MENA WEEKLY MONITOR APRIL 4 - APRIL 10, 2021 WEEK 15

Economy CONTACTS ______p.2 PWC SAYS ROLLOUT OF VACCINATION AND OIL PRICE RECOVERY IMPROVE THE Treasury & Capital Markets REGIONAL OUTLOOK PWC issued its Economy Watch dated April 2021 and entitled “Rethinking the role of expats and Bechara Serhal tax as we look beyond COVID-19.” (961-1) 977421 [email protected] Also in this issue Private Banking p.3 GCC banking provisions reached record highs of US$ 20 billion last year, as per Kamco Invest p.4 Flow of FDI to jumps 20% to US$ 5.5 billion in 2020 Toufic Aouad p.4 Kuwaitization of public sector reaches 77% in 2020 (961-1) 954922 [email protected]

Corporate Banking ______Surveys Carol Ayat p.5 UAE TOPS ARAB COUNTRIES IN HERITAGE FOUNDATION’S INDEX OF ECONOMIC (961-1) 959675 FREEDOM 2021 [email protected] Heritage Foundation published its 27th edition of the Index of Economic Freedom 2021 in which UAE topped Arab Countries and ranked 14th globally with a score of 46.9.

Also in this issue p.6 Doha tops Middle East cities in occupancy rates in January 2021, as per EY p.6 Jordan’s GDP to expand by a yearly 2.6% in 2021, as per Bloomberg

______Corporate News p.7 QATAR'S OOREDOO STRIKES US$ 750 MILLION DEAL TO SELL TOWERS IN INDONESIA Qatar’s telecoms company Ooredoo said its Indonesian operating company, PT Indosat Tbk, signed a sale and leaseback agreement with Edge Point Indonesia (PT EPID Menara AssetCo) for more than 4,200 RESEARCH telecommunications towers. Marwan Barakat (961-1) 977409 Also in this issue [email protected] p.7 ACC wins contract to build 300 villas at Jubail Island p.7 's DEWA inks 35-year water purchase deal for Hassyan project Salma Saad Baba p.8 Abu Dhabi's ADQ set to acquire Egyptian Amoun Pharmaceutical Company (961-1) 977346 p.8 signs partnership with quarrying company Stevin Rock [email protected] p.8 Al Atheer Real Estate set to launch residential project in Jeddah p.8 Al Mazaya Holding's board approves facility agreement with Kuwaiti bank Farah Nahlawi (961-1) 959747 [email protected] ______Markets In Brief Zeina Labban p.9 FURTHER WEEKLY EQUITY PRICE RISES, BOND PRICES MOSTLY UP WEEK-ON-WEEK (961-1) 952426 MENA equity markets saw extended price gains this week, as reflected by a 0.8% rise in the S&P Pan Arab [email protected] Composite index, mainly tracking global equity strength (+1.8%), after the IMF raised its 2021 global growth forecast to 6% and expected most GCC economies to recover this year at a faster pace than previously Michele Sakha estimated, largely helped by COVID-19 vaccine rollouts, trillions of US dollars of relief spending by rich (961-1) 977102 [email protected] countries’ governments and an oil price recovery. In parallel, activity in MENA bond markets was mostly skewed to the upside, mainly tracking US Treasuries move, after the US Federal Reserve Chairman said that the sluggish progress of COVID-19 vaccination outside the US is a key threat to the global economic outlook. MENA MARKETS:MENA WEEK MARKETS: OF OCTOBER APRIL 4 - 11APRIL - OCTOBER 10, 2021 17, 2020 Stock market weekly trend Bond market weekly trend Weekly stock price performance +2.8% Weekly Z-spread based bond index -3.4% ⬆ ⬆ Stock market year-to-date trend Bond market year-to-date trend YTD stock price performance +12.3 % YTD Z-spread based bond index +2.0% ⬆ ⬇ Week 15 April 4 - April 10, 2021 1 Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected] APRIL 4 - APRIL 10, 2021 WEEK 15

ECONOMY ______PWC SAYS ROLLOUT OF VACCINATION AND OIL PRICE RECOVERY IMPROVE THE REGIONAL OUTLOOK

PWC issued its Middle East Economy Watch dated April 2021 and entitled “Rethinking the role of expats and tax as we look beyond COVID-19.”

The report says that a year since the outbreak of the coronavirus, and it remains a material factor in daily life and economic trends here in the Middle East. Despite a new wave of infections this year, the rollout of vaccinations offers hope that the end is in sight and a recovery in the oil price - faster than most analysts expected - has provided further impetus.

However, the last year has changed the region, just as it has changed the world, and some of this will persist. In this issue, PwC looked at two trends in the GCC which predate the crisis but have been amplified by it, as diversification becomes more important than ever: expats and taxation.

A loosening of the sponsorship system in the Kingdom of Saudi Arabia and a new program of naturalisation in the are two examples of these trends. The pandemic has led to a sharp outflow in expats, mainly because of lost jobs, but many GCC states are looking at ways of retaining and attracting them, particularly those who can make the largest economic contribution.

