GCC stock markets. While market specific bad news was mainly responsible for the lackluster performance, lack of progress in regulatory structure (a key determining factor for attracting credible foreign money), and steep fall in liquidity (value traded) added to the woes. Earnings destruction was significant to recoup within a short span of time. Asset quality impairment for banks revealed the overall economic weakness and corporate governance failures came to the fore. In the past a strong oil price was enough to lift the market to speculative heights. Money was easy to make in that environment with north being the only direction where price of any stock can move. Transparency and research was never demanded (due to lack of institutional investors) and even when demanded, they were not heeded to. In the “new normal” world, oil price is not the only variable affecting the fortunes, hence, the relevance of our 7-force framework. When looked at the markets with this prism, we are bullish for Saudi Arabia and Qatar while being neutral on all other GCC countries. Wishing you the best for 2010…
January 2010 Research Highlights: Reviewing the year that was (2009) and projecting the year that will be (2010) based on an
assessment of various drivers that specifically affect the performance of GCC stock markets.
Markaz Research is available on Bloomberg Type “MRKZ” <Go>
M.R. Raghu CFA, FRM Head of Research +965 2224 8280 [email protected] Amrith Mukkamala Senior Analyst
Saudi Arabia – Positive We maintain our positive outlook on Saudi Arabia driven by strong positive economic expectations, healthy corporate earnings, positive investor sentiment and a stable geopolitical structure. Pockets of neutrality exist in terms of valuations (PE), market liquidity and regulatory structure. Economically, the Kingdom is expected to resume growing at 4% in 2010 (in line with the historical average), while inflation is expected to remain under control. Healthy crude oil prices are expected to have a positive effect on the fiscal and current balances. As for corporate earnings growth, these are expected at 14% for 2010 versus an estimated 26% in 2009. In terms of sectors, we expect the corporate earnings support to come from Banks and Financial Services. Additionaly, investor sentiment (as measured by Bayt.com) was up 12% YoY as of August 2009 while the geopolitical
outlook (as measured by EIU) remains stable. Market liquidity remains a concern for all GCC markets; in the Kingdom, value traded was down 35% in 2009. However, the market is fairly open to foreign investors and the regulatory structure is relatively sound. Kuwait – Neutral
We have revised our outlook on Kuwait from Positive (in September 2009) to Neutral for 2010. While the country’s economic and corporate earnings outlook remain positive in our view, the distress in the investment sector and lack of concrete positive triggers may hamper. Investor sentiment is low at the moment with lakcluster trading.
Kuwait’s economy is set to resume a growth rate of 3.3% in 2010, about half the historical average, while inflation is likely to remain under control. Healthy oil prices and low fiscal spending will produce healthy fiscal and current account balances in the coming year. On the corporate earnings side, Kuwait is expected to lead in terms of growth in 2009 due to a solid turnaround expected in investment companies. Overall earnings are expected to double in 2010. UAE – Neutral We maintain our Neutral outlook on the UAE given the mixed signals in the country; the economic outlook is positive with a 3% GDP growth expected for 2010 while investor sentiment remains fairly positive. Additionally, the geopolitical and regulatory arenas are considered to be stable. On the other hand, corporate earnings look negative for 2010, with an overall decline of 9% expected for 2010 after an estimated decline of 26% in 2009. The financial services, banks, and real estate sectors are expected to drag overall earnings, with annual declines of 21%, 16%, and 15%, respectively, forecasted in 2010. Telecom is the only sector expected to
post positive earnings growth in 2010, to the tune of 10%.
