GCC Markets Performance Markets – GCC August 2011

Global Research GCC Markets Performance Markets – GCC August 2011

GCC Markets Performance – 1H2011

• Political unrest in the Middle East drove all GCC bourses to a lower close by the end of 1H2011.

• GCC equities’ market capitalization stood at USD722.2bn by the end of 1H2011, down from USD750.2bn by the end of FY2010.

The political impact of the GCC Indices Performance 1H2011 / 2010 revolutions that swept 25% 20.03% across several countries in 20% 17.46%

the Middle East, dubbed as 15% “Arab Spring”, in addition to 10% 8.15% the international debt 6.06% problems, had their 5% economic effect on GCC 0% -0.68% -0.58% stock markets. -5% -0.61% -4.87% -0.87% -10% -7.59% -6.97% Kuwait market was hit the -9.60% -15% -12.41% hardest, as it posted the -14.02% steepest decline compared -20% Global Global Oman Global Saudi Dubai Abu to its regional peers. Global Bahrain Kuwait Qatar Dhabi General Index declined by 1H2011 Full year 2010 14.02 percent by the end of Source: Respective GCC stock markets & Global Research 1H2011 as it closed at 192.19 points. Meanwhile, KSE price index dipped by 10.69 percent by the end of 1H2011, reaching 6,211.70 points.

Besides Kuwait, Muscat Securities Market (MSM) had a disappointing performance in 1H2011. MSM 30 index dipped by 12.41 percent by the end of 1H2011, as it ended at 5,916.47 points. Despite an USD20bn economic aid package geared towards economic reforms in both Oman & Bahrain, neither market managed to reflect this positive initiative in its performance.

GCC Markets Meanwhile, Abu Dhabi Securities Exchange (ADX) performed better than its GCC peers, with the market’s index marginally retreating by 0.58 percent. It seems that UAE has managed to shrug off regional unrest and positioned itself as MENA's perceived safe haven.

Similarly, the Saudi market had a marginal decline of 0.68 percent by the end of 1H2011. The Saudi economy strengthened on the back of increased oil output and more government Faisal Hasan, CFA Head of Research spending, thus capping the stock market’s loss, compared to its regional peers. [email protected] Tel: (965) 2295-1270 Global GCC Large Cap. 30 Index declined by 5.43 percent in 1H2011 ending at 303.17 points, as most large capitalized stocks were hit hard. Rasha Al-Huneidi Vice President Market Capitalization [email protected] Market capitalization for the GCC markets stood at USD722.2bn by the end of 1H2011, down Tel: (965) 2295-1285 by 3.7 percent compared to end of year 2010. The Saudi market constituted 48.3 percent of the

Global Investment House aggregate market capitalization of GCC stock markets. www.globalinv.net

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Market Breadth The breadth of the GCC markets was titled Country Advancers Decliners Unchanged Total towards decliners during 1H2011, with 416 stocks Bahrain 8 25 17 50 ending on a lower note compared to 187 Kuwait 39 154 22 215 advancing stocks, while 69 stocks remained Oman 18 65 7 90 unchanged. Qatar 19 23 0 42

The market spread was negative in five out the six Saudi 79 65 3 147 GCC markets; except in Saudi, which was the only UAE 24 84 20 128 market that had a positive advancers to decliners’ Total 187 416 69 672 ratio. Source: Respective GCC Stock Markets & Global Research

GCC Trading Activity Total volume of shares traded during the 1H2011 stood at 64.5bn shares, with an aggregate value of USD189.2bn, executed through 14.4mn deals.

Total Volume Total Value Market Cap. Transactions Country (mn shares) (USDbn) (USDbn)* (000) Bahrain 0.3 0.1 19.7 7.0 Kuwait 22.2 13.7 114.1 363.4 Oman 1.5 1.7 17.9 227.3 Qatar 1.3 13.2 122.1 673.3 Saudi 27.3 155.5 348.6 12,943.0 UAE 12.0 5.0 99.9 228.8 Total 64.5 189.2 722.2 14,442.8 * GCC market capitalization is adjusted for cross-listed companies Source: Respective GCC stock markets & Global Research

IPO’s During 1H2011, four GCC companies offered their shares to the public, with an aggregate value of USD364.6mn. Three of these companies were in UAE, specifically ADX, and one in Saudi.

The first IPO of the year was that of Abu Dhabi based Insurance House, which took place from February 27 to March 11. Insurance House’s IPO, which was fully subscribed, was looking to raise AED66mn (USD18.6mn), equal to 55 percent of the company's authorized share capital of AED120mn.

National Takaful Company (Watania), an Abu Dhabi based Sharia'a-compliant insurance company, was the second company to tap the equity market during 1H2011, as it took place from April 18 to May 01, offering 55 percent of its capital to the public, valued at AED82.5mn (USD23.6mn). The company’s IPO received an overwhelming response as applications for 590mn shares were received for the 82.5mn shares offered to the public, which resulted in the IPO being oversubscribed by seven times.

IPO of Abu Dhabi-based developer Eshraq Properties was launched during the period from May 01, to May 11, 2011, to sell 55 percent of its shares to the public to raise AED825mn (USD229.9mn). As much as 25 percent of the value of each share was to be paid upon purchase with the rest to be paid over a period of two years. The IPO was fully covered.

In Saudi Arabia, IPO activity slowed down this year, as only one company floated its shares in 1H2011. Saudi Integrated Telecommunication Company (ITC) offered 35 of its capital to the public from May 2 to May 08, 2011. ITC’s SAR300mn (USD93.3mn) IPO was oversubscribed by three times, with a coverage percentage of 294 percent.

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Bahrain

Bahrain Bourse had a turbulent 1H2011 brought on mn Shares Global Bahrain Index - 1H2011 by the political unrest that hit the Middle East, and 60 122 120 extended to the country’s capital Manama. As a 50 118 result, by the end of 1H2011, Global Bahraini General 116 40 Index dropped by 7.59 percent, as it ended at 107.21 114 112 30 points. Meanwhile Bahrain All Share Index retreated 110 by 7.86 percent, ending 1H2011 at 1,319.71 points. 20 108 106 10 104 Trading Activity 102 The political unrest had its effects on the trading 0 100 r r y y activity of the exchange. During 1H2011, 273.8mn p p 3-Jan 6-Jun 9-Ma 11-A 25-A 17-Jan 31-Jan 20-Jun shares were traded on Bahrain Bourse, down from 14-Feb 28-Feb 14-Mar 28-Mar 23-Ma 403.06mn shares traded in 1H2010 (-32 percent). Volume Index Aggregate value of shares traded stood at Source: Bahrain Bourse & Global Research BHD52.3mn (USD138.8mn), down from BHD70.2mn (USD186.1mn) in 1H2010 (-25.4 percent). Bahrain Bourse witnessed the highest traded volume during 1H2011 on June 23, 2011, with 50.2mn shares exchanged. This surge in trading volume was attributed to deals executed on shares of Gulf Finance House (GFH) as part of its capital reorganization. Sector wise, commercial banks sector was the most active in terms of volume and value of shares traded during 1H2011, with 150.7mn shares exchanged at an aggregate value of BHD22.2mn (USD58.8mn), which represented 55.0 percent and 42.4 percent, respectively, of the market’s aggregates for 1H2011. Within the sector, AUB was the top value leader, with 56.7mn of its shares changing hands at an aggregate value of BHD15.7mn (USD41.6mn), representing 30 percent of the total traded value on the exchange in 1H2011. The bank’s share price marginally grew by 1.41 percent, ending 1H2011 at USD0.72.