Part of that contribution is increasingly coming in the form of taxation, mainly indirectly. This is happening as the GCC is trying to diversify its revenue base in response to the energy transition. PwC estimates that the regional tax take more than doubled between 2016 and 2019 to 5.2% of GDP. However, there is a wide range between states, from 0.5% of GDP in Abu Dhabi, even with VAT, to 7.4% in KSA, as nations explore different options for diversification.

The growth in taxation is coming from new kinds of tax as well as higher rates, and more is to come, including personal income tax in places. However, the GCC will still retain one of the lowest and simplest tax burdens globally and exemptions are being made to support competitiveness. Tax policy can also be used to support development goals, as with the Saudi white land tax.

DATA AND PROJECTIONS: APRIL 2021

GDP share (2020) Real GDP growth Inflation Fiscal bal. (% y/y) (& y/y) (% GDP) PPP MER 2020e 2021p 2020e 2021p 2020e 2021p Middle East 100% 100% -4.9 2.9 2.9 4.0 -7.1 -10.9 GCC 2.2% -3.4% -5.1 2.1 1.1 2.8 -6.2 -9.1 Saudi Arabia 33.2% 33.6% -3.9 2.6 3.6 3.7 -10.6 -6.0 UAE 13.4% 17.5% -6.6 1.3 -1.5 1.5 -9.9 -5.1 Qatar 5.3% 7.3% -4.5 2.5 -2.2 1.8 3.0 3.3 Kuwait 4.2% 5.4% -8.1 0.6 1.0 2.3 -8.5 -10.7 Oman 2.7% 3.1% -6.4 1.8 -0.9 3.9 -17.4 -5.4 Bahrain 1.5% 1.7% -5.4 3.3 -2.3 2.8 -12.8 -9.2 Non-GCC 39.8% 31.4% -4.5 4.7 6.8 6.6 -14.9 -11.3 Egypt 26.7% 17.9% 3.6 2.8 5.7 4.8 -8.0 -8.4 Iraq 8.2% 8.8% -10.9 1.2 1.0 11.5 -20.3 -16.2 Jordan 2.1% 2.1% -3.0 2.5 0.1 1.3 -6.8 -5.5 Lebanon 1.6% 0.9% -25.0 - 85.5 - -16.5 - Libya 0.7% 1.1% -66.7 76.0 22.3 15.1 -102.9 -43.2 Palest. Terr. 0.5% 0.7% -11.5 3.5 -0.7 0.7 -7.6 -4.9

Sources: PwC analysis, National statistical authorities, IMF estimates and forecasts (WEO, October 2020 or more recent country reports).

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Given its importance, in this edition PwC has dedicated a section to the ever changing landscape of tax in the region.

At the macro level, the first quarter of 2021 has been mixed for the region as per PwC. A new wave of coronavirus infections, particularly in the UAE and Bahrain, has led to a fresh wave of travel restrictions and lockdown measures. PwC’c composite index of GCC mobility, derived from Google data, hit a low of -16% below the pre-Covid baseline at end-2020, but had reverted to -22% by late January, the worst since August. However, there were signs of improvement in late February and PwC expects further improvements in the months to come, as vaccine deliveries pick up and other regional states emulate the strong rollouts seen so far in the UAE and Bahrain.

A more positive trend for the region has been the recovery of oil prices, which have risen above $60 (and briefly above $70) for the first time since January 2020. This is well above the prices budgeted by many states (for example $40 by Qatar and $45 by Oman) and if they persist then this should significantly ease fiscal stress across the region and provide governments with more capacity to support the post-Covid recovery phase.

______GCC BANKING PROVISIONS REACHED RECORD HIGHS OF US$ 20 BILLION LAST YEAR, AS PER KAMCO INVEST

The COVID-19 pandemic had a deep impact on the GCC banking sector resulting in record provisions being booked for fiscal year 2020.

Not only was economic activity hit by the pandemic-induced lockdowns and restrictions in movement among GCC countries, the lower oil prices for most of the year saw State revenues slashed for the oil producing members.

The 62 listed banks in the GCC reported loan loss provisions (LLP) of US$ 20.3 billion during 2020 with increases seen in all the six countries of the bloc, said Kamco Invest in a report.

Banks in the UAE saw the biggest spike in LLP during the year with an increase of US$ 3.4 billion, or 72%, to reach US$ 8.2 billion. On the other hand, Saudi Arabian banks booked the lowest percentage increase in LLP at 37.6%, or US$ 1.3 billion, to reach US$ 4.6 billion during the year.

Banks in the region set aside US$ 6.4 billion for doubtful credit during Q4-2020, the highest for a quarter ever recorded in the region.

Nevertheless, lending growth continued unabated in the region backed by economic recovery with gross loans (excluding Kuwaiti banks) reaching US$ 1.4 trillion with a quarter-on-quarter growth of 1.1% during the fourth quarter of 2020, Kamco said.

While most members reported growth ranging from 1% to 2.5% in gross lending during the fourth quarter of 2020, UAE reported a decline of 1.2%.