We maintain our positive outlook on Saudi Arabia driven by strong positive economic expectations
Kuwait is expected to lead in terms of earnings growth in
2009 due to a solid turnaround expected in investment companies
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Qatar – Positive We have revised upwards our outlook on Qatar, from Neutral to Positive, on the back of good economic and corporate earnings. Qatar’s GDP is expected to grow at 18% in 2010 coupled with positive fiscal and current balances. Corporate earnings are expected to show an overall growth of 15% in 2010, after declining an estimated 3% in 2009. The Banking and Telecom sectors are expected to boost overall earnings, with 2010 growth rates of 33% and 15%, respectively. Pockets of concern in Qatar are with market liquidity as value traded declined 46% in 2009 after increasing 57% in 2008. Moreover, lower investor sentiment and a slightly ambiguous regulatory structure remain of concern. Oman – Neutral We have revised downwards our outlook on Oman, from Positive to Neutral, due to decelerated economic growth, moderating corporate earnings outlook and low market liquidity. Real GDP growth is expected to decelerate in 2010, growing at 3.8% versus 4% in 2009, while the current account balance is expected to remain negative. Moreover, broad money supply has slowed to pre-2002 levels. Corporate earnings growth is expected at 13% for 2010 after growing an estimated 17% in 2009, with support from Banks and Telecoms. Bahrain – Neutral We have revised upwards our outlook on Bahrain, from Negative to Neutral,
as positive stimulus comes from corporate earnings. Corporate earnings are expected to grow at 51% in 2010 following an estimated growth of 9% for 2009. Financial services are expected to remain a drag on overall earnings but a forecasted 59% growth in Bank earnings is expected to boost overall earnings. Market liquidity has dried up in Bahrain, with value traded declining 62% in
2009 after expanding by 144% in 2008.
We have revised upwards our outlook on Qatar, from Neutral to Positive We have revised downwards our outlook on Oman, from Positive to Neutral, due to decelerated economic growth
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B. Looking back
Table: 1 – Recommendations & Market performance
Saudi Arabia Kuwait UAE Qatar Oman Bahrain
January 2009 Neutral Neutral Neutral Positive Positive Negative
September 2009 Positive Positive Neutral Neutral Positive Negative
2009 Return (%) 38 -8 34 10 33 -28
Note: Market returns – MSCI Investible TR Indices
The overall GCC markets as measured by the MSCI GCC Investable total return net index gained 21% for 2009. Among the six GCC markets, the highest gains were from Saudi Arabia, which ended the year up 38% (MSCI Saudi Arabia). At the beginning of the year we were neutral (equal weight) on Saudi Arabia. This was mainly due to a balance between positive and negative factors. The latter factors were mainly due to a forecast of weak GDP growth and anemic earnings growth rate while the positive factors on Saudi Arabia were its valuation rates and stable geo political scenario. As the year progressed, we did see some improvement in the macro scenario as compared to our forecast. The government announced an expansionary budget which had a positive influence on markets. In our September note, we raised Saudi Arabia from Neutral to Positive, mainly due to an improved outlook on the economic front. The Saudi Arabian market performed mostly on expected lines in 2009. (Table: 1) Kuwait was the only market where we witnessed a combination of an upward revision in the rating and the markets closing with a negative bias for the year. The MSCI Kuwait index returned -8% for 2009. Kuwait markets performed positively till end of August with a YTD return of 17%. Post this, the markets declined by 21% within a span of four months. We turned positive on Kuwait in September mainly due to higher visibility on a turnaround in earnings. We continue to see a turnaround in earnings for Kuwait and expect 2009 to end with a 5.6x increase in earnings as compared to 2008. However, the fall in markets can be mainly attributed to the low levels of liquidity coupled with significant negative news flow on blue chip stocks. Liquidity as measured by value traded was down by 44% in 2009 as compared to 2008. We were cautious on UAE since the start of the year. We did not have a change in rating mainly due to the expectation of a low GDP growth from the start of the year. The MSCI UAE index witnessed an increase of 61% from the beginning of the year till September. However, post this increase, markets lost 17% in the last three months of the year to close with a net return of 34%. The significant losses in the last two months of the year in 2009 can be mainly attributed to the news flow about the restructuring of corporate debt in Dubai World’s subsidiaries. There was a slew of rating downgrades which followed the announcement. The ratings on some of the subsidiaries were cut by four notches within a matter of few days post the announcement while CDS prices on Dubai witnessed a spike of 99%.
Among the six GCC markets,
the highest gains were from Saudi Arabia, which ended the year up 38%.
