WEEKLY MARKET

MONITOR WEEK 28 / 08-14 JULY, 2013

THE WEEK IN BRIEF

¾ Banks Charged with Blocking CDS Market ¾ Croatia Becomes 28th EU Member CONTACTS ¾ Reserve Bank of Australia Keeps Rates at 2.75% Ibrahim Itani ¾ Report of U.S Spying Trade Talks with EU in Doubt 961‐1‐360460 Ext.786 [email protected] ¾ Orders to U.S Factories Rise on Demand for Machinery ¾ US Oil Tops $100 for First Time Since September 2012 Fouad Abou Hassan 961‐1‐360460 Ext.787 ¾ Eurozone Unemployment Climbs to 12.1% [email protected] ¾ Brazil Posts Biggest Trade Deficit Since 1995

Joseph Kalaydjian ¾ Egypt Economy Nears Collapse as Protesters Fill Streets 961‐1‐360460 Ext.788 ¾ Portuguese Bond Yield Soars [email protected] ¾ ECB Leaves Benchmark Interest Rate Unchanged at 0.5% ¾ Bank of England Maintains Benchmark Interest Rate at 0.5% ¾ Trade Deficit in U.S Unexpectedly Jumps as Imports Near Record

GOLD TECHNICALS

1275

Resistance 1295 1317

1180 1155 Support 1120

After printing the significant low of 1180, the metal has showed some kind of consolidation during the previous week but it closed negatively on Friday . The clear bearish trend started at 1796.00 is still in progress. Stochastic remains negative despite approaching oversold regions. Eyes on 1120.00 to be a target for the bearishness EURO TECHNICALS

1.2890

Resistance 1.2950 1.3000

1.2740 1.2680 Support 1.2650

The EUR/USD ended Friday at 1.2831 after comments from Mr. Draghi of the ECB sent the euro tumbling and then a strong jobs release in the US sent the USD climbing. The euro fell as low as $1.2805 against the dollar, its weakest since May 20. It was last trading at $1.2829, down 0.7 percent. The euro fell against the dollar for the third straight week with a 1.4 percent decline in the week.

GLOBAL COVERAGE

INDEX MARKET OPEN MARKET CLOSE Investment banks’ 20 year grip over credit insurance 01‐07‐13 05‐07‐13 markets has come under regulatory assault as DOW 14974.96 15135.84 Brussels served charges against 13 banks for allegedly S&P 500 1614.96 1631.89 conspiring to block exchanges from challenging their NASDAQ 3434.49 3479.38 business model. The formal European Commission charge sheet alleges collusion to ensure the INDEX MARKET OPEN MARKET CLOSE insurance like contracts remained an over the 01‐07‐13 05‐07‐13 counter (OTC) product preserving the banks’ role as NIKKEI 13852.5 14309.97 middlemen. Investigators claim the banks from 2006 HANGSENG 20658.65 20854.67 to 2009 protected their indispensable position in the $25tn global market through control of a trade body ASX 200 4710.29 4841.75 and information provider, which vetted whether new exchanges should be licensed. CREDIT DEFAULT INDEX MARKET OPEN MARKET CLOSE SWAPS provide insurance against a default on bond 01‐07‐13 05‐07‐13 payments and are used by investors to manage risk DAX 7983.92 7806.0 and bet on creditworthiness. If the commission acts STOXX 50 2622.62 2596.01 on the charges, the 13 banks (Bank of America Merrill FTSE 100 6307.78 6375.52 Lynch, Barclays, Bear Stearns, BNP Paribas, , , , Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Royal Bank of Scotland, UBS), the International Swaps and Derivatives Association (ISDA), a derivative trade body and Markit, the main data handler for CDS, could face fines of up to 10 percent of global turnover. Brussels alleges that the harm from blocking exchanges, such as Deutsche Borse and CME Group of the US, went beyond trapping investors in the relatively more costly OTC market.

The European Union will launch broad trade talks with the U.S in Washington next week despite French and German concerns about reports of U.S spying. France and Germany had demanded that Washington respond to news reports that the National Security Agency spied on European institutions, the latest diplomatic blow up from revelations by fugitive NSA leaker Edward Snowden. French President Francois Hollande on Monday said we cannot have any negotiations or deals until France and EU get guarantees that the U.S is not spying on its European allies. Germany officials said the trade talks could proceed but only on the basis of trust. On Tuesday, The Brussels based European Commission, the EU’s executive arm and lead trade negotiator, said the formal trade talks would start the week of July 8 as planned. Supporters of the trade negotiations say the TTIP is envisioned as a broad agreement on trade, agriculture, industry standards and investment that would boost growth on both sides of the Atlantic.