The trend in net loans was similar, showing a growth of 1.4% with only UAE showing a marginal decline of 0.3%. As a result, earning assets reached a record high of US$ 2.1 trillion with a quarter-on-quarter growth of 1.6%. This pushed total assets for the banking sector in the region to a new record high of US$ 2.6 trillion, according to Kamco.

The increase in customer deposits was relatively marginal during the quarter with growth of 0.4% to reach US$ 1.9 trillion. Even then, only Saudi Arabia, Qatar and Bahrain showed growth, while UAE, Oman and Kuwaiti banks saw a decline.

UAE banks reported the first fall in customer deposits in 16 quarters at -3.7% quarter-on-quarter. The net impact of a faster growth in lending versus deposits during the last quarter was a rise in aggregate loan-

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to-deposit ratio to above the 80% mark for the first time in three quarters at 80%. In terms of profitability, the decline in interest rates were reflected in lower net interest margins (NIM) for almost all the regional banks. The aggregate NIM for the region dipped below the 3.0% mark at 2.9%. However, Bahraini banks reported the highest NIMs in the region at 3.5%, followed by Saudi Arabian banks with aggregate NIM at 3.3%, down 13 bps (basis points) on the quarter.

______FLOW OF FDI TO SAUDI ARABIA JUMPS 20% TO US$ 5.5 BILLION IN 2020

There has been a significant increase in the inflow of foreign investments into Saudi Arabia last year.

The net foreign direct investment (FDI) in the Kingdom jumped 20.2% to about US$ 5.5 billion during the year 2020, compared to about US$ 4.6 billion in the previous year, according to preliminary and estimated data of the Saudi Central Bank (SCB).

The flow of FDI soared 80%, reaching US$ 1.9 billion in the fourth quarter of 2020, against US$ 1.0 billion in the same quarter of 2019. The remarkable achievements of Saudi Arabia are significant while comparing to a big fall in FDI at the global level.

According to a report of the United Nations Conference on Trade and Development (UNCTAD), there was a collapse of global foreign direct investment in 2020, dropping by 42% to an estimated US$ 859 billion from US$ 1.5 trillion in 2019.

In its previous report, UNCTAD stated that FDIs in Saudi Arabia amounted to US$ 4.7 billion in 2020, indicating that the Saudi government’s policies related to investment promotion are beginning to show positive results.

According to a previous data released by SCB, there has been an increase in net FDIs in Saudi Arabia by 1.3% during the first nine months of 2020, reaching about SR 13.4 billion (US$ 3.6 billion) as against SR 13.2 billion (US$ 3.5 billion) in the same period of 2019.

The net FDIs in the Kingdom reached SR 3.9 billion (US$ 1.0 billion) during the third quarter of 2020, an increase of 13.3% compared to SR 3.4 billion (US$ 913 million) in the second quarter of the same year.

The rate of foreign direct investment in Saudi Arabia increased by 7.9% during the first half of 2020, reaching US$ 2.6 billion while compared to about US$ 2.4 billion.

______KUWAITIZATION OF PUBLIC SECTOR REACHES 77% IN 2020

Kuwaitization of the public sector reached almost 77% last year as government employment grew to 420,800, up 11.4% since 2016, as per the Central Statistical Bureau.

Ministries and government departments employed 334,000 people as of the end of June 2020, of which 77.5% were Kuwaiti, the data showed. Public agencies and institutions employed 38,400, of whom 86.5% were Kuwaiti. Bodies and institutions with independent budgets employed 19,600 workers, of whom 59.4% were Kuwaiti.

Kuwait Airways employed 6,915 staff, 35.2% of whom were nationals. Employment in the 16 fully State-owned companies was 28,300, 68.3% of them Kuwaiti. About three quarters of them work in the oil sector.

The biggest share of non-Kuwaiti workers in the public sector were from non-GCC Arab countries (42.6%), followed by Asian countries (38.7%) and GCC nations (7.4%).

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SURVEYS ______UAE TOPS ARAB COUNTRIES IN HERITAGE FOUNDATION’S INDEX OF ECONOMIC FREEDOM 2021

Heritage Foundation published its 27th edition of the Index of Economic Freedom 2021 in which UAE topped Arab Countries and ranked 14th globally with a score of 46.9. The country was classified as “Mostly Free” and its overall score is above the regional and world averages.

The index which assesses economic freedom in a total of 184 countries for the year 2020, measures economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom. The first is Rule of Law (property rights, government integrity, judicial effectiveness. The second is Government Size (government spending, tax burden, fiscal health). The third is Regulatory Efficiency (business freedom, labor freedom, monetary freedom and the fourth is Open Markets (trade freedom, investment freedom, financial freedom).

Each of the twelve economic freedoms within these categories is graded on a scale of 0 to 100. A country’s overall score is derived by averaging these twelve economic freedoms, with equal weight being given to each.

In details, UAE’s overall score has increased by 0.7 point, primarily because of an improvement in fiscal health.