Meanwhile, GFH was the top volume leader, with 62.5mn shares traded, at an aggregate value of BHD8.3mn (USD22mn), representing 22.8 percent of total volume of share traded on the Bahraini bourse. GFH’s shares have been suspended from trading during the period from October 17, 2010 to May 08, 2011, until it got necessary approvals to reorganize its capital. The Islamic bank reduced its paid-up capital through a 4:1 consolidation of shares and followed that by issuing equity-linked convertible murabaha that would be directed towards fund acquisitions and to be used as an initial seed capital for investments. GFH’s shares did not actually trade until June 12, 2011, and ended 1H2011 at USD0.305, down by 37.76 percent compared to its adjusted price after the capital reduction.

Top Five Traded Stocks - 1H2011 Company Volume (mn) Company Value (BHDmn) Gulf Finance House 62.54 Ahli United Bank 15.69 Ahli United Bank 56.65 Gulf Finance House 8.30 Ithmaar Bank 41.33 Al Baraka Banking Group 5.91 Al Salam Bank 32.23 Bahrain Telecommunications Co 5.64 Nass Co. 12.91 Aluminum Bahrain 3.85 Source: Bahrain Bourse (BB) & Global Research

Sectoral Performance Heavyweight investment stocks had a poor performance, with the sector’s index retreating by 14.29 percent by the end of 1H2011. On the companies’ level, Inovest posted the steepest decline amongst Bahraini listed shares, down by 39.62 percent, as it ended at USD0.32. Meanwhile, share price of Arab Banking Corporation

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and Al Baraka Banking Group, the largest two investment companies in terms of market capitalization, declined by the end of 1H2011 by 9.8 percent and 14.93 percent, respectively.

Commercial Banks index dropped by 5.45 percent. Several heavyweights within the commercial banking sector ended 1H2011 on a negative note. In May 2011, Moody's Investors Service has downgraded the long- term deposit ratings Bank of Bahrain & Kuwait (BBK) to Baa2 from A3, National Bank of Bahrain to Baa1 from A3, and BMI Bank to Ba1 from Baa3, with negative outlook for all three ratings. These rating actions followed Moody's decision to downgrade by one notch Bahrain's government bond rating to Baa1 and assign a negative outlook. Share price of BBK retreated by 2.79 percent, while National Bank of Bahrain’s share price inched marginally higher by 2.84 percent. In the meantime, Khaleeji Commercial Bank posted the steepest decline amongst commercial banks, as it ended at BHD0.042, down by 35.38 percent by the end of 1H2011.

Services index was another notable decliner, down by 9.93 percent by the end of 1H2011. The sector housed only two gainers, Bahrain Cinema Company and Bahrain Ship Repairing and Engineering Company, which ended 1H2011 with 19.2 percent and 5.6 percent in gains, respectively. Meanwhile, share price of Bahrain Telecommunications Company (Batelco) ended down by 12.16 percent. During 1H2011, Batelco came to the forefront with news about its joint bid with Saudi’s Kingdom Holding Company to acquire a 25 percent stake in Zain Saudi. The deal is expected to be finalized by 3Q2011.

Industrial index had limited losses of 0.57 percent by the end of 1H2011. Heavy-weight Aluminum Bahrain Company (Alba) ended 1H2011 at BHD0.900, down by 0.55 percent, while the sector’s other two components, Bahrain Flour Mills Company and Delmon Poultry Company, ended flat.

Global Bahrain Sectoral Indices Performance - YTD (1H2011)

Global Bahraini Index -7.59% BSE All Share Index -7.86% Commercial Banks -5.45% Investment -14.29% Preferred Shares -10.63% Closed Co. 0.00% Insurance -1.01% Services -9.93% Hotels & Tourism -0.02% Industrial -0.57%

-16% -14% -12% -10% -8% -6% -4% -2% 0% 2%

Source: Bahrain Bourse (BB) & Global Research

Market Capitalization Market Capitalization of Bahraini listed companies stood at BHD7.4bn (USD19.7bn) by the end of the 1H2011, declining from BHD7.9bn (USD20.9bn) in FY2010, recording a drop of 5.8 percent or BHD0.5bn (USD1.2bn) during the period.

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Largest Ten Listed Companies in Market Capitalization Company (Figures in BHDmn) Jun-2011 Mar-2011 Dec-2010 QoQ% YTD % Ahli United Bank 1,299.84 1,343.55 1,279.73 -3.25% 1.57% Aluminum Bahrain 1,278.00 1,278.00 1,285.10 0.00% -0.55% Bahrain Telecommunications Co. 645.12 699.84 734.40 -7.82% -12.16% Arab Banking Corporation 518.16 668.31 597.96 -22.47% -13.34% National Bank of Bahrain 496.11 560.26 482.11 -11.45% 2.90% Al Baraka Banking Group 365.34 416.33 447.03 -12.25% -18.27% Bank of Bahrain & Kuwait 355.87 383.11 366.08 -7.11% -2.79% United Gulf Bank 350.95 349.29 389.20 0.48% -9.83% Investcorp Bank 329.89 343.37 381.52 -3.93% -13.53% AUB Class A Preference Share 159.37 178.32 178.32 -10.63% -10.63% Total Market Capitalization 7,421.08 7,960.67 7,877.64 -6.78% -5.80% Source: Bahrain Bourse (BB) & Global Research

Several measures have been taken to address the causes of the turmoil. In March 2011, GCC officials announced an USD20bn economic aid package for Bahrain and Oman, in an effort to support the two countries. Moreover, His Majesty King Hamad bin Isa Al-Khalifa announced a 44 percent increase in budgetary expenditures for fiscal year 2011 and 2012, and lately, a National Dialogue initiative was launched in June 2011, to narrow divergence in viewpoints in order to reach common visions and reinvigorate reforms. We hope that this will help in getting trading activity of Bahrain Bourse increase as investors try to get into the markets. However, much will also depend on 2Q2011 results, which will dictate short term direction of the market.