Kuwait was the only market where we witnessed a combination of an upward revision in the rating and the markets closing with a negative bias for the year
We had a positive view on Qatar during the beginning of 2009. We liked the story of a commodity-led revival, high economic growth as compared to its peers and a high current account surplus even during tough times. At the start of the year we were expecting aggregate earnings growth in Qatar to be at +6%. However, earnings growth has been very subdued. This led to our downward revision of the rating to a Neutral in September. We were bullish on Oman since the beginning of the year with a consistent Positive rating. MSCI Oman closed the year with a gain of 33%. Conversely, we had a consistently negative view on Bahrain in 2009. This was mainly due to an expectation of low earnings growth. Overall earnings growth in Bahrain is expected to come in at +9% for 2009 on the back of a 62% decline in 2008. Bahrain was not an interesting turnaround story in earnings as compared to Kuwait.
C. What to expect in 2010
The most important question is what to expect for 2010. We believe that there are host of factors that influence the markets. We have identified seven such factors that we feel will directly impact market performance during 2010. Based on its importance, we provide weights to each of these seven factors (Figure 1). An explanatory description for all the seven factors can be found in Appendix 1.
Figure 1: Markaz 7-Force Framework
Source: Markaz Research
1. Economic Parameters The overall economic scenario is positive for four of the six GCC nations. Relatively, the highest ranking is provided for Kuwait due to the expected turn around in GDP growth in 2010 as compared to 2009.
i. Real GDP Growth Forecast According to the latest economic forecasts, Real GDP across the GCC is likely to show a contraction of 0.1% in 2009 due to negative rates in the
We had a positive view on Qatar during the beginning of 2009 We have identified seven factors that we feel will directly impact market performance during 2010
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three largest economies. Economic growth is expected to resume in 2010 with GCC real GDP growing at 4.2%. Following negative growth in 2009, Saudi Arabia, Kuwait and the UAE are expected to see real GDP growth of 4%, 3.3% and 3%, respectively, in 2010. For Saudi Arabia, this would mark a return to the average growth seen between 2000-2008; however, it remains sub-standard growth for both Kuwait and the UAE. Steadily increasing crude oil prices (IPE Brent is up nearly 85% for the year) coupled with expansionary fiscal policies in many GCC economies are the main catalysts for the 2010 figures. Kuwait and the UAE are expected to have the lowest growth rates in 2010 while Qatar is expected to forge ahead with a 2010 Real GDP growth of 18.5% following an estimated 11.5% growth in 2009.
ii. Inflation Inflation is expected to continue to decline in 2010 for most of the GCC economies, except for the UAE and Qatar where consumer prices are expected to increase 2.5% and 4%, respectively.
iii. Fiscal Balance Fiscal balance for 2009 were forecasted as being negative for most GCC economies, however, as we mentioned in our previous outlook, these figures should be taken with a grain of salt as the combination of recovering crude oil prices and exceedingly low oil price assumptions used in the drafting of fiscal budgets may lead to the GCC posting actual fiscal surpluses in 2009. This materialized in all cases except for Bahrain, which is estimated to have a 2009 fiscal balance of -4% of GDP, while all other GCC countries posted fiscal surpluses. In 2010, Bahrain is expected to post a fiscal deficit of -2% of GDP while the remaining GCC nations are expected to have another year of surpluses, the highest being Kuwait, where a decline in fiscal spending is expected to push the fiscal surplus to 33% of
GDP.
iv. Current Account Balance Current account balances as a percentage of GDP are expected to recover across the board. The largest gain is expected in Kuwait with a 2010 current account balance equal to 32% of GDP.
v. Broad money growth Money supply growth slowed noticeably in 2008, and has decelerated further for most of the GCC in 2009. Qatar’s money supply grew 13% YoY in 3Q09 while Bahrain remains flat. Kuwait’s M2 grew 16% YoY in October 2009. Table: 2 – Economic Parameters Summary
The overall economic scenario is positive for four of the six GCC nations
Real GDP growth across the GCC is expected to resume in 2010, growing at 4.2%
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2. Valuation Attraction
The collapse of markets in 2008 pushed PE valuations down to the single digits as earnings growth managed to hold up in some markets. In 2009, valuations increased to double digits due to a combination of some price appreciation and weakening earnings growth. Earnings growth is expected at 6% for 2009 (based on annualized 9M09 results). As for 2010, we expect a 16% growth in GCC earnings compared to 2009, which we expect to bring valuations down to low to mid double digits. The exception to this is Saudi where 2010 PE is expected at 18x up from 13x in our last note due mainly to price appreciation.