According to the report, the economy of the United Arab Emirates has maintained its standing among the ranks of the mostly free this year. Additional economic freedom is essential, however, if the government is to succeed in diversifying away from reliance on the hydrocarbons sector. Substantial reductions in subsidy payments would likely raise Index indicator scores for government spending and monetary freedom. More regulatory openness to foreign investment would also be a plus, as per the report.

ARAB COUNTRIES 2021 INDEX OF ECONOMIC FREEDOM RANKINGS

Global Overall Classification Rank

United Arab Emirates 14 76.9 Mostly Free Qatar 31 72.0 Mostly Free Bahrain 40 69.9 Moderately Free Saudi Arabia 63 66.0 Moderately Free Jordan 69 64.6 Moderately Free Oman 71 64.6 Moderately Free Kuwait 74 64.1 Moderately Free Morocco 81 63.3 Mostly Unfree Tunisia 119 56.6 Mostly Unfree Djibouti 126 56.2 Mostly Unfree Mauritania 128 56.1 Mostly Unfree Egypt 130 55.7 Mostly Unfree Comoros 132 55.7 Mostly Unfree Lebanon 154 51.4 Mostly Unfree Algeria 162 49.7 Repressed Sudan 175 39.1 Repressed

Sources: Heritage Foundation, Bank Audi's Group Research Department

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At the level of the Arab region, Qatar came in the second position regionally and 31st globally with a score of 72, decreasing by 0.3 point from its previous score. It was also classified as “Mostly Free”. Bahrain came in the third position regionally and 40th globally with a score of 72, rising by 3.6 point from its previous score. It was also classified as “Moderately Free”.

At the lower end of the scale were Algeria and Sudan which ranked 162nd and 175th globally and were both classified as “Repressed”. It is worth noting that Iraq, Libya, Somalia, Syria and Yemen were not ranked in this index. Globally, Singapore, New Zealand and Australia took over the first three ranks with respective scores of 89.7, 83.9 and 82.4 and all three countries were classified as “Free”.

______DOHA TOPS MIDDLE EAST CITIES IN OCCUPANCY RATES IN JANUARY 2021, AS PER EY

Ernst & Young issued its latest Hotel Benchmark Survey on the Middle East for the first month of 2021 (four and five star hotels), according to which occupancy rates decreased in thirteen out of fourteen cities within the region, with the only increase of 0.9% reported in Doha. Occupancy rates decreased in 13 cities considered in the survey with Makkah registering the most significant decrease of 66.9%.

The largest declines after Makkah were seen by Cairo-City which reported a decline of 50.1% and Amman with a fall of 37.1%. According to the survey, the cities of Doha Dubai and Abu Dhabi took over the first three ranks amongst peers in hotel occupancy, with 70% for Doha, 64% for Dubai and 61% for Abu Dhabi.

At the lower end of the regional scale were Manama (20%), Makkah (17%) and Amman (13%). Furthermore, a total of 10 of 14 cities reported decreases in the average room rate, with the highest decrease registering 44.0% in the case of Muscat. Beirut, Jeddah, Ras Al Khaimah and Dubai reported increases with the highest rise registered by Beirut at 142.1%.

In this context, the rooms’ yield decreased in 12 out of 14 cities, whereby Beirut and Jeddah reported increases of 110.1% and 11.4% respectively. As a matter of fact, the report considers Jeddah. The hospitality market in Jeddah witnessed a RevPAR growth of 11.4% from US$ 104 in January 2020 to US$115 in January 2021 primarily driven by the increase in ADR by 26.2% during the same period. However, occupancy declined by 7.3 percentage points from 62.1% in January 2020 to 54.8% in January 2021, according to the report. Reopening of Saudi Arabia’s borders after the two weeks’ suspension and consequent rise in the flight bookings may have yielded a greater return in the ADR and RevPAR levels of Jeddah hospitality market. However, the market has experienced a softened occupancy rates during the month mainly on the ground of surge in COVID-19 cases and reduced number of inbound travelers when compared to January 2020, as per EY.

Moving forward, the strategic decision to reopen the airspace, and land and sea borders to Qatar, the launch of themed short films by Saudi Tourism Authority (STA) to promote the domestic and international tourism, the potential development of cruise tourism and the rollout of COVID-19 vaccination are expected to accelerate the post-COVID sector recovery, as per the same source.

______JORDAN’S GDP TO EXPAND BY A YEARLY 2.6% IN 2021, AS PER BLOOMBERG

According to a recent survey by Bloomberg, Jordan’s GDP is expected to rise by a yearly 2.6% in 2021 and is expected to report a yearly growth of 2.9% in 2022.

The country’s inflation is expected to stand at 1.5% in 2021 and to register 1.7% in 2022, as per Bloomberg. As for current account, it is expected to register a deficit of 5.4% in 2021 and 4.4% in 2022.

Furthermore, the budget deficit is expected to stand at 4.8% in 2021 and 3.6% in 2022, as per the same source.

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CORPORATE NEWS ______QATAR'S OOREDOO STRIKES US$ 750 MILLION DEAL TO SELL TOWERS IN INDONESIA

Qatar’s telecoms company Ooredoo said its Indonesian operating company, PT Indosat Tbk, signed a sale and leaseback agreement with Edge Point Indonesia (PT EPID Menara AssetCo) for more than 4,200 telecommunications towers.