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Kuwait

Kuwait Stock Exchange (KSE) had one of its mn Shares Global Kuwait Index - 1H2011 worst first half performances since the 1H1998. It 600 240 started in 1Q2011 when all MENA markets 500 230 220 including Kuwait witnessed selling pressure due 400 to political sitution in the region. Investors found 210 300 some hope in April and KSE rebounded strongly 200 200 registering the first monthly gain since December 190 2010. The gains came due to good 1Q2011 100 180 results of released companies’ financials specially 0 170 r y y

in banking sector. The gain did not last for too p 3-Jan 6-Jun

long as the market went back to bearish tone in 9-Ma 11-A 25-Apr 17-Jan 31-Jan 20-Jun 14-Feb 28-Feb 14-Mar 28-Mar 23-Ma May and June. KSE was negatively affected in Volume Index May by the local political issues. The market Source: KSE & Global Research weighted Global General Index, ended 1H2011 down by 14.02 percent as it closed at 192.19 points.

Trading Activity During the 1H2011, a total of 22.22bn shares were traded on the exchange, at an aggregate value of KWD3.77bn (USD13.70bn). The services sector was the most active in terms of volume of shares traded during 1H2011, with 6.40bn shares changing hands, representing 28.80 percent of the market’s total traded volume for 1H2011. On the other hand, the banking sector was the most active in terms of value of shares traded during 1H2011, with an aggregate value of KWD1.37bn (USD4.83bn) being traded, representing 36.26 percent of the market’s aggregate for 1H2011. Company-wise, National Ranges Company was the most traded stock in the bourse in terms of volume with 1.58bn shares changing hands, accounting for 7.12 percent of the total traded volume in KSE for 1H2011. However, the stock ended 1H2011 flat at KWD0.017. Heavy- weight Zain accounted for 11.34 percent of total value traded on the exchange during 1H2011 with KWD427.89mn worth of stocks being traded. The scrip recorded 21.21 percent loss in 1H2011, as it ended at KWD1.040.

Top Five Traded Stocks – 1H2011 Value Company Volume (mn) Company (KWDmn) National Ranges Company 1,581.68 Zain 427.88 Al Safwa Holding Group 1,318.48 National Bank of Kuwait (NBK) 409.02 Abyaar Real Estate Development Co. 1,092.80 Kuwait Finance House (KFH) 349.31 Investors Holding Group Company 1,067.92 Kuwait International Bank (KIB) 251.69 International Financial Advisors 1,031.96 Aviation Lease & Finance Co(Alafco) 162.97 Source: KSE & Global Research

Sectoral performance All sectoral indices ended the first half of the year in the negative territory. Global Services Index was the biggest loser, shedding 23.72 percent of its value. Kuwait National Airways Company was the top decliner in the sector, losing 76.25 percent from its share value to close at KWD0.019. The company’s stock was suspended from trading since May 15 for not submitting its 1Q2011 results to the exchange. The company suspended its operations earlier this year due to losses. The board has scraped KWD15mn (USD54.65mn) capital increase, according to the company. Educational Holding Group and Sultan Center Food Products Company were another major losers in the sector, shedding 46.88 percent and 42.86 percent, respectively.

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The heavy-weight stocks within the sector performed poorly during 1H2011. Agility closed down by 31.25 percent during 1H2011 to close at KWD0.330. The company dropped in its extraordinary general assembly the decision to raise its capital by 25 percent, which was originally endorsed on May 5, 2008.

With all companies announcing their dividends for the 2010 fiscal year, Zain was ranked number one in terms of dividend payout. Zain’s AGM and EGM approved the distribution of 200 percent cash dividends (200fil) in April 2011. Total revenues of the company in the year ending December 31, 2010 amounted to KD1.352bn, up 7 percent compared to a year earlier. The net profit, however, skyrocketed by 445 percent to KD1.036bn in 2010 compared with KD195mn recorded in 2009 due to extraordinary gain of KWD770.3mn, which resulted from the sale of its African Assets in 2010. On the positive side, Al Jazeera Airways Company was one of the prominent gainers in the sector as its scrip closed up by 59.68 percent for 1H2011 to reach KWD0.198.

Global Investment Index was down by 20.86 percent for 1H2011. The investment sector witnessed a merger & acquisition (M&A) deal in 1H2011 as International Finance Company got merged with Kuwait Invest Company (Holding) and Jeezan Holding Company, hence the last two companies were de-listed from the bourse. Only four Investment Companies managed to end 1H2011 with growth in their prices. First Investment Company was a major gainer in the sector, adding 27.50 percent to its share price as it closed at KWD0.102. On the negative side, eight investment stocks showed up in the top 20 decliners stocks during 1H2011. Housing Finance Company (ISKAN) was one of the major losers, shedding 66.67 percent from its share price.

In the banking sector, seven out of nine Kuwaiti banks recorded a drop in their share prices. National Bank of Kuwait (NBK) posted the steepest decline during 1H2011, shedding 9.37 percent of its value, as it ended June 2011 at KWD1.160. By the end of 1H2011, the Global banking index retreated by 6.12 percent.

Global Kuwait Sectoral Indices Performance - YTD (1H2011)

Global General Index -14.02% KSE Price Index -10.69% Global Banking -6.12% Global Investment -20.86% Global Insurance -8.07% Global Real Estate -10.04% Global Industrial -16.74% Global Services -23.72% Global Food -5.75% Global Kuwait Only -14.04% Global Non-Kuwaiti -13.89% Global Large Cap. -13.31% Global Small Cap. -8.97% Global High Yield -28.25% Global Islamic -4.64%

-32% -30% -28% -26% -24% -22% -20% -18% -16% -14% -12% -10% -8% -6% -4% -2% 0% 2%

Source: Kuwait Stock Exchange (KSE) & Global Research

Market Capitalization By the end of 1H2011, market capitalization of listed companies on the Kuwait Stock Exchange stood at KWD31.39bn (USD114.05bn), down by KWD4.91bn (USD16.54n) or 13.5 percent, compared to KWD36.30bn (USD130.59bn) reported by the end of FY2010.

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Largest Ten Listed Companies in Market Capitalization Company (Figures in KWDmn) Jun-2011 Mar-2011 Dec-2010 QoQ% YTD % National Bank of Kuwait (NBK) 4,590.96 4,511.81 5,181.02 1.75% -11.39% Zain 4,464.16 5,666.05 6,506.07 -21.21% -31.38% Kuwait Finance House (KFH) 2,689.04 2,850.38 2,888.23 -5.66% -6.90% Gulf Bank 1,354.16 1,278.93 1,429.39 5.88% -5.26% Commercial Bank of Kuwait 1,119.38 1,195.70 1,170.26 -6.38% -4.35% Boubyan Bank 1,048.94 979.01 1,101.39 7.14% -4.76% National Mobile Telecommunications Co 987.90 887.10 957.66 11.36% 3.16% Al-Ahli Bank of Kuwait 936.77 879.12 1,008.83 6.56% -7.14% Ahli United Bank 878.97 811.36 708.33 8.33% 24.09% Burgan Bank 750.41 698.91 742.71 7.37% 1.04% Total Market Capitalization 31,398.49 32,525.18 36,299.91 -3.46% -13.50% Source: Global Research

New listings and delisting during 1H2011 During 2Q2011, one company was listed under the Regular market. Al Imtiaz Investment Company was listed in the regular market on April 19, 2011, under the investment sector with a paid-up capital of KWD113.36mn. Zima Holding Company and Kuwait Remal Real Estate Company were listed on January 2011 under the services and real estate sectors, respectively. On the other hand, two companies were delisted from KSE after they got merged with International Finance Company (IFC). On May 11, 2011 IFC announced that its merger with Jeezan Holding Company and Kuwait Invest Holding Company has been finalized and its shares started trading on the Kuwait Stock Exchange (KSE) effective May 12, 2011 with the new increased capital. This brings the total number of listed companies in KSE by the end of June 2011 to 215.

