MSM Index: 53

MENA Morning Note Monday, December 10, 2018

ECONOMIC NEWS Value Previous % Globa l stocks extended their slump on Monday, with U.S. equity futures and Asian GCC shares sliding on worries over slowing growth and fears that a fresh flare-up in tensions 09-Dec-2018 Closing Change between Washington and Beijing could quash chances of a trade deal. Traders returned MSM 4,547.73 4,548.72 -0.02% from the weekend to face a growing wall of worry, with the world’s largest economies all reporting weaker than expected data which pointed to moderating activity. Investors were Dubai 2,550.50 2,580.27 -1.15% also bracing for a Tuesday vote on British Prime Minister Theresa May’s European Abu Dhabi 4,836.45 4,876.68 -0.82% Union divorce deal, which looks set to be rejected by parliament, raising fears of a chaotic exit in March. S&P futures fell 0.8 percent and Dow futures lost 0.8 percent in Saudi Arabia 7,839.27 7,848.98 -0.12% the Asian day. MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.4 Bahrain 1,317.44 1,320.04 -0.20% percent to a near three-week low. (Reuters) Qatar 10,604.28 10,598.40 0.06% Brent crude oil prices climbed on Monday after producer club OPEC and some non- Kuwait 5,184.82 5,186.90 -0.04% affiliated suppliers last Friday agreed a supply cut of 1.2 million bpd from January. Despite this, the outlook for next year remains muted on the back of an economic Egypt 12,140.00 12,387.58 -2.00% slowdown. International Brent crude oil futures were at $61.96 per barrel at 0451 GMT, 8,243.32 8,432.41 -2.24% up 29 cents, or 0.5 percent, from their last close. WTI crude futures were weaker,

however, dropping 11 cents from their last settlement to $52.50 per barrel, weighed by Value surging U.S. output as the booming American oil industry is not taking part in the Asia % Change announced cuts. (Reuters) 10-Dec-2018 NIKKEI 21,205.64 -2.18% Production cut announced by OPEC and its allies is likely sufficient to balance the Hang Seng 25,696.89 -1.41% market in 1H 2019 and prevent inventories from building, said Morgan Stanley. While there are limiting factors, partial recovery in oil prices are still expected. Brent crude to Shanghai 2,583.90 -0.84% reach $67.50/bbl by 2Q 2019, down from previous estimate of $77.50/bbl. The bank also Value USA % Change cut its global demand growth estimate for 2019 by 100k b/d. Nevertheless, these 07-Dec-2018 production cuts should lead to a balanced market in 1H 2019 and stabilize inventories, which otherwise would have built aggressively, the bank added. (Bloomberg) Dow Jones Ind. 24,388.95 -2.24% S&P 500 Index 2,633.08 -2.33% Uncertainty still remains after OPEC+ announced new production cuts, given the lack of country allocation and the exemptions of Libya, Venezuela and Iran, Goldman Sachs NASDAQ 6,969.25 -3.05% said. Bank expects a gradual return of the Brent forward curve into backwardation and Value EUROPE % Change with stabilizing deferred prices, a gradual return of spot Brent prices to near $70/bbl. 07-Dec-2018 (Bloomberg) FTSE 100 6,778.11 1.10%

Arab coalition supporting the Yemeni legitimate government issued on Friday nine DAX 10,788.09 -0.21% permits for vessels destined for Yemeni ports carrying basic materials and oil derivatives. CAC 40 4,813.13 0.68% A coalition source said the pro-Iranian Houthi militias deliberately disrupted the entry

and the unloading of four ships in the Yemeni ports of Hodeidah and al-Saleef. The Value source added that one vessel already entered Hodeidah port to unload while three other Currencies % Change 10-Dec-2018 vessels are waiting to enter and as for al-Saleef port, two vessels already entered and one is waiting to be allowed in. (Reuters) USD-JPY 112.4500 0.21%

The GCC leaders and their representatives on Sunday began the 39th GCC Summit at USD-OMR 0.3850 0.00% Diriya Palace in Riyadh in Saudi Arabia. On behalf of His Majesty Sultan Qaboos, the EUR-USD 1.1427 0.42% Sultanate’s delegation is led by His Highness Sayyid Fahd bin Mahmood al Said, Deputy Prime Minister for the Council of Ministers. The summit was opened by King Salman bin GBP-USD 1.2743 0.13% Abdulaziz al Saud of Saudi Arabia and Chairman of the current session of the GCC Council. Speaking at the opening, King Salman expressed thanks and gratitude to Sheikh Sabah Al Ahmed Al Jaber al Sabah, Emir of Kuwait, for the good efforts made during his Value Commodities % Change chairmanship of the GCC Supreme Council’s previous session to enhance the GCC 10-Dec-2018 march. (Oman Observer) Oil 52.51 -0.19%