The company also known as Indosat Ooredoo agreed to sell this portfolio of towers in a transaction valued at US$ 750 million.

Indosat Ooredoo will lease back space on the towers for a period of ten years to meet its ongoing requirements.

The transaction is expected to close in Q2 2021 subject to customary conditions including shareholder approval. It is worth mentioning that J.P. Morgan acted as financial advisor to Indosat Ooredoo throughout the transaction.

PT EPID Menara AssetCo is an Indonesian subsidiary of Edge Point Singapore which is fully owned by Digital Colony, a global digital infrastructure investor with extensive experience owning and operating cellular towers.

______ACC WINS CONTRACT TO BUILD 300 VILLAS AT ABU DHABI JUBAIL ISLAND

Jubail Island Investment Company (JIIC) awarded the construction contract for the first phase of 300 villas to Arabian Construction Company (ACC).

A development of AED 5 billion (US$ 1.4 billion) Jubail Island will be collection of villages located between and Saadiyat Island. Covering more than 45 million square meter area and offering restaurants, a beach club, business center, sports facilities, schools and nurseries, as well as a community club and specialized clinics.

More than 60 % of the infrastructure is already completed, the first tranche of 300 villas within Jubail Island will be ready by the fourth quarter of 2023.

______DUBAI'S DEWA INKS 35-YEAR WATER PURCHASE DEAL FOR HASSYAN PROJECT

DEWA's first Independent Water Producer plant is scheduled to commence operations by Q1 2024.

Dubai Electricity and Water Authority (DEWA) signed a 35-year Water Purchase Agreement (WPA) and the Shareholder Agreement (SHA) for the Hassyan Sea Water Reverse Osmosis (SWRO) Plant, with Emirati company Utico at a cost of AED 1.5 billion (US$ 410 million) where project completion is expected by March 2024.

The 120 Million Imperial Gallons per Day (MIGD) project is DEWA's first desalination plant to be developed using the Independent Water Producer (IWP) model, the utility said in a press statement. DEWA is aiming to increase its desalination capacity to 750 MIGD by 2030.

This key project supports DEWA’s strategy to engage the private sector in developing innovations that enhance water supplies and improve the efficiency and quality of water services, as per the same source.

The project also supports DEWA’s strategy to promote Sea Water Reverse Osmosis, as it consumes less energy compared to Multi-Stage Flash (MSF) plants.

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______ABU DHABI'S ADQ SET TO ACQUIRE EGYPTIAN AMOUN PHARMACEUTICAL COMPANY

Abu Dhabi’s State-owned ADQ signed a definitive agreement to acquire Amoun Pharmaceutical Company. The transaction will be completed through a mandatory tender offer (MTO) by ADQ for the total issued share capital of Amoun including the less than 1 % held by minority shareholders, the UAE-based holding company said in a statement.

The investment in Amoun is expected to further strengthen ADQ’s long-term healthcare and pharma strategy, as per the same source. Amoun Pharmaceutical Company is an Egyptian manufacturer, distributor and exporter of branded pharmaceutical and animal health products from Bausch Health Companies Inc.

______ETIHAD RAIL SIGNS PARTNERSHIP WITH QUARRYING COMPANY STEVIN ROCK

Etihad Rail, the developer of the UAE’s national railway network signed an agreement with Stevin Rock, one of the largest quarrying companies based in Ras Al Khaimah for the transport of raw materials from the northern emirate to Abu Dhabi.

This agreement is considered as its first in a series of commercial agreements for Stage Two of the UAE National Rail Network which sees major organizations based in the UAE connected throughout the emirates via Etihad Rail’s highly anticipated national railway network, said the statement from Etihad Rail.

The Stage Two stretches over 605 kms from Al on the UAE’s border with Saudi Arabia in the west to the port of on the eastern coast. An estimated 3.5 million tons of construction material will be carried annually from Stevin Rock’s Al Ghail quarry in Ras Al Khaimah to Abu Dhabi through 500 annual train trips. Each train will measure one kilometer in length hauling 70 wagons that will have a carrying capacity of 7,000 tons per journey. The agreement will have significant environmental benefits, with an annual reduction of 100,000 truck trips, as said in a statement.

______AL ATHEER REAL ESTATE SET TO LAUNCH RESIDENTIAL PROJECT IN JEDDAH

Al Atheer Real Estate Development Company announced to launch its new Obhur Park plan located in one of the fastest-growing districts north of Jeddah near Obhur beach. The project is spread over a sprawling 1,145 square km area, Obhur Park will emerge a residential development in KSA featuring 8,000 apartment-type residential units of various areas and styles to meet the citizens' needs.

The project is a residential city that brings together residential towers, shopping centers, green spaces and parks, and a central garden, while ensuring full compliance with environmental sustainability criteria, as per CEO of AL Atheer Real Estate. Obhur Park Project provides diversified solutions to the residential sector targeting the beneficiaries of Sakani program that is being implemented in partnership with the Ministry of Municipal and Rural Affairs and Housing.

