Industrials, Insurance, Banking Stocks Weigh on Qatar Bourse Saudi Shares Keep Falling

ENGINE FOCUS | Page 4 DIESEL CHEAT | Page 12 Dreamliner VW reaches issue prompts accord with ANA check US dealers Friday, August 26, 2016 Dhul-Qa’da 23, 1437 AH EUROPE SUPPLIES: Page 3 GULF TIMES Threat of war, earthquakes and Brexit can’t BUSINESS stop gas plunge Iran will join Opec 21 QSE stocks eligible to meet in Algeria: join FTSE Russell index Minister By Santhosh V Perumal AFP Business Reporter Tehran s many as 21 of the 44 stocks Iran will take part in an informal listed on the Qatar Stock Ex- meeting of Opec countries in Achange (QSE) have been found Algeria next month, state media eligible to be included in the FTSE reported yesterday. “I will take part Russell global market equity index. Of in this session,” Oil Minister Bijan the 21, half are large-cap equities. Zanganeh told the ministry’s Shana The eligible constituents are Aamal news service. Company, Al Meera Consumer Goods, Iran had previously said it had not Barwa, Commercial Bank, Doha Bank, yet taken a decision on whether to Ezdan Holding, Industries Qatar, attend the closed-door meeting on Masraf Al Rayan, Medicare Group, the sidelines of the International Ooredoo, Qatar Electricity and Water, Energy Forum in Algiers in late Nakilat, Qatar Insurance, QIIB, Qatar September. Islamic Bank, QNB, Milaha, Qatari Oil markets have been carefully Investors Group, Salam International tracking reports of whether Iran Investment, United Development will attend the meeting, which Company and Vodafone Qatar. other Opec members hope will This announcement comes in the lead to a freeze in production that wake of FTSE Russell deciding to would boost oil prices. upgrade Qatar next month to emerg- Iran refused to accept a freeze ing market category from the frontier earlier this year, having just status, a move seen to witness higher emerged from international funds infl ow from overseas. sanctions and keen to maximise “Further to the notice released on its oil revenues, but rumours this August 15, 2016 regarding the reclas- week that it may have changed its sifi cation of Qatar from frontier to position have led to a 10% spike in secondary emerging market status prices, according to Bloomberg. within the FTSE Country Classifi ca- Zanganeh did not comment on tion scheme, FTSE Russell announces whether Iran, Opec’s third-biggest the indicative list of Qatari companies producer, would support a cap which will be eligible for addition to on production at the September the FTSE Global Equity Index Series meeting. at the September 2016 review,” Lon- He did mention that Opec secretary don-based index compiler said. general Mohammed Barkindo will As per the indicative list of FTSE be visiting Iran “in the near future,” Russell, among the eligible stocks, 11 according to the Shana agency. of them are large caps, six mid-caps, Iran says it has doubled its exports three small caps and one micro-cap. of oil and gas to 2.7mn bpd since Selective speculation on individual The QSE has already been upgraded to emerging markets by MSCI and Standard & Poor’s-Dow Jones signing an accord with world scrips to be included in the FTSE Rus- powers in July 2015 that removed sell index had last week resulted in a houses to be liquidity providers for funds infl ow may further propel the The low oil price environment and going developmental works) and the sanctions in exchange for curbs on large one-day gain, whose sustainabil- individual scrips and some entities QSE, even as some analysts held that the appurtenant slowdown in the diffi culty in accessing fi nance for the its nuclear programme. ity had been questioned by many fi nan- had taken advantage of the scheme. there could also be some knee-jerk economy and national spending have private sector have undeniably ex- Oil production has risen from cial experts. The QSE has already been Moreover, margin lending has also reactions. been nagging persistent dampeners in tended extraneous weak traction to 2.7mn bpd to 3.85mn bpd in that upgraded to emerging markets by MSCI been allowed in principle to further “Infl ows, rather passive, could be the Middle Eastern economies in gen- those economies that are more sus- time, close to the level before and Standard & Poor’s-Dow Jones. boost the daily trading volumes and expected but they come with a cave- eral, which have had its repercussions ceptible to hydrocarbons,” an analyst international sanctions were As part of eff orts to improve liquid- turnover in the market. at,” an analyst with a leading broker- in the private sector as well, he said. tracking infrastructure equities in the imposed in 2012. ity, the bourse had allowed brokerage Expectations are high that foreign age house said. “Friction in cash fl ows (to the on- Gulf Cooperation Council said. A M Best affirms DIC ratings; outlook remains ‘stable’ Moody’s upgrades ratings By Santhosh V Perumal Re Underwriters (Mena Re). DIC has estab- Business Reporter lished a strong franchise within its domestic of Masraf Al Rayan market. Although the