A newly published report by the IMF has stressed the importance of greater intra non-oil Gold 1,254.70 0.17% trade between member states of the GCC in fuelling economic growth across the region. Silver 14.57 -0.05% The report, titled ‘Trade and Foreign Investment – Keys to Diversification and Growth in the GCC’, says there is significant room to enhance intra-GCC trade. A gravity model analysis of trade trends, according to the report, suggests that intra-GCC exports by Note: All the above data updated at 8:00 AM, several countries are “below their potential”. The report singles out Oman as particularly Muscat time (5:00am GMT) prospective with a gap of around 7 per cent of non-oil GDP, followed by Kuwait and Qatar with a gap of around 4 per cent each. Both Bahrain and UAE have large negative gaps as well, while Saudi Arabia has a smaller positive gap. (Oman Observer)

This report has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. While all care has been taken to ensure that the facts stated herein are accurate and the estimates, opinions and expectations contained herein are fair and reasonable, neither United Securities LLC, nor any of its employees shall be, in any way, responsible for the contents. This shall not be construed as an offer to buy or sell the investments referred to in this report.

United Securities LLC, P.O. Box 2566, Postal Code – 112, Ruwi, Sultanate of Oman Tel: +968 24763300, Fax: +968 24788671, Website: http://www.usoman.com, Email: [email protected]

MENA Morning Note Monday, December 10, 2018 Oman Oman’s Economic Performance Report was reviewed by the Supreme Council of Planning Council at a meeting yesterday. The report showed that the GDP grew by 15.1 per cent at the current prices, driven by the increase in total oil activities, especially natural gas activities, which grew by 23.2 per cent. On the other hand, the contribution of non-oil sectors increased during the same period by 5.1 per cent. (Times of Oman)

UAE ADNOC awarded Chinese state oil company Zhenhua Oil a 4 percent stake in its onshore oil concession, previously held by debt-laden CEFC China Energy Co. Ltd. Zhenhua Oil is 100 percent indirectly owned by the Assets Supervision and Administration Commission of the State Council. CEFC in February 2017 bought a 4 percent stake in giant onshore oilfields majority-owned by ADNOC for $900 million. But the company ran into financial problems following the arrest of its chairman Ye Jianming in early 2018. (Reuters)

ADX chief executive Rashed al-Blooshi has left his position and moved to a new role at the Department of Economic Development in Abu Dhabi. Khalifa al-Mansouri, undersecretary of the Department of Economic Development in Abu Dhabi, has become new acting chief executive of the stock exchange. (Reuters)

Growth in the number of foreign visitors to Dubai stalled in the first nine months of year, official data showed on Sunday. Dubai recorded 11.58 million visitors in the nine months to Sept. 30, Dubai’s government media office said. Growth in passenger traffic through Dubai International Airport has slowed this year, after 15 years of robust increases. (Reuters)

Hong Kong-based Cosco Shipping Ports opens terminal at Khalifa Port in Abu Dhabi on Monday. Co. spent $300 million to build terminal; $130 million for container freight station. Handling capacity for Cosco terminal in Abu Dhabi is 1.5 million TEU; co. may expand terminal in coming years. Cosco has concession right for 35 years. Abu Dhabi Ports CEO Mohamed Al Shamsi said Khalifa port to increase total handling capacity to more than 3 million TEU by end of 2019 after Cosco terminal starts full commercial operations. (Bloomberg)

Saudi Arabia Saudi Arabia is reviewing its policy of imposing fees on expatriate workers after rising costs inflicted economic pain and contributed to an exodus of foreigners, according to four people familiar with the matter. While it’s unlikely the fees will be canceled altogether, a ministerial committee is looking at modifying or restructuring them, one of the people said. A decision is expected within weeks, two of the people said. They all spoke on condition of anonymity because the information isn’t public yet. (Bloomberg)

Saudi Arabia’s foreign minister on Sunday ruled out the extradition of suspects in the murder of journalist Jamal Khashoggi, after Istanbul’s chief prosecutor filed warrants for the arrest of two former senior Saudi officials. The Saudi public prosecutor has said the order to repatriate Khashoggi came from Asiri and that a travel ban has been imposed on Qahtani. Jubeir declined to confirm or deny whether the men were currently detained, referring the question to the Saudi public prosecutor. (Reuters)

The United States wants to continue support to the Saudi-led coalition in Yemen’s war and will remain engaged in efforts to combat Iranian influence and Islamist militancy in the Arab state, a State Department official said on Sunday. The Senate last month voted to advance a resolution to end U.S. military support, which includes arms sales and intelligence sharing. (Reuters)