This project supports the endeavors to increase residential ownership among its citizens to 70% by the end of the decade in line with Saudi Vision 2030, as said in a statement.

______AL MAZAYA HOLDING'S BOARD APPROVES FACILITY AGREEMENT WITH KUWAITI BANK

The board of Al Mazaya Holding approved a facility agreement worth KWD 24.5 million (US$ 81 million) with a Kuwaiti bank to restructure the original outstanding facility of KWD 22.7 million.

The first payment is due upon signing the final contract followed by equal payments over a five-year period. The final payment is due at the end of the contract term on 31 January 2027, according to a bourse filing.

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CAPITAL MARKETS ______EQUITY MARKETS: EXTENDED WEEKLY PRICE GAINS IN MENA STOCK MARKETS, TRACKING GLOBAL EQUITY STRENGTH

MENA equity markets saw extended price gains this week, as reflected by a 0.8% rise in the S&P Pan Arab Composite index, mainly tracking global equity strength (+1.8%), after the IMF raised its 2021 global growth forecast to 6% and expected most GCC economies to recover this year at a faster pace than previously estimated, largely helped by COVID-19 vaccine rollouts, trillions of US dollars of relief spending by rich countries’ governments and an oil price recovery.

The heavyweight Saudi Tadawul, whose market capitalisation represents circa 76.2% of the total regional market capitalisation, posted a 1.1% rise in prices week-on-week, mainly on improved sentiment after the IMF raised its 2021 growth forecast for the Saudi economy to 2.9%, up from 2.6% forecast in January, which marks a rebound from the 4.1% contraction in 2020. Concurrently, the Saudi Central Bank governor said that the Kingdom’s economic recovery is expected to be “positive” this year. Also, some favorable company- specific factors contributed to driving Saudi equity prices up week-on-week.

Al closer look at individual stocks shows that petrochemicals giant Saudi Aramco shares, whose market capitalization represents 74.2% of the total Saudi market capitalization, posted weekly price gains of 0.4% to close at SR 35.60. SABIC’s share price increased by 2.1% to SR 117.40. Advanced Petrochemical Company’s share price surged by 6.1% to SR 75.30. Advanced Petrochemical Company announced a 64% year-on- year rise in its 2021 first quarter net profits to reach SR 171 million. Saudi Electricity Company’s share price surged by 7.8% to reach SR 24.78, noting that the stock was the fifth top gainer in the Saudi Tadawul this week. Saudi Electricity Company announced 2020 net profits of SR 3 billion, up by 118% relative to the previous year. Saudi National Bank’s share price closed 1.6% higher at SR 55.90. SNB’s Board of Directors recommended the distribution of dividends at a rate of SR 0.80 per share for the year 2020.

Boursa Kuwait posted a 2.0% increase in prices week-on-week, mainly tracking strengths in global equity markets, and on improved sentiment after the IMF forecast the Kuwaiti real economy to grow by 0.7% in 2021, rebounding from an 8.1% contraction in 2020. Boubyan Bank’s share price surged by 5.3% to KWf 613.0. NBK’s share price rose by 0.7% to KWf 821. Mabanee’s share price increased by 3.7% to KWf 723. Agility’s share price went up by 1.4% to KWf 741.

EQUITY MARKETS INDICATORS (APRIL 4 - APRIL 10, 2021)

Price week-on- Year-to- Trading week-on- Volume Market Capi- Turnover Market P/E* P/BV* Index week Date Value week Traded talization ratio

Lebanon 82.14 0.8% 29.4% 7.1 -55.7% 0.4 9,282.0 4.0% - 0.66 Jordan 288.6 -0.4% 1.0% 37.3 -42.4% 27.0 19,283.3 10.1% 16.8 1.31 Egypt 254.4 -2.9% -5.0% 220.8 -20.3% 1,827.8 43,773.4 26.2% 9.1 1.58 Saudi Arabia 448.5 1.1% 17.6% 11,203.6 -13.8% 1,386.6 2,560,063.9 22.8% 21.2 3.04 Qatar 179.3 0.8% 1.2% 777.4 35.7% 1,980.4 166,238.4 24.3% 15.9 1.90 UAE 114.7 -0.7% 11.4% 1,074.0 -52.5% 914.5 333,108.3 16.8% 16.1 2.00 Oman 190.3 0.5% 1.3% 21.8 3.8% 57.7 15,914.6 7.1% 11.1 0.87 Bahrain 137.6 0.0% -3.0% 2.8 -20.6% 5.6 22,344.7 0.6% 15.6 0.56 Kuwait 113.6 2.0% 8.6% 570.2 15.9% 1,218.7 104,591.4 28.3% 21.4 1.81 Morocco 286.7 0.7% 1.3% 37.6 -20.6% 1.0 76,058.8 2.6% 23.1 2.63 Tunisia 71.2 0.8% 2.3% 7.9 -20.7% 3.4 8,716.0 4.7% 15.3 2.86 Arabian Markets 864.2 0.8% 12.3% 13,960.4 -16.7% 7,423.1 3,359,374.8 21.6% 20.1 2.77 Values in US$ million; volumes in millions * Market cap-weighted averages

Sources: S&P, Bloomberg, Bank Audi'sGroup Research Departement.