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Oman

mn Shares The Omani market witnessed a rough and challenging MSM 30 Index - 1H2011 40 six months of the year 2011. Political instability in the 35 7,500 Arab countries and demonstrations in Oman had its 30 negative impact on the Omani market performance 25 7,000 20 during 1H2011. Although on March 2011, the GCC 6,500 15 council approved an aid package of USD10bn for 10 6,000 Oman and Bahrain each to upgrade housing and 5 infrastructure in the country, this catalyst had a very 0 5,500 limited impact on the market performance during y 9-Apr 4-Jun 1-Jan 7-Ma 23-Apr 18-Jun 15-Jan 29-Jan 12-Feb 26-Feb 12-Mar 26-Mar

1H2011. MSM 30 index registered a decline of 12.41 21-May percent during 1H2011, to reach 5,916.47 points. Volume Index Source: MSM & Global Research Trading Activity During 1H2011, Omani market experienced sluggish trading activity as a total of 1,472.7mn shares were traded during 1H2011 at an aggregate value of OMR654.91mn (USD1.70bn). Bank Muscat, the largest listed company in terms of market capitalization, was the most traded stock in 1H2011 with a total volume of 142.27mn. The bank topped value leaders’ list in 1H2011 as well with an aggregate traded amount of OMR120.10mn (USD311.87mn). Bank Muscat posted net profit of OMR27.86mn for the three months ended March 31, 2011 compared to OMR24.50mn reported during the same period in 2010, recording an increase of 13.76 percent.

Top Five Traded Stocks – 1H2011 Company Volume (mn) Company Value (OMRmn) Bank Muscat 142.27 Bank Muscat 120.10 Bank Sohar 110.77 Renaissance Services 113.71 Renaissance Services 105.73 Nawras 62.61 Oman United Insurance 85.43 Galfar Engineering & Contracting 33.52 Nawras 83.35 Oman Telecommunication 31.39 Source: MSM & Global Research

Sectoral Performance Heavy weight stocks did not perform well in 1H2011 and could not support market sectoral indices. All three market sectors were hit during 1H2011. Banking & Investment sector was the biggest decliner with a noticeable drop of 22.56 percent. Bank Muscat reported massive losses of 12.48 percent to close at OMR0.742. Bank Dhofar was also a prominent decliner in 1H2011 shedding 13.92 percent to close at OMR0.567. Investment companies also played a major role pulling the sector into the red zone. Dhofar International Development and Investment Holding Company ended the period under review down by 20.59 percent, reaching OMR0.428. Oman National Investment Corporation Holding (ONIC) went through turbulent first half ending it at OMR0.231, with 32.81 percent loss.

Industrial Index followed with a loss of 8.80 percent in 1H2011. Heavyweight cement companies retreated with Raysut Cement losing 14.62 percent of its value to close at OMR1.063. Oman Cement Company also declined by 12.50 percent. OCC was asked by the Ministry of Commerce and Industry to socially contribute OMR2.25mn for villages environmentally affected by its operations. Oman Flour Mills also experienced a challenging first half, posting 17.06 percent loss and closed at OMR0.530.

Services & Insurance Index declined by 6.72 percent. The largest listed services company in terms of market capitalization, Oman Telecommunications, witnessed a significant drop of 14.30 percent to close at

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OMR1.097. Oman Telecommunication has reported a 20 percent decline in net profit to OMR26mn for the first quarter ended March 31, 2011, compared to OMR32.44mn reported during the same period in 2010. The fall was primarily due to the company's investments in infrastructure made during the quarter. The actively traded stock, Nawras Telecom, was also amongst the decliners dropping by 14.86 percent. Also, Renaissance Services and Galfar Engineering And Contracting lost 25.70 percent and 23.36 percent from their share values, respectively.

During 1H2011, out of 97 companies that were traded 70 stocks declined, while 19 advanced and 8 ended unchanged. Oman and Emirates Investment Holding Company led decliners’ list for the 1H2011 with 49.21 percent losses to reach OMR0.096. On the gainers’ front, Oman Refreshment Company SAOG topped the gainers’ list with a growth of 121.48 percent in its share price to close at OMR1.121. Shareholders of the Company at the Extraordinary General Meeting and Annual General Meetings approved to change the nominal value of share from OMR1 to 100 baizas each and to split the paid up share of OMR1 each into 10 shares of 100 baizas each. The Shareholders approved a stock dividend at the rate of 66.67 percent (2 free bonus shares for every 3 shares held by the shareholders). The Share holders also approved a cash dividend at the rate of 100 percent of the face value of paid up share capital. MSM Sectoral Indices Performance - YTD (1H2011)

MSM 30 Index -12.41% -22.56% Banking & Investment

Industry -8.80%

Services & Insurance -6.72%

-24% -22% -20% -18% -16% -14% -12% -10% -8% -6% -4% -2% 0% 2%

Source: Muscat Securities Market (MSM) & Global Research

Market Capitalization By the end of 1H2011, market capitalization of listed companies on the Omani bourse stood at OMR7.03bn (USD18.25bn) compared to OMR7.80bn (USD20.26bn) recorded at the end of FY2010, recording a decline of OMR0.77bn (USD2.01bn) a -9.92 percent decrease.