CORPORATE NEWS

France will sell stakes in Paris airport operator AEROPORTS DE PARIS SA (EURONEXT:ADP) of 4.69 percent to construction group VINCI (EURONEXT:DG) and 4.81 percent to CREDIT AGRICOLE ASSURANCES (EURONEXT: ACA), Finance Minister Pierre Moscovici said. The government and its FSI investment fund will raise 738 million euros from the sale of 9.5 percent, the minister said in a statement on Sunday. Vinci and Credit Agricole Assurances will each get a board seat and have agreed not to increase their ADP stakes above 8 percent for five years. With the sale, Vinci raises its stake to nearly 8 percent. The French group has said it wants to expand its airport management business to reduce reliance on construction revenues. In December it paid 3.08 billion euros for Portuguese airport operator ANA. France’s cash strapped government, which has announced plans to trim some public holdings, announced on May 30 it planned to reduce the combined 60.1 percent of ADP controlled by the state and FSI fund, while retaining a majority.

Russian niche coal producer SIBANTHRACITE set a price range for shares in a planned London market debut that would enable the selling shareholder to raise up to $214 million for its 25 percent stake. Sibanthracite said the GLG Emerging Markets Growth Fund would sell its one quarter stake in a price range between $7.00 and $9.5 per global depositary receipt (GDR) in an initial public offering. A two week investor road show starts on Monday to be followed by pricing. The offering would value the stake being put up for sale at between $158 million and $214 million. Of the shares on offer, 20 percent are being reserved for eligible existing investors of the GLG fund. The stock offering comes at a challenging time for coal producers as China’s industrial growth wanes and steelmakers struggle. Emerging markets that, like Russia, are weighted towards the resources sectors are also weak. Sibanthracite, however, profiles itself as a niche player offering a premium product‐ultra high grade anthracite that can be used as a substitute for coke in blast furnaces and continues to be in high demand.

BARCLAYS PLC (LON:BARC), DEUTSCHE BANK AG (NYSE:DB) and CREDIT SUISSE GROUP AG (NYSE:CS) had their credit ratings lowered by Standard & Poor’s as new rules and uncertain market conditions threaten their business. Long term counterparty credit ratings for the three banks were cu to A from A+. The company also affirmed it’s a long term rating and A1 short term rating on UBS AG (NYSE:UBS). The outlook for all four companies is stable. Banks are still in recovery from the 2008 financial crisis, which drove some economies into recession and spawned new regulations and legal proves. The four European lenders are among the most exposed to proposed rules that could reduce revenue from trading and operations. S&P maintained its ratings for UBS because it considers the Zurich based company to be the most active bank in reducing its exposures to investment banking. UBS, Switzerland’s biggest bank by assets said it will cut about 10,000 jobs and retreat from capital intensive trading business.

ENERGY & COMMODITIES

U.S oil prices soared more than 2 perce4nt to a 14 month high above $100 a barrel following a decline in crude stockpiles and concerns that unrest in Egypt could disrupt oil supplies from the . Crude futures rose as high as $102.18 in trade, having tested the $100 mark in the New York session. Oil prices have risen more than 5 percent so far this week. Worries about Egypt also boosted Brent crude futures, which rose more than $1 to just above $105 a barrel. Instability in Egypt and Libya has bolstered crude oil prices amid concerns about the supply of oil from the Middle east. Egypt’s President Mohamed Morsi has rebuffed an ultimatum from the army to resolve growing opposition to his government, which comes barely two years after long time strongman Hosni Mubarak was ousted in a wave of similar protests. Egypt controls the Suez Canal, which is a key transit point for oil tankers, and is why developments in Cairo are being watched closely. According to the latest data from the U.S Energy Information Administration, total oil flows through the Suez Canal reached almost 2.2 million barrels a day in 2011. Brent crude futures for August delivery rose by more than $1 to trade near $104 a barrel, extending the previous day’s rally. A Libyan official made an announcement that incessant disruption to that country’s oil sector could cripple Libya’s economy and choke off state revenue. New protests have shut down several Libyan oilfields in the last week. FOREIGN EXCHANGE