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The Qatar Exchange recorded price increases of 0.8% week-on-week, mainly tracking global equity strength and on improved sentiment after the IMF forecast the Qatari economy to grow by 2.4% in 2021 following a 2.6% contraction in 2020, in addition to some favorable company-specific factors. 24 stocks out of 48 listed stocks registered price gains, while 23 stocks posted price falls and one stock saw no price change week-on-week. Industries Qatar’s share price rose by 2.2% to QR 12.47. Gulf International Services’ share price surged by 3.8% to QR 1.557. Mesaieed Petrochemical Company’s share price went up by 0.5% to QR 1.864. Vodafone Qatar’s share price closed 3.7% higher at QR 1.813. Ezdan Holding Company’s share price jumped by 11.4% to QR 1.786.

In contrast, the Egyptian Exchange registered a 2.9% fall in prices week-on-week, mainly on concerns over escalating regional tensions after the latest round of talks between Egypt, Ethiopia and Sudan over the Grand Renaissance Dam failed to make a progress and the Egyptian President warned of the risk of conflict over the giant dam. Commercial International Bank’s share price shed 3.7% to LE 55.08. EFG Hermes’ share price closed 1.5% lower at LE 14.40. Talaat Moustafa Group’s share price plunged by 4.3% to LE 5.94. Palm Hills Development’s share price went down by 1.1% to LE 1.604. Juhayna Food Industries’ share price declined by 3.3% to LE 5.51. SODIC’s share price decreased by 0.8% to LE 15.86.

______FIXED INCOME MARKETS: ACTIVITY IN MENA BOND MARKETS MOSTLY TILTED TO UPSIDE, ON LINGERING CONCERNS OVER UNEVEN GLOBAL VACCINATION

Activity in MENA fixed income markets was mostly skewed to the upside this week, mainly tracking US Treasuries move, after the US Federal Reserve Chairman said that the sluggish progress of COVID-19 vaccination outside the US is a key threat to the global economic outlook, and after latest FOMC’s meeting minutes showed that officials back the view that it would take some time for economic conditions to meet the threshold for a taper of asset purchases.

In the Bahraini credit space, prices of sovereigns maturing in 2026 and 2031 expanded by 0.38 pt and 1.02 pt respectively week-on-week. NOGA’27 was up by 0.59 pt. NOGA’29 was down by 0.08 pt. Fitch assigned The Oil and Gas Holding Company's (nogaholding) US$ 3 billion trust certificate issuance program, housed under the special-vehicle purpose nogaholding Sukuk Limited, a final rating of “B+”. It has also assigned US$ 600 million fixed-rate certificates, issued through nogaholding Sukuk Limited and maturing in 2029, a final rating of “B+”. The final ratings are in line with nogaholding's “B+” Long- Term Issuer Default Rating and senior unsecured rating. nogaholding's IDR outlook is “stable”.

In the Abu Dhabi credit space, sovereigns maturing in 2031 registered price gains of 0.25 pt week-on- week. Mubadala’26 closed up by 0.38 pt. Prices of ADNOC’29 improved by 0.34 pt. Etisalat’24 was up by 0.15 pt.

In the Dubai credit space, sovereigns maturing in 2029 saw price increases of 0.19 pt week-on-week. Emaar’26 closed up by 0.33 pt. Prices of DP World’30 improved by 0.36 pt. Majid Al Futtaim’29 was up by 0.44 pt. As to papers issued by financial institutions, Emirates NBD Perpetual (offering a coupon of 6.125%) registered price gains of 0.27 pt. Regarding plans for new issues, Dubai Islamic Bank announced plans to tap international debt markets with US dollar-denominated Additional Tier 1 Sukuk. In the Qatari credit space, sovereigns maturing in 2030 posted price rises of 0.25 pt week-on-week. Ooredoo’26 was up by 0.10 pt. Amongst financials, Commercial Bank of Qatar’23 was down by 0.07 pt. Commercial Bank Qatar Finance raised CHF 150 million from the sale of three-year bonds at 78 bps over midswaps, offering a coupon of 0.195%.

In the Saudi credit space, sovereigns maturing in 2026 and 2030 posted price increases of 0.13 pt and 0.38 pt respectively week-on-week. Saudi Aramco’25 was up by 0.18 pt. STC’29 closed up by 0.42 pt. In the Omani credit space, sovereigns maturing in 2026 and 2029 registered price gains of 0.63 pt and 1.0 pt respectively. Prices of Omantel’28 expanded by 0.50 pt.

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In the Egyptian credit space, US dollar-denominated sovereigns maturing in 2023, 2025 and 2040 saw price increases of 0.25 pt, 0.38 pt and 1.50 pt respectively, while sovereigns maturing in 2030 were down by 0.31 pt this week. Prices of Euro-denominated sovereigns maturing in 2026 and 2031 improved by 0.82 pt and 1.25 pt respectively.