In September 2009, we expected the GCC region to close the year with a 0% earnings growth rate. This was calculated by taking corporate results till June and forecasting the rest of the year. Currently, we have clarity of results till September 2009. Thus, annualizing the 9M results, we expect to see a 6% earnings growth rate for 2009. Kuwait is expected to lead in terms of growth in earnings for 2009 due to a solid turnaround expected in the investment companies. Earnings in Kuwait are expected to grow by almost 5x as compared to 2008. For 2010, our bottom up approach shows a 16% growth in earnings for GCC as a whole as compared to 2009. Figure: 2 – Consolidated GCC Earnings Trend (USD Mn)
27,272
47,01749,251
63,868
37,04739,195
45,366
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2004 2005 2006 2007 2008 2009 A 2010E Source: Markaz Research
As for 2010, we expect a 16% growth in GCC earnings compared to 2009, which we expect to bring valuations down to low to mid double digits Kuwait is expected to lead the GCC countries in terms of growth in earnings for 2009
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Among the sectors, we continue to expect strong earnings growth rate in the financial services sector segment due to the significant contraction witnessed in 2008 and a small revival in 2009. The overall financial services sector earnings in 2007 was at USD 10 Bn. We expect 2010 financial sector earnings to be at USD 1.9 bn significantly lower as compared to peak earnings. The Banking sector earnings (a major contributor to overall earnings) are expected to witness a strong growth of 19% in 2010. Among the various countries, Banks in Kuwait are expected to double their 2009 earnings in 2010. (Figure 3). Figure 3: Consolidated GCC Earnings Trend (USD Mn)
Source: Markaz Research Among the countries, we expect Kuwait to continue to lead the earnings growth at close to 106% in 2010. We expect UAE to be the only country to post a negative growth rate of -9% 2010. (Table: 4)
Source: Markaz Research Note: Absolute values are provided in Appendix – 3
We continue to expect strong earnings growth rate in the financial services sector segment Kuwait is expected to lead the GCC countries in terms of growth in earnings for 2009
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4. Investor Sentiment We have used the Bayt’s Consumer Confidence Index to determine the sentiment of investors (Table 5). Consumer Confidence Index is survey based and reveals the economic well – being of a country. The index is tracked since 2007 and shows a declining trend till 2008. This continued to February 2009 but has picked up in the second quarter. Consumer confidence in Saudi Arabia and Oman grew 12% and 15%, respectively, from July 2008 to August 2009.
Economist Intelligence Unit provides ratings of various risks for countries and we have used two of its ratings – Political risk ratings and Economic
The consumer confidence index tracked since 2007 shows a declining trend till 2008, continuing in the first quarter before picking up in the second
Political risk ratings have remained largely unchanged except in the case of the UAE where a triple B economic rating was revised to double B.
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Structure ratings. Economic structure risk ratings for all GCC countries have remained constant through 2009. Political risk ratings have remained largely unchanged except in the case of Kuwait where a triple B rating has been revised to double B. UAE has seen a revision in its economic rating from triple BBB to double BB. In the final analysis, all the GCC countries rank positive on this score (Table 6).
6. Market Liquidity
Continuing a declining trend which started in 2007, total value traded dropped 41% to USD 511 bn in 2009, after declining 14% in 2008. The declining trend is driven by the Saudi Arabian bourse, which shed 35% in 2009. All markets saw their value traded decline for the year, the largest of which was a 62% drop in Bahrain. Liquidity in the UAE fell by 54% to USD66.7 bn. Figure 4: Value Traded Trends (USD Bn)
Source: Zawya, GulfBase
All GCC markets saw severe declines in value traded; Bahrain had the largest drop of 62% while the UAE lost more than half. Saudi Arabia and Oman both shed 35%.