MARKET OPEN MARKET CLOSE The Yuan completed its best week since May before 01‐07‐13 05‐07‐13 Chinese officials meet their U.S counterparts on EUR 1.3010 1.2825 economic and political issues this month. Treasury GBP 1.5199 1.4880 Secretary Jacob J.Lew and Secretary of State John JPY 99.23 101.16 Kerry will meet Chinese government officials July 10‐ CHF 0.9431 0.9635 11 for the fifth round of the bilateral Strategic and AUD 0.9110 0.9065 Economic Dialogue. Exports probably rose 3.9 percent XAU 1233.4 1222.9 in June. The Yuan advanced 1.6 percent this year, the XAG 19.52 18.89 sole gainer among Asian currencies. Next week’s WTI 96.53 103.46 meeting is a short term catalyst for Yuan gains due to political pressure, according to Bruce Yam, a foreign exchange strategist at Sun Hung Kai Financial Ltd. In Hong Kong. Yet, scope for further gains is limited on slower economic growth . China’s competitiveness has been harmed as the exchange rate is stronger relative to Asian peers. The Yuan rose 0.08 percent this week, the best performance since the five days ended May 24, according to China Foreign Exchange trade System prices. The currency fell 0.11 percent today to close at 6.1326 per dollar, as the People’s Bank of China weakened the reference rate 0.06 percent to 6.1790. The spot rate traded at 0.76 percent premium to the fixing, compared with the maximum allowed divergence of 1 percent.

IRAQI MARKETS

118 ISX Price Index for Sunday 7/7/2013 117.05 117 116.92 116.13 116 116.61 115 114.71 Points 114 114.28 113 112 30/6 1/7 2/7 3/7 4/7 7/7

opening highest lowest Closing Trading Company Name Code Price price price Price Volume

Bank Sector Commercial Bank of Iraqi BCOI 0.920 0.930 0.920 0.930 13,534,929 Middle East Investment Bank BIME 1.560 1.600 1.560 1.600 96,935,190 Investment Bank of Iraq BIBI 1.130 1.130 1.120 1.130 51,050,600 Credit Bank Of Iraq BROI 3.250 3.590 3.250 3.590 15,475,000 Dar es salam Investment Bank BDSI 1.540 1.540 1.510 1.510 88,037,500 Babylon Bank BBAY 0.720 0.720 0.710 0.710 21,971,154 Economy Bank For Investment BEFI 0.930 0.930 0.930 0.930 7,369,383 Gulf Commercial Bank BGUC 1.040 1.040 1.020 1.030 735,429,900 Mosul Bank For Investment BMFI 0.800 0.800 0.790 0.790 70,079,700 North Bank BNOR 2.430 2.450 2.430 2.450 428,626,900 Kurdistan International Bank BKUI 2.680 2.690 2.680 2.690 84,432,500 Al-Mansour Bank BMNS 1.440 1.450 1.430 1.440 79,601,426 United Bank BUND 1.670 1.670 1.620 1.630 62,610,800 Total of Banks sector 1,755,154,983 Insurance Sector AL-Wiaam for Financial Investment VWIF 1.600 1.600 1.600 1.600 160,000 Total of Insurance sector 160,000

ECONOMIC CALENDAR DATE TIME COUNTRY EVENT FORECAST PREVIOUS MON 1 02:50 Current account 0.62T 0.85T All day Eurogroup meetings 51.3 51.3 15:30 Building permits m/m 2.6% 10.5% 15:30 ECB president draghi speaks TUE 2 01:00 NZIER business confidence 04:30 CPI y/y 2.5% 2.1% 11:30 Manufacturing production m/m 0.5% ‐0.2% WED 3 03:30 Westpac consumer sentiment 4.7% Tentative Trade balance 27.8B 20.48B 09:00 FOMC meeting minutes 11:10 Fed chairman Bernanke speaks THU 4 04:30 Employment change 0.3K 1.1K 04:30 Unemployment rate 5.6% 5.5% Tentative Monetary policy statement Tentative BOJ press conference 15:30 Unemployment claims 336K 343K FRI 5 15:30 PPI m/m 0.5% 0.5% 16:55 Prelim UoM consumer sentiment 85.3 84.1

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