Largest Ten Listed Companies in Market Capitalization Company (Figures in OMRmn) Jun-2011 Mar-2011 Dec-2010 QoQ% YTD % Bank Muscat 1,148.90 1,062.19 1,295.25 8.16% -11.30% Oman Telecommunication 822.75 825.00 959.25 -0.27% -14.23% Bank Dhofar 518.94 607.72 602.84 -14.61% -13.92% Nawras 443.94 468.03 517.50 -5.15% -14.21% National Bank Of Oman 345.92 344.84 382.67 0.31% -9.60% Oman International Bank 253.63 250.23 253.89 1.36% -0.10% Renaissance Services 238.93 277.58 312.56 -13.92% -23.56% Shell Oman Marketing 226.10 223.25 213.47 1.28% 5.92% Raysut Cement 212.60 217.80 245.00 -2.39% -13.22% Ahli Bank 209.17 234.82 206.59 -10.92% 1.25% Total Market Capitalization 7,027.45 7,142.28 7,801.01 -1.61% -9.92% Source: MSM & Global Research

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Qatar

Qatar market slumped during the first half of the mn Shares Global Qatar Index - 1H2011 year 2011, taking its cue from weakness in global 30 680 660 25 stocks, as doubts about Europe's ability to manage 640 its debt hammered developed markets, adding to 20 620 the wake of political unrest in neighboring Gulf 600 15 Arab countries. Moreover, the negative sentiments 580 prevailed as investors’ disappointment spurred by 10 560 540 5 MSCI Inc’s delay on whether to raise QE to 520 emerging market status. 0 500 r r r r y y y

p p p p 3-A Global Qatari General Index ended 1H2011 down 5-Jun 8-Ma 1-Ma 10-A 17-A 24-A 12-Jun 19-Jun 26-Jun by 4.9 percent as it finished at 628.08 points, while 15-Ma 22-May 29-May Volume Index QE Index dipped by 3.7 percent and closed at Source: QE & Global Research 8,361.1 points.

Trading Activity During 1H2011, a total of 1.3bn shares were traded on QE, at an aggregate value of QAR48.0bn (USD13.2bn). The services sector was the most active in terms of volume of shares traded during 1H2011, with 668.7mn shares exchanged at an aggregate value of QAR18.8bn (USD5.2bn), which represented 51.8 percent and 39.2 percent, respectively, of the market’s aggregates for 1H2011. Within the sector, Barwa constituted 12.9 percent of total volume of shares traded on the exchange during 1H2011, as investors exchanged 166.1mn shares of the company’s shares at an aggregate value of QAR5.6bn (USD1.5bn). The scrip recorded a price decline of 16.6 percent, as it finished the 1H2011 at QAR30.1.

On the other side, the banking & financial sector was the most active in terms of value of shares traded during 1H2011, with an aggregate value of QAR21.0bn (USD5.8bn), which represented 43.7 percent of the market’s aggregates for 1H2011. Masraf Al-Rayan witnessed intense buying during the first six months of the current year, as investors exchanged 292.6mn of the bank’s shares at an aggregate value of QAR6.5bn (USD1.8bn), which represented 22.6 percent and 13.5 percent, respectively, of the market’s aggregates for 1H2011. The bank’s share price grew by 21.7 percent by the end of 1H2011. The Islamic banks seem to be getting attention after Central Bank of Qatar (CBQ) directed conventional banks to seize their Islamic operations by the end of 2011, pushing Islamic bank stocks higher, while shares in some conventional banks weakened. However, in April, CBQ cut interest rates for the first time in eight months after a slowdown in credit growth. CBQ lowered the benchmark overnight lending rate by 50 basis points to 5 percent and the deposit rate by the same amount to 1 percent, after the monthly growth in Qatari bank credit dropped to 10 percent in February, the slowest pace since 2009. The decline came amid political turmoil in the Middle East, with unrest in Tunisia and Egypt spreading into some of Qatar’s neighbors such as Bahrain & Oman.

Top Five Traded Stocks – 1H2011 Company Volume (mn) Company Value (SARmn) Masraf Al-Rayan 292.52 Masraf Al-Rayan 6,476.68 Barwa 166.12 Industries Qatar 5,703.44 NAKILAT 111.10 Barwa 5,559.42 Salam International 89.59 Qatar National Bank 4,624.17 Qatar Meat 69.71 Qatar Islamic Bank 2,956.89 Source: Qatar Exchange (QE) & Global Research

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Sectoral Performance Sector wise, the retreat was broad-based, with three out of the four sectors of the market ending 1H2011 with losses. Global Banking & Finance Index was the sole exception, as it managed to add 0.4 percent gains in 1H2011, despite the poor performance of half of the sector’s component stocks. However a 21.7 percent advance in the share price of Masraf Al-Rayan helped enhance the overall performance of the sector. The bank announced that it will seek shareholder approval for a euro medium-term notes program which may see it issue a USD1bn sukuk, or Islamic bond. Also the biggest lender, Qatar National Bank was among the sector’s gainers, as its share price added 6.1 percent to its value by the end of the period, closing at QAR141.0, after the lender reported a 35 percent jump in its 1Q2011 profits. On the other side, the share prices of Commercial Bank and Doha bank were the major losers, shedding 21.6 percent and 20.9 percent, respectively, closing at QAR72.10 and QAR51.4, respectively.

Meanwhile on the negative side, Global Services Index was the biggest decliner shedding 10.8 percent, on the back of the poor performance posted by the two property stocks, Ezdan and Barwa. Ezdan topped the 1H2011 losers list as its share price dipped by 24.8 percent, closing at QAR22.95, while Barwa slipped by 16.6 percent, closing at QAR30.1. The scrip started its down trend journey after announcing leasing its Barwa City Project to Qatar Airways for QAR7.1bn (USD2.0bn). However, the sector’s loss was cushioned by the big advance posted by Qatar Cinema & Film Distribution, Al-Meera, Gulf Warehousing Company, Qatar Fuel and Qatar Meat, which topped the 1H2011 gainers list. During the period, Qatar Media Services and Cinema have agreed to a merger and acquisition deal worth nearly QAR2bn after talks lasting more than 10 months. The deal sees Qatar Cinema’s capital rise from QAR51.907mn to QAR129.699mn through the issuance of 7.78mn shares valued at QAR10 per share. Qatar Media will own 60 percent of Qatar Cinema’s share capital after the deal.

Global Insurance Index was also a notable decliner in the 1H2011, down by 4.1 percent. All insurance stocks ended the period on a negative note, barring Islamic Insurance, which finished up by 8.5 percent. The other four insurance companies reported lose ranged between 4.2 percent for the sector’s heavy weight, Qatar Insurance, and 7.9 percent for General Insurance.

In the meantime, Global Industrial Index dipped by 1.1 percent. Only two of the sector’s component stocks closed at higher levels, which were Industrial Manufacturing (up by 9.4 percent) and National Cement Company (up by 9.1 percent). On the other side, United Development Company and Qatar German Company for Medical Devices were the major decliners, shedding 11.8 percent and 11.3 percent, respectively. Also, the sector’s heavy weight, Industries Qatar, closed the 1H2011 down by 1.3 percent at QAR136.2. Industries Qatar represented 11.9 percent of the market’s aggregates value for 1H2011, with QAR5.7bn (USD1.6bn).

Global Qatar Sectoral Indices Performance - YTD (1H2011)

Global General Index -4.87%

QE Index -3.69%

Banking and Institutions 0.40%

Insurance -4.09%

Industrial -1.11% -10.76% Services

Qatar Islamic -6.42%

-12% -10% -8% -6% -4% -2% 0% 2%

Source: Qatar Exchange (QE) & Global Research

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Market Capitalization By the end of 1H2011, market capitalization of listed companies on QE stood at QAR444.6bn (USD122.1bn), down by QAR5.8bn (USD1.6bn), compared to QAR450.4bn (USD122.1bn) reported at the end of FY2010.