Qatar Australia overtook Qatar as the world’s largest exporter of LNG for the first time in November, data from Refinitiv Eikon showed on Monday. The surge in Australian exports follows the start up of a number of export projects in the country over the past three years, most recently the Ichthys project offshore its northern coast. In November, Australia loaded 6.5 million tonnes of LNG for exports while Qatar exported over 6.2 million tonnes, the data showed. (Reuters)

Qatar’s national budget for 2019 will show a forecast for a surplus, its Finance Minister Ali Shareef al-Emadi told a conference on Sunday. He reiterated that the financial statements for the first half of 2018 confirm the strength of its economy and the country has overcome the blockade imposed by Saudi Arabia and its allies. He said non-oil sector economic growth for the first half of the year was over 5 percent. (Reuters)

Kuwait Kuwait’s central bank has told foreign exchange companies to raise their capital requirements to 1.7 million dinars from 1.5 million dinars, the central bank said on Sunday. (Reuters)

Bahrain Central Bank of Bahrain starts liquidity management tool called interbank repurchase for the government’s conventional securities denominated in dinars. Through an inter-bank repo transaction, the banks that require liquidity can sell their government securities to banks that provide liquidity for a predefined period and at an agreed price. (Bloomberg)

CORPORATE NEWS

Oman ACWA Power Barka announced that GT-2 has now been successfully synchronized with the Grid and is operating smoothly. The company was able to complete repair works well ahead of original schedule. This has enabled the company to declare 2/3 of its power plant capacity as available. (MSM)

United Securities LLC, P.O. Box 2566, Postal Code – 112, Ruwi, Sultanate of Oman Tel: +968 24763300, Fax: +968 24788671, Website: http://www.usoman.com, Email: [email protected]

MENA Morning Note Monday, December 10, 2018

Indonesia's Pertamina on Monday signed a framework agreement with Oman's Overseas Oil and Gas LLC to develop a new $10 billion refinery and petrochemical complex in Bontang, on the island of Borneo. Once completed, OOG is expected to supply 300,000 barrels per day of crude oil to the refinery. (Reuters)

SalamAir has become the first Oman-based carrier to receive the new Airbus A320neo aircraft, making it one of the early Middle East recipients and operators of the highly rated model. The aircraft, called “Wadi Shab”, and named after one of the key tourist attractions in the Sultanate, was selected by SalamAir’s customers across the airline’s social media platforms. The delivered aircraft is on a lease-to-purchase option along with another five Airbus A320neo expected to join SalamAir’s fleet by Q1 of 2019.

UAE Goldilocks Investment Company, an indirect subsidiary of ADFG, has increased its beneficial ownership in Salama, to 14.1%. The move reflected Goldilocks’ and ADFG’s bullish outlook on the UAE insurance sector, Goldilocks said. Goldilocks raised its stake from 9.9 percent via a share finance facility, it said. Combined, Goldilocks and ADFG continue to hold around 29.9 percent of Salama’s issued shares. (Reuters)

Agility plans to invest around USD 100 million over the next three years to develop www.shipa.com, a digital logistics platform designed to help consumers and small businesses tap into the global economy. (DFM)

ADX, together with SENAAT, rang the market opening bell to celebrate the listing of the first tranche of SENAAT sukuk. Valued at $300 million, it is the first of its kind dual listing between ADX and London Stock Exchange. The sukuk was raised at a profit rate of 4.76% with a 7-year tenure, backed by an Obligor Rating of A3 (stable) by Moody’s and A (stable) by Fitch issued last week. (ADX)

Shuaa capital said that the company does not have any exposure in Wahat Al Zawevw on its balance sheet. Shuaa holds 182 million shares in Wahat Al Zaweva on behalf of its clients. (DFM)

Saudi Arabia Zain Saudi announced that Mr. Thamer Ahmad Obeidat has resigned from its Board of directors, as well as the Audit Committee. The board appointed Mr. Martial Caratti to the Board (non-executive), as well as the Audit Committee, effective 09/12/2018. (Tadawul)

Qatar Commercial Bank of Qatar could raise up to $1 billion in debt next year by tapping a range of debt instruments, CEO Joseph Abraham told Reuters. The bank will look at Kangaroo bonds, Taiwanese bond market and the Japan bank debt market. He added that the bank is in no hurry sell 40% stake in UAB. (Bloomberg)

PSG’s Qatari owner is enlisting the club’s hottest star to help promote the country’s biggest bank. After advertising products from razors and headphones to coffee and car batteries, Brazilian soccer star Neymar has now been appointed ‘global brand ambassador’ for Qatar National Bank, the lender said in a statement. (Bloomberg)

United Securities LLC, P.O. Box 2566, Postal Code – 112, Ruwi, Sultanate of Oman Tel: +968 24763300, Fax: +968 24788671, Website: http://www.usoman.com, Email: [email protected]