Continuing a declining trend which started in 2007, total value traded dropped 41% to USD 511 bn in 2009 All GCC markets saw severe
declines in value traded
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7. Regulatory developments In times like these, regulatory reforms and progress will go a long way in instilling investor confidence. Hence, we try and measure GCC capital markets in terms of regulatory progress. We do this through the prism of three factors viz., Presence of an independent regulator for capital markets, Institutional participation in the stock market and foreign investment. A strong regulatory regime implies active presence of all the three. i. Existence of CMA The GCC markets continue to be at an infancy stage from a regulatory perspective. We had reviewed the progress in terms of regulations in our “Leap or Lag: Choices before GCC regulators” report dated 28 Apr 2007 wherein we had reviewed the presence of a Capital Market Authority in all the GCC markets. There were gaps back then. It is sad to note that in spite of the current financial turmoil the same gaps continue to persist. Out of the six GCC markets three of them still have not put in place a Capital Market Authority (read independent regulator). This we believe has higher negative impact in current circumstances leading to several limitations including information disclosure, corporate governance, market ethics, etc
Table 8: Existence of CMA
Country Capital Market Authority Availability
Saudi Arabia Saudi Arabian Securities and Exchange
Commission Available
Kuwait Not Available Not Available
UAE Securities and Commodities Authority Available
Qatar Committee formed by members from QCB,
CoCI, Etc Not Available*
Oman Capital Market Authority Available
Bahrain Not Available Not Available
Source: Respective stock exchange websites. Note: *. QFMA has been formed, but 2009 documents indicate that the
stock exchange continues to be governed by a Committee.
ii. Institutional Investment The level of institutional investment in the GCC remains low, in the range of 0% to 3.8%, when compared to emerging markets (between 10%-25%). Globally, there are three main categories of institutional investors viz., Pension funds, mutual funds and insurance companies. However, in the
context of GCC the only credible institutional investor would be mutual funds. Hence, we measure their presence by aggregating the assets under management of all equity funds in a country and dividing it by the market capitalization to arrive at the institutionalization rate. All the GCC countries rank very low ranging from 0.1% to a maximum of 3.8% (Table 9).
Table 9: Institutional Investment
Country AUM
USD Bn Market Cap
(Usd Bn) % Institutionalization
Saudi Arabia 4.77 341 1.4%
Kuwait 4.19 109 3.8%
UAE 0.69 131 0.5%
Qatar 0.17 92 0.2%
Oman 0.07 18 0.4%
Bahrain 0.02 18 0.1%
Note: AUM & Market Cap as at end Sep 09
Source: Fund Fact Sheets, Lipper, Zawya, Markaz Research
Out of the six GCC markets three of them still have not put in place a Capital Market Authority The level of institutional investment in the GCC remains low, in the range of 0% to 3.8%, when compared to emerging markets (between
iii. Foreign Investment Kuwait has the most foreign friendly market, with a Foreign Inclusion Factor (FIF) of 52%, followed by Saudi Arabia with an FIF of 36%. Qatar scores the lowest with a factor of 15%. Table 10: Foreign Inclusions Factor – December 2009
In the overall analysis of the regulatory developments, we have ranked
Qatar and Bahrain as Negative mainly due to the absence of a Capital Market Authority, low institutional investment.