Largest Ten Listed Companies in Market Capitalization Company (Figures in QARmn) Jun-2011 Mar-2011 Dec-2010 QoQ% YTD % Qatar National Bank 89,692.59 87,275.34 72,693.56 2.77% 23.38% Industries Qatar 74,910.00 75,460.00 74,360.00 -0.73% 0.74% Ezdan 60,874.80 62,333.67 81,166.40 -2.34% -25.00% Qatar Telecom (Q-Tel) 26,945.60 23,883.20 26,039.25 12.82% 3.48% Qatar Islamic Bank 18,478.14 19,139.76 17,544.77 -3.46% 5.32% Commercial Bank of Qatar 17,840.88 19,053.37 20,641.15 -6.36% -13.57% Masraf Al-Rayan 17,430.00 16,725.00 14,325.00 4.22% 21.68% Electricity & Water 14,420.00 13,790.00 12,950.00 4.57% 11.35% Barwa 11,712.65 13,950.12 14,047.40 -16.04% -16.62% Doha Bank 10,624.27 12,133.16 12,410.48 -12.44% -14.39% Total Market Capitalization 444,578.97 444,466.71 450,393.11 0.03% -1.29%

Source: QE & Global Research

Delisting First Finance Company was delisted from QE on April 05, 2011, following Barwa Bank's acquisition of the financial services firm, thus decreasing the number of companies listed on the exchange to 42 companies.

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Saudi Arabia

The Saudi market ended the firs t half of the year mn Shares Tadawul All Share Index - 1H2011 2011 with little change, as Tadawul All Share 7,000 500 Index (TASI) closed at 6,576.00 points, 6,500 marginally down by 0.68 percent. 400 300 6,000 Saudi’s economic indicators for the 1H2011 200 showed a strengthening in economy due to an 5,500 increase in oil output and more government 100 spending, however, that was not reflected into 0 5,000 r r y the stock market’s activity, as regional political p p 9-A 1-Jan 4-Jun 7-May 23-A 15-Jan 29-Jan 18-Jun

unrest weighted on investors’ sentiments. 12-Feb 26-Feb 12-Mar 26-Mar 21-Ma Volume Index For the time being, investors’ attention will mainly Source: Tadawul & Global Research be focused on 1H2011 corporate results, will be announced during the coming few days. In addition to that, the enforcement of Labor Ministry’s newly introduced Nitaqat system, and its potential impact on the Saudi economy, will also be closely monitored.

Trading Activity During 1H2011, a total of 27.3bn shares were traded on the exchange, at an aggregate value of SAR583.3bn (USD155.5bn). The petrochemical sector was the most active in terms of volume and value of shares traded during 1H2011, with 6.0bn shares exchanged at an aggregate value of SAR193.9bn (USD51.7bn), which represented 22.0 percent and 33.2 percent, respectively, of the market’s aggregates for 1H2011. Within the sector, heavy-weight Saudi Basic Industries Corporation (SABIC) constituted 13.0 percent of total value traded on the exchange during 1H2011, with an aggregate value of SAR75.9bn (USD20.2bn). SABIC’s scrip recorded a price decline of 0.72 percent, as it ended the 1H2011 at SAR104.0.

In the meantime, Saudi Arabian Mining Company (Ma’aden), the biggest industrial investment company in terms of market capitalization, witnessed intense buying during the first six months of the current year, as investors exchanged 514.5mn of the company’s shares at an aggregate value of SAR12.6bn (USD3.4bn). Ma’aden’s scrip grew by 24.77 percent by the end of 1H2011. The company managed to secure a USD1bn government loan to help finance its USD3bn aluminum joint venture with Alcoa. Ma’aden also obtained commitment letters to cover USD1bn commercial bank financing for the development of the project, while further funding of USD160mn by the Saudi Industrial Development Fund is currently under evaluation.

Top Five Traded Stocks – 1H2011 Value Company Volume (mn) Company (SARmn) Alinma Bank 2,479.37 Saudi Basic Industries Corp 75,910.48 Saudi Kayan Petrochemical Co. 1,735.77 Saudi Kayan Petrochemical Co. 31,628.22 Zain Saudi 1,599.03 Alinma Bank 24,902.67 Emaar the Economic City 1,035.18 Al Rajhi Bank 14,579.57 Saudi Basic Industries Corp 730.85 Saudi Arabian Mining Company 12,588.86 Source: Tadawul & Global Research

Sectoral Performance In terms of sectors, out of 15 sectoral indices, eight sectors managed to eke out some gains, while seven sectors posted losses. Among gainers, Cement index posted the highest advance amongst its peers, up by

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25.56 percent. An upsurge in construction activity boosted cement demand in Saudi Arabia in 1H2011, and growth is projected to continue throughout the year. All 9 cement companies posted notable gains, led by the sector’s newest listing, Al Jouf Cement Company, which added 34.43 percent in gains for 1H2011, as it ended at SAR16.40. Another company, Hail Cement, is set for an initial public offering (IPO) next September.

Another prominent gainer was the Retail index, which grew by 12.61 percent by the end of 1H2011. Most retail listed companies ended the period on a positive note. Share price of Abdullah Al Othaim Markets Company and Mouwasat Medical Services Company appreciated by 24.68 percent and 17.01 percent respectively.

Meanwhile, on the negative side, Banks & Financial Services was among declining sectors, with its index shedding 8.24 percent of its value. Share price of the largest two listed Saudi banks, Al Rajhi Bank and Samba Financial Group retreated by 12.05 percent and 18.37 percent by the end of 1H2011, respectively.

On the companies’ level, Etihad Atheeb Telecommunication Company topped the decliners list, as it shed 49.18 percent of its share value, ending at SAR7.75. Capital Market Authority (CMA) suspended the company’s shares from trading effective May 24, 2011, after the company announced accrued losses for the year ended March 31, 2011 to be approximately 95 percent of its capital. Meanwhile, in June 2011, CMA approved Atheeb’s request to reduce its capital from SAR1bn (USD266mn) to SAR400mn (USD106mn).

Saudi Sectoral Indices Performance - YTD (1H2011) Tadawul All Share Index (TASI) -0.68% Banks & Financial Services -8.24% Petrochemical Industries 5.34% Cement 25.56% Retail 12.61% Energy & Utilities -1.79% -9.52% Agriculture & Food Industries Telecom. & Information Technology -9.41% Insurance 1.24% Multi-Investment 3.54% Industrial Investment 11.81% Building & Construction 1.52% Real Estate Development -4.84% Transport -15.82% Media and Publishing 7.45% Hotel & Tourism -0.68%

-25% -15% -5% 5% 15% 25% 35%

Source: Tadawul & Global Research

Market Capitalization By the end of 1H2011, market capitalization of listed companies on the Saudi bourse stood at SAR1,307.5bn (USD348.6bn), down by SAR17.9bn (USD4.8bn), compared to SAR1,325.4bn (USD353.4bn) reported at the end of FY2010.