company’s gross written premium fell by 7% to QR494mn in 2015, A M Best, an international insurance rating primarily driven by the reduction of infrastruc- lobal credit rating agency Moody’s said the key driver of agency, yesterday aff irmed Doha Insurance ture projects in a low oil-price environment, Moody’s has upgraded Mas- the upgrade is the bank’s increasing Company’s (DIC) financial strength rating at DIC remained one of the leading insurance Graf Al Rayan’s long term geographical diversifi cation follow- ‘A- (Excellent)’ and the issuer credit rating at “a-”, providers in the country. issuer ratings to A1 from A2 and ing the growth and fi rst time prof- both with “stable” outlook. In order to diversify its insurance portfolio and Counterparty Risk (CR) Assessment itability of its subsidiary Al Rayan The ratings reflect the insurer’s very strong risk- broaden its footprint, DIC opened in November to ‘Aa3(cr)’ from ‘A1(cr)’. Bank UK (originally Islamic Bank of adjusted capitalisation, solid position within the 2015 Mena Re, a fully owned reinsurance MGA. At the same time, the baseline Britain). domestic insurance market and track record of Mena Re operates out of the Dubai International credit assessment (BCA) and adjust- “Going forward, we expect these good operating performance, the rating agency Financial Centre, writing inward facultative busi- ed BCA were raised to ‘baa2’ from diversifi cation trends to continue said. “However, off setting rating factors are its ness in the Middle East and North Africa (Mena), ‘baa3’. as the bank’s UK subsidiary grows underdeveloped risk management framework and is expected to be a driver of growth for DIC in Concurrently, the rating agency further and helps off set the slow- and execution risk associated with the company’s the next few years. affi rmed the ‘Prime-1’ short term is- down in asset growth expected in planned expansion,” it added. Whilst this new expansion strategy entails execu- suer ratings and ‘Prime-1(cr)’ short its domestic market,” it said, add- Doha Insurance’s risk-adjusted capitalisation re- tion risk, it is mitigated by the experience of the term CR Assessment. ing the UK business has increased mains very strong, benefiting from low underwrit- senior management hired to run this division, A The outlook on the long-term the contribution of retail operations ing leverage and a robust reinsurance panel that M Best said. ratings has changed to stable from towards Masraf Al Rayan’s operat- supports the company’s significant reinsurance DIC has demonstrated a track record of good positive. ing income to 22% for the fi rst six cession on commercial risks, it said. operating results, and generated a profit of The upgrade of Masraf Al Rayan’s months of 2016 from 5% for the year Although capital consumption continues to be QR110mn in 2015. Although the company re- ratings refl ects continued business 2011. driven by investment risk, due to DIC’s material ported a reduction in its net underwriting result diversifi cation as a result of growth Finding that Masraf Al Rayan’s exposure to domestic equities, it said. Neverthe- to QR79mn in 2015 from QR85mn in 2014, its loss and profi tability of the UK subsidi- current non-performing fi nancings less, the insurer holds a suff icient level of cash ratio remained resilient at 56% (51% in 2014). ary; consistently strong asset quality (NPFs analogous to non-performing and cash equivalents to support an excellent An increased expense ratio of 37% (25% in 2014), performance and strong profi tability loans) are around 0.10% of total fi - liquidity position, and has demonstrated its solid driven by the start-up costs associated with Mena and capital metrics, Moody’s said. nancing assets; Moody’s said “go- financial flexibility with a successful rights issue Re, caused the combined ratio to deteriorate to These strengths however remain ing forward, we do not expect MAR’s in the first half of 2014. 93% in 2015, considerably above the five-year moderated by the bank’s depend- NPF ratio to increase signifi cantly The agency expects DIC to maintain strong average of 85%, A M Best noted. ence on key management relation- from its current levels.” risk-adjusted capitalisation, due to good in- “DIC’s risk management is a negative rating ships to generate new business, high Moody’s also expects that Masraf ternal capital generation, and a capital buffer driver. At present, the company operates a silo degree of concentration on both the Al Rayan’s will maintain strong capi- sufficient to support the company’s planned approach to risk management, mainly managing Masraf Al Rayan’s ratings upgrade reflects continued business asset and liability side of the balance tal ratios, as healthy internal capital expansion outside Qatar, via its newly estab- underwriting and credit risks independently,” it diversification as a result of growth and profitability of the UK sheet and the impact of tightening generation supports the needs of fu- lished managing general agent (MGA), Mena said.

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