All in all, regional bond markets saw mostly upward price movements this week, mainly tracking rises in US Treasuries, after the US Fed Chairman said that disparate vaccination distribution poses a risk to the global economic rebound and the US recovery remains “uneven and incomplete”.

MIDDLE EAST 5Y CDS SPREADS V/S INTL BENCHMARKS Week-on- in basis points 9-Apr-21 2-Apr-21 31-Dec-20 week Year-to-date Abu Dhabi 47 48 38 -1 9 Dubai 100 105 112 -5 -12 Kuwait 52 51 44 1 8 Qatar 47 49 38 -2 9 Saudi Arabia 68 69 65 -1 3 Bahrain 198 204 241 -6 -43 Morocco 99 103 112 -4 -13 Egypt 323 331 339 -8 -16 Iraq 594 609 693 -15 -99 Middle East 170 174 187 -4 -17 Emerging Markets 142 142 105 0 37 Global 156 155 140 1 16

Sources: Bloomberg, Bank Audi's Group Research Department

Z-SPREAD BASED AUDI MENA BOND INDEX V/S INTERNATIONAL BENCHMARKS

Base Jan 2010 = 100 20 240 220 200 10 10 140 120 100 0 0 40 20 0 Jan-10 Aug-10 Mar-11 Oct-11 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Jun-16 Jan-17 Aug-17 Mar-18 Oct-18 May-19 Dec-19 Jul-20 Feb-21

Ai pil A ri r

Sources: Bloomberg, Bank Audi's Group Research Department

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SOVEREIGN RATINGS & FX RATES

SOVEREIGN RATINGS Standard & Poor's Moody's Fitch LEVANT Lebanon SD/-/SD C/- RD/-/C Syria NR NR NR Jordan B+/Stable/B B1/Stable BB-/Negative/B Egypt B/Stable/B B2/Stable B+/Stable/B Iraq B-/Stable/B Caa1/Stable B-/Stable/B GULF Saudi Arabia A-/Stable/A-2 A1/Negative A/Negative/F1+ United Arab Emirates AA/Stable/A-1+* Aa2/Stable AA-/Stable/F1+ Qatar AA-/Stable/A-1+ Aa3/Stable AA-/Stable/F1+ Kuwait AA-/Negative/A-1+ A1/Stable AA/Negative/F1+ Bahrain B+/Stable/B B2/Stable B+/Stable/B Oman B+/Stable/B Ba3/Negative BB-/Negative/B Yemen NR NR NR NORTH AFRICA Algeria NR NR NR Morocco BB+/Stable/A-3 Ba1/Negative BB+/Stable/B Tunisia NR B3/Negative B/Negative/B Libya NR NR NR Sudan NR NR NR NR= Not Rated RWN= Rating Watch Negative RUR= Ratings Under Review * Ratings

FX RATES (per US$) 09-Apr-21 02-Apr-21 31-Dec-20 Weekly change Year-to-date LEVANT Lebanese Pound (LBP) 1,507.50 1,507.50 1,507.50 0.0% 0.0% Jordanian Dinar (JOD) 0.71 0.71 0.71 0.0% -0.1% Egyptian Pound (EGP) 15.70 15.72 15.75 -0.2% -0.3% Iraqi Dinar (IQD) 1,460.00 1,460.00 1,460.00 0.0% 0.0% GULF Saudi Riyal (SAR) 3.75 3.75 3.75 0.0% 0.1% UAE Dirham (AED) 3.67 3.67 3.67 0.0% 0.0% Qatari Riyal (QAR) 3.72 3.70 3.67 0.6% 1.4% Kuwaiti Dinar (KWD) 0.30 0.30 0.30 0.0% 0.1% Bahraini Dinar (BHD) 0.38 0.38 0.38 0.0% 0.0% Omani Riyal (OMR) 0.38 0.39 0.39 0.0% 0.0% Yemeni Riyal (YER) 250.00 250.00 250.00 0.0% 0.0% NORTH AFRICA Algerian Dinar (DZD) 133.33 133.33 131.58 0.0% 1.3% Moroccan Dirham (MAD) 8.97 9.06 8.91 -1.0% 0.6% Tunisian Dinar (TND) 2.78 2.79 2.69 -0.4% 3.3% Libyan Dinar (LYD) 4.52 4.54 1.34 -0.5% 237.5% Sudanese Pound (SDG) 381.62 381.74 55.14 0.0% 592.1%

Sources: Bloomberg, Bank Audi's Group Research Department

______DISCLAIMER

The content of this publication is provided as general information only and should not be taken as an advice to invest or engage in any form of financial or commercial activity. Any action that you may take as a result of information in this publication remains your sole responsibility. None of the materials herein constitute offers or solicitations to purchase or sell securities, your investment decisions should not be made based upon the information herein.

Although Bank Audi sal considers the content of this publication reliable, it shall have no liability for its content and makes no warranty, representation or guarantee as to its accuracy or completeness.

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