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Largest Ten Listed Companies in Market Capitalization Company (Figures in SARmn) Jun-2011 Mar-2011 Dec-2010 QoQ% YTD % Saudi Basic Industries Corp 312,000.00 315,750.00 314,250.00 -1.19% -0.72% Al Rajhi Bank 109,500.00 116,625.00 124,500.00 -6.11% -12.05% Saudi Telecom Co. 72,800.00 77,000.00 85,200.00 -5.45% -14.55% Saudi Electricity Co. 57,290.66 57,707.32 58,540.64 -0.72% -2.14% Saudi Arabia Fertilizers Co. 47,250.00 46,875.00 39,937.50 0.80% 18.31% Samba Financial Group 45,000.00 51,075.00 55,125.00 -11.89% -18.37% Etihad Etisalat (Mobily) 36,750.00 36,050.00 38,675.00 1.94% -4.98% Riyad Bank 35475.00 39,600.00 39,900.00 -10.42% -11.09% Bank Al Saudi Al-Faransi 32038.39 34,858.93 32,327.68 -8.09% -0.89% Saudi British Bank 31500.00 33,750.00 30,225.00 -6.67% 4.22% Total Market Capitalization 1,307,489.93 1,319,051.72 1,325,392.98 -0.88% -1.35% Source: Tadawul & Global Research

New Listings Saudi Integrated Telecom Company (SITC) was listed on the exchange on June 28, 2011. In May 2011, the company offered 35 percent of its SAR1bn paid up capital to the public in an IPO priced at SAR10 per share. The scrip ended 1H2011 at SAR11.95, up by 19.50 percent compared to its IPO price.

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UAE

UAE stock markets ended 1H2011 with noticeable decline as Dubai and Abu Dhabi stock markets were affected by negative external factors. Political instability in the region, uncertainty about U.S economy and European financial debt crisis were negative factors that heavily weighted on UAE markets, and reduced investors’ appetite amid the absence of any major internal catalyst. Dubai government’s plan to take full control of Dubai Bank, resuming trading on Tamweel’s shares after more than 2 years suspension and expectations of a government solution for Amlak Finance were short term catalysts and failed to provide the required support to push the markets out of negative territory. The possible inclusion of UAE markets in MSCI to upgrade it from frontier markets to emerging markets, caught investors’ eyes during the 2Q2011 and was considered a strong positive catalyst, however, postponing the decision till December 2011 was met with mixed reactions. As investors were divided between that UAE markets are not ready to be upgraded, while, other investors thought that it’s an indication of a higher probability of including UAE markets in the index. However, we believe that it will ultimately lead to improvement in the UAE market structure and practices.

Dubai Financial Market (DFM). DFM General Index was hit the hardest in 1H2011 with 6.97 percent drop in 1H2011 to close at 1,516.93 points. FTSE NASDAQ Dubai UAE 20 index reported a decline of 8.85 percent during 1H2011 to close at 1,641.25 points. Meanwhile, Abu Dhabi Securities Exchange (ADX) was the best performing market in the GCC region during the first six months of the year with a limited retreat of 0.58 percent in 1H2011 to close at 2,704.19 points.

mn Shares ADX Index - 1H2011 mn Shares DFM Index - 1H2011 300 2,800 350 1,750 1,700 250 2,750 300 1,650 250 200 2,700 1,600 200 1,550 150 2,650 150 1,500 100 2,600 1,450 100 1,400 50 2,550 50 1,350 0 2,500 0 1,300 r r y y y y p p 2-Jan 5-Jun 2-Jan 5-Jun 8-Ma 8-Ma 10-Apr 24-A 10-Apr 24-A 16-Jan 30-Jan 19-Jun 16-Jan 30-Jan 19-Jun 13-Feb 27-Feb 13-Mar 27-Mar 13-Feb 27-Feb 13-Mar 27-Mar 22-Ma 22-Ma Volume Index Volume Index

Source: Dubai Financial Market (DFM), Abu Dhabi Securities Exchange (ADX) & Global Research

Trading Activity UAE markets witnessed volatile trends during 1H2011 with ADX witnessed 68 gaining sessions versus 60 sessions declined. Meanwhile, DFM index ended 68 sessions on a lower note and advanced for 59 sessions during 1H2011. UAE markets traded a total volume of 27.13bn shares during the 1H2011, with an aggregate traded value of AED38.35bn (USD10.44bn).

UAE Market Trading Activity - 1H2011 Markets Volume (mn) Value (AEDmn) DFM 17,039.26 22,440.36 ADX 10,090.95 15,909.52 Total UAE 27,130.21 38,349.88 Source: ADX, DFM & Global Research

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Total volume of shares traded on ADX stood at 10.09bn shares changing hands at an aggregate value of AED15.91bn (USD4.33bn). The real estate sector was the most active in terms of volume and value of shares traded during 1H2011, with 4.42bn shares exchanged at an aggregate value of AED5.83bn (USD1.59bn). Al Dar Properties witnessed intensive trading activity, as it was the most traded stock in terms of volume and value, with 2.49bn of the company’s shares changing hands, at an aggregate value of AED4.03bn (USD1.09bn).

In DFM, 17.04bn shares were traded at a total traded value of AED22.44bn (USD6.11bn). The real estate sector was here also the most active in terms of volume and value of shares traded during 1H2011, with 7.98bn shares exchanged at an aggregate value of AED12.10bn (USD3.30bn). Arabtec Holding Company was the volume leader for 1H2011 with 2.60bn shares traded. While, Emaar Properties stock was the most active when it came to value traded, which stood at AED5.86bn (USD1.60bn).

Top Five ADX Traded Stocks – 1H2011 Value Company Volume (mn) Company (AEDmn) Al Dar Properties 2,489.31 Al Dar Properties 4,028.92 Dana Gas PJSC 2,324.92 Emirates Telecommunications Corp. 2,030.72 Sorouh Real Estate Co. 1,097.32 Dana Gas PJSC 1,556.25 Ras Al Khaimah Cement Co. 1,037.02 Sorouh Real Estate Co. 1,465.75 RAK Properties 832.19 First Gulf Bank 1,019.52

Top Five DFM Traded Stocks – 1H2011 Value Company Volume (mn) Company (AEDmn) Arabtec Holding Company 2,605.32 EMAAR Properties 5,865.57 EMAAR Properties 1,880.84 Arabtec Holding Company 3,989.26 Air Arabia Company 1,824.57 Dubai Financial Market PJSC 1,835.71 Drake & Scull International 1,511.46 Drake & Scull International 1,585.69 Dubai Financial Market PJSC 1,388.80 Air Arabia Company 1,435.46 Source: ADX, DFM & Global Research

Sectoral performance On May 1, 2011, The Securities and Commodities Authority (SCA) has unified UAE sectors and reclassified the listed companies in accordance to international practices. (The new sectors classifications are showed in the indices performances graph).