Our view on market attractiveness is summarized in the table below. As per the seven force framework assessment, we have maintained our outlooks on Saudi Arabia and the UAE at Positive and Neutral, respectively. We’ve
revised downwards our views on Kuwait to Neutral (from Positive) and Oman to Neutral (from Positive). We’ve revised upwards our views on Qatar to Positive (from Neutral) and Bahrain to Neutral (from Negative) (Table 12). Table: 12 – Final Ranking
Source: Markaz Research
We have maintained our outlooks on Saudi Arabia and the UAE at Positive and Neutral, respectively
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Appendix 1: Markaz 7-Force Framework 1. Economic parameters Even though this is a very broad parameter to evaluate, we have taken in five criterions with weightings to evaluate the attractiveness of the economy. These five parameters are mostly forward looking and the estimates are arrived at by taking into consideration forecast data from International Institute of Finance (IIF) in corroboration with the IMF. a. Forecasted Real GDP Growth b. Forecasted Inflation c. Forecasted Fiscal balance as % of GDP d. Forecasted Current account balance as % of GDP e. Historical broad money growth trend (M3) 2. Valuation attraction We have considered the levels of valuation on an historical basis (TTM) as of 2008 to arrive at ascertaining the attractiveness of the markets. The valuation parameters used are: a. Price to Earnings b. Price to Book c. Dividend Yield 3. Earnings growth potential Earnings growth potential provides the forecasted earnings expectation for
2009. We have arrived at these forecasts using a bottoms up approach of aggregating earnings data for more than 600 companies listed in GCC stock markets. 4. Investor sentiment We have used the consumer confidence survey results over a period of time provided by Bayt.com to ascertain the trend in investor sentiments.
5. Geopolitical Developments Due to the changing nature of the geo political scenario in the region we have used two different equally weighted parameters provided by EIU to arrive at a score for geo political risk.
a. Political risk b. Economic structure risk
6. Market liquidity Due to the change in liquidity levels in the markets post the credit crisis, we have included this parameter to evaluate attractiveness in terms of liquidity. We have used value traded to ascertain the same. 7. Regulatory developments
As the region continues to be in an infancy stage when it comes to regulation, we have ascertained the level of regulatory developments using three equally weighted parameters. a. Existence of a Capital Market Authority b. Level of institutional investment in the markets (AUM/Market cap) c. Foreign Inclusion Factor levels. All the parameters are scored on a scale of 0-5, wherein 0 would mean the lowest score implying negative assessment and 5 would mean the highest implying positive assessment.
We have taken in five criterions with weightings to evaluate the attractiveness of the economy.
We have ascertained the level of regulatory developments using three equally weighted
parameters.
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Appendix-2 Market Performance
Source: MSCI, Markaz Research
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Appendix-3 Economic Factors
Real GDP Growth Saudi Arabia Kuwait UAE Qatar Oman Bahrain
Real GDP Growth (2000-2008 Avg) %
GDP 3.9 6.6 8.0 10.00 5.8 6.4
Real GDP Growth (2009 e) % GDP -0.9 -1.5 -1.6 11.50 4.1 3.0
Real GDP Growth (2010 f) % GDP -IMF 4.0 3.3 3.0 18.50 3.8 3.7
Score 4.50 4.00 3.75 4.75 2.50 3.00
Inflation Saudi Arabia Kuwait UAE Qatar Oman Bahrain
Current Account Balance Saudi Arabia Kuwait UAE Qatar Oman Bahrain
Current Account Balance (2000-2008
Avg) - % to GDP 18 30 13 23 10 8
Current Account Balance (2009 e) - % to GDP
2 27 4 13 -8 0
Current Account Balance (2010 f) - % to GDP-IIF
8 32 9 23 -2 5
Score 4.50 4.50 4.00 4.75 4.50 3.00
Broad Money Growth Saudi Arabia Kuwait UAE Qatar Oman Bahrain
Average (1998-2002)-% change 7 5 13 8 6 10
Average (2003-2008)-% Change 15 14 25 30 18 18
2009 10 16 7 13 6 1
Score 3.75 4.50 3.50 4.00 3.25 1.00
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Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is intended to be circulated for general information only and should
not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction.