In ADX, sectoral indices were skewed towards decliners with 7 sectors out of 9 indices reported significant drop during 1H2011. The real estate index extended its losses posting the steepest decline during 1H2011, shedding 35.62 percent. Within the sector, Al Dar property, largest listed real estate stock in terms of market capitalization, lost 45.61 percent from its value to close at AED1.24. The two other index’s components; Sorouh Real Estate Company & RAK Properties registered noticeable losses in 1H2011 as well, down by 24.54 percent and 18.18 percent, respectively. Heavy weight, energy sector index imposed pressure on ADX shedding 18.07 percent driven by the share price of Abu Dhabi National Energy Company, which plunged by 18.92 percent to close at AED1.20. Consumer staples sector index followed with 14.01 percent loss.

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ADX Sectoral Indices Performance - YTD (1H2011)

ADX Index -0.58%

Banks Sector 6.44%

Investment Sector -8.11%

Insurance Sector -3.45%

Services Sector -4.21%

Consumer Staples Sector -14.01%

Industrial Sector -4.21%

Real Estate Sector -35.62%

Telecom m unication Sector 2.78%

Energy Sector -18.07%

-45% -35% -25% -15% -5% 5%

Source: ADX & Global Research

Looking at DFM, sectoral indices were mostly negative with six indices ended 1H2011 with huge losses, while two sectors managed to register some gains. Services sector index reported the biggest decline in 1H2011, shedding 29.34 percent. Within the sector, National Central Cooling Company (Tabreed), reported the biggest decline plunging by 38.32 percent during 1H2011 to close at AED1.03. In April 2011, Tabreed announced that it has successfully completed its recapitalization program by refinancing AED2.63bn of bank debt and securing up to AED3.1bn of committed long-term capital from Mubadala. It has completed the conversion of AED1.7bn (USD463mn) Trust Certificates into shares of the firm, increasing Abu Dhabi-based Mubadala Holding stake in Tabreed to 14.81 percent. On the gainers’ front, Telecommunications sectoral index posted the highest gain in 1H2011, adding 8.74 percent to its value. Emirates Integrated Telecommunication Company, an index heavyweight, added 8.74 percent to its value during 1H2011 and closed at AED 3.11.

Worth mentioning that, Tamweel, Islamic mortgage provider, resumed trading on May 10, 2011 after it swung to profitability in 1Q2011. The scrip was suspended from trading since November 2008. By the end of June 2011,Tamweel’s share price lost 4.50 percent from its value compared to its closing price on the first trading day (May 10, 2011),which was AED0.89. The scrip closed at AED0.85 at the end of June 2011.

DFM Sectoral Indices Performance - YTD (1H2011)

DFM Index -6.97%

Banks Sector 4.49%

Investment Sector -12.43%

Insurance Sector -11.03%

Services Sector -29.34% 0.00% Consumer Staples Sector

Industrial Sector -17.83%

Real Estate Sector -12.75%

Telecommunication Sector 8.74%

Transport Sector -17.05%

-40% -30% -20% -10% 0% 10% 20% 30%

Source: DFM & Global Research 19

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Market Capitalization At the end of 1H2011, total market capitalization of DFM and ADX combined reached AED483,11bn (USD131.50bn). Market capitalization of ADX stood at AED288.23bn (USD78.46bn), down by AED1.10bn (USD299.73mn), compared to AED289.33bn (USD78.76bn) reported at the end of FY2010. While, market capitalization of DFM stood at AED194.87bn (USD53.04bn), down by AED4.21bn (USD1.15bn), compared to AED199.09bn (USD54.19bn) reported at the end of FY2010.

Largest Ten Listed Companies in Market Capitalization - ADX Company (Figures in AEDmn) Jun-2011 Mar-2011 Dec-2010 QoQ% Etisalat 86,534.79 82,978.57 85,349.38 4.29% Abu Dhabi National Bank 31,570.48 27,954.22 28,102.51 12.94% First Gulf Bank 26,775.00 24,000.00 25,093.75 11.56% Abu Dhabi Commercial Bank 17,514.22 11,976.90 9,956.70 46.23% Union National Bank 9,009.21 7,287.23 7,123.88 23.63% Abu Dhabi Islamic Bank 7,803.53 7,614.35 6,999.53 2.48% Abu Dhabi National Energy Company 7,719.00 9,213.00 4,544.25 -16.22% National Bank of Ras Al-Khaimah 6,303.24 5,749.11 5,795.28 9.64% United Arab Bank 4,483.81 5,629.67 5,410.46 -20.35% National Bank of Fujairah 4,389.00 4,554.00 5,500.00 -3.62% Total Market Capitalization 288,233.59 280,866.28 289,334.74 2.62% *Non UAE companies were excluded from top ten list

Largest Ten Listed Companies in Market Capitalization – DFM Company (Figures in AEDmn) Jun-2011 Mar-2011 Dec-2010 QoQ% Emirates National Bank of Dubai 23,064.77 18,396.23 15,339.46 25.38% EMAAR Properties 18,424.33 19,674.70 21,623.90 -6.36% Emirate Integrated Telecommunications 18,395.54 14,445.71 13,074.29 27.34% Mashreqbank 14,217.14 12,630.05 14,033.39 12.57% Dubai Financial Market PJSC 12,630.05 10,480.00 12,080.00 20.52% Dubai Islamic Bank 9,360.00 8,429.46 8,277.58 11.04% Commercial Bank of Dubai 7,632.08 5,823.86 6,716.86 31.05% Oman Insurance Company 4,665.34 3,279.29 3,451.44 42.27% Air Arabia 3,279.29 3,546.69 3,822.03 -7.54% Dubai Investment 3,094.02 3,016.98 2,784.91 2.55% Total Market Capitalization 194,871.55 194,823.94 199,085.54 0.02% *Non UAE companies were excluded from top ten list Source: ADX, DFM & Global Research

New Listing in 1H2011 Insurance House (IH) was listed on ADX on June 20, 2011 as part of the insurance sector. In February 2011, the company offered 55 percent of its AED120mn paid up capital to the public in an IPO. The subscription was open only for UAE nationals and 100 percent UAE national owned companies. Few days after listing, the shareholders of IH have approved during its Extraordinary General Meeting(EGM) to open up shareholding to foreigners to an extent of 25 percent of the company’s paid up equity share capital. The scrip ended 1H2011 at AED1.05, up by 0.96 percent compared to its IPO price of AED1.04.

Delisting On May 25, 2011, ADX decided to suspend trading on Fujairah Trade Centre Company’s shares and is currently awaiting a ministerial decision regarding delisting the company's shares.

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