The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily
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This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice
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R E S E A R C H January 2010
Strategic Research
What to expect in 2010 (Jan-10) GCC Banks (Jan-10)
What is left for 2009? (Sept-09) Kuwait Investment Sector (Jun-09) Missing The Rally (Jun-09)
Shelter in a Storm (Mar-09)
Diworsification: The GCC Oil Stranglehold (Jan-09) This Too Shall Pass ( Jan-09) Fishing in Troubled Waters(Dec-08) Down and Out: Saudi Stock Outlook (Oct-08)
Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) The Golden Portfolio (Apr-08) Banking Sweet spots (Apr-08)
The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07)
A Gulf Emerging Portfolio: And Why Not? (Jun-07) To Leap or To Lag: Choices before GCC Regulators (Apr-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07)
GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06)
Periodic Research
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KSE Market Weekly Review International Market Update
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Thought Speaks
Infrastructure
GCC Power GCC Ports GCC Water
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GCC Roads & Railways Real Estate – Market Outlook
Kuwait Real Estate Outlook(Dec-09)
Abu Dhabi Residential (Nov-09) Office Investment in KSA (Jul-09) Saudi Arabia – Residential Real Estate Outlook (Jun-09) Saudi Arabia (Sep-08) Abu Dhabi (July-08)
Algeria (Mar-08) Jordan (Mar-08) Kuwait (Feb-08) Lebanon (Dec-07)
Qatar (Sep-07) Saudi Arabia (Jul-07) U.S.A. (May-07) Syria (Apr-07)
Sector Research
Real Estate Strategic Research
GCC Distressed Real Estate Opportunities (Sep-09) GCC Real Estate Financing (Sept-09)
Real Estate Earnings -2009 (May-09) Supply Adjustments Are we done? (Apr-09)
Dubai Real Estate Meltdown (Feb-09)
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R E S E A R C H January 2010
Bahrain Gulf Finance House (Oct-08) Esterad Investment Company
(Aug-08)
Bahrain Islamic Bank (Aug-08) Ithmaar Bank (July-08)
Tameer (July-08) Batelco (July-08)
Research Coverage Market Cap as % of total Market cap 29%
Sorouh Real Estate (Feb-09) Aldar Properties (Feb-09) Gulf Cement Company (Jan-09)
Abu Dhabi National Hotels (Dec-08) Dubai Investments (Dec-08)
Arabtec Holding (Dec-08) Air Arabia ( Nov-08) Union Properties (Nov-08)
Dubai Islamic bank (Oct-08) Union National Bank (Aug-08)
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Oman
Galfar Engineering & Cont. (Nov-08) Oman Telecommunications (Sept-08) Bank Muscat(Sept-08)
Oman cement (Sept-08) Raysut Cement Company (Aug-08)
National Bank of Oman (Aug-08) OIB (July-08)
Research Coverage Market Cap as % of total Market cap 69%
Egypt Commercial Int’l Bank (Oct-08) Orascom Telecom (Sep-08)
Mobinil (Sep-08) Telecom Egypt (Aug-08)
EFG-Hermes (Jun-08)
Research Coverage Market Cap as % of total Market cap 45%
Jordan
Arab Bank (Sept-08) Cairo Amman Bank (Oct-08)
Research Coverage Market Cap as % of total Market cap 39%
Saudi Arabia Almarai (Dec-09) Arab National Bank (Oct-09)
SAFCO (Oct-09)
Al Rajhi Bank (Aug-09)
Riyad Bank (Jul-09) Saudi Telecom Co. (May-09) Sabic (Mar-09)
Samba Financial Group (Feb-09) Saudi Investment Bank (Jan-09)
Savola Group (Dec-08) Kingdom Holding Co (Dec-08) Al Marai Company (Nov-08)
Saudi Kayan Petro Co. (Aug-08) Banque Saudi Fransi (Jun-08)
Research Coverage Market Cap as % of total Market cap 60%
Company Research
Markaz Research is available on: Bloomberg Type “MRKZ” <GO>, Thomson Financial, Reuters Knowledge, Zawya Investor & Noozz. To obtain a print copy, kindly contact: Kuwait Financial Centre “Markaz” Client Relations & Marketing Department Tel: +965 2224 8000 Ext. 1804 Fax: +965 2241 4499 Postal Address: P.O. Box 23444, Safat, 13095, State of Kuwait Email: [email protected] markaz.com
