GCC monthly market snapshot

March 2017

Kuwait Market Summary

Open

High

Low

Close

Change (%)

Traded Volume (mn)

Traded Value (KWD mn)

Number of Trades

Market Capitalization (KWD bn)

1

GCC Market Performance Bahrain (BAX) – Bahrain’s BAX advanced 0.5% as the country jumped up 69 places in the World Bank’s Easiness to Carry out Business Activities Index. The ranking

was supported by a set of reforms passed by Bahrain’s government this year. We expect BAX to remain bearish in April due to the uncertainty in oil price movements. Oil prices declined during the last week of March as Libya resumed oil production and US stock piles increased unexpectedly.

Kuwait (KSE) – Kuwait’s KSE reversed its last month’s trend and advanced 3.6% amid the positive sentiment surrounding the country’s maiden international bond sale. Foreign investors seeking high returns and diversification were the major investors in the sovereign’s debut bond sale. We expect Kuwaiti bourse to remain bearish in April as investors would remain cautious due to the uncertainty surrounding oil prices and global stock markets in the absence of any clear vision by US President Trump. Investors are also guarded because they are awaiting Q1 2017 results of the corporates.

Oman (MSM) – Oman’s MSM lost 4.0% as oil prices declined due to an increase in US inventories. In addition, absence of any positive sentiment affected the market’s performance. We expect Oman’s stock market to continue the downtrend due to oil price fluctuations.

Qatar (DSM) – DSM retreated 2.9%, driven by strong FII outflows, coupled with the uncertainty surrounding the US President’s growth policies. We anticipate DSM to remain bearish as investors are likely to remain cautious about oil price movements.

Saudi Arabia – Saudi Arabia’s TASI ended 0.4% higher as oil prices increased on anticipation of an OPEC output cut extension. We expect KSA’s stock market to remain bearish in spite of a possible OPEC production cut extension, led by the uncertainty surrounding global stock markets and oil prices.

UAE – The UAE’s DFM fell 4.1% as the market witnessed cautious trading in line with the approach of Q1 2017 results. ADX fell 2.4% as investors awaited Q1 2017 results. We expect the markets to remain bearish due to the uncertainty over oil prices and global stock markets.

Source: Bloomberg

Macroeconomic Snapshot Bahrain – Bahrain expects GDP to expand 1.8% in 2017 and inflation to remain steady at 3.0%. Fitch has affirmed Bahrain's long-term foreign and local currency

issuer default ratings at 'BB+' with a stable outlook. The country’s economic recovery is anticipated to be slower than its GCC peers in 2017 owing to its high fiscal deficit, rising debt levels, and oil-dependent government budget.

Kuwait – Kuwait’s economy is expected to grow 2.6% in 2017, with a stable inflation rate of 3.8%. The economy is projected to record fiscal budget surplus in 2017, led by stability in oil prices. According to a report published by NBK, Kuwait’s non-oil sector is expected to grow 4.0% in 2017–18.

Oman – Oman’s GDP is expected to grow 2.6%. The economy is anticipated to rebound in 2017 due to favorable oil price movements.

Qatar – Qatar is expected to record the highest GDP growth rate of 3.4% among its GCC peers, with inflation being under control. The economy is projected to perform well, driven by increased government spending ahead of the 2022 FIFA World Cup and stability in oil prices.

Saudi Arabia – Saudi Arabia’s GDP growth would be affected by low oil prices, which prevailed in the previous years. The IMF has cut its 2017 growth forecast for Saudi to 0.4% from the previous 2.0% on account of lower oil production due to the impact of the OPEC production cut deal. Inflation is estimated to moderate to 2.0% from the previous high of 4.3% in January 2016.

UAE – The UAE’s economy is anticipated to grow at a steady rate of 2.5%, led by its strengthening non-oil economy, which is expected to expand 4.6% in 2017.

Country Real GDP Growth*

Inflation* M2 YoY 2016

growth % Credit Growth*

Interbank rate (3M)

REPO rate

Bahrain 1.8 3.0 3.2 5.0 2.20 3.00 Kuwait 2.6 3.8 3.1 4.2 1.50 1.00 Oman 2.6 3.1 1.8 2.7 0.37^ 1.48 Qatar 3.4 3.1 (4.6) 2.9 1.92 2.25 Saudi Arabia 0.4 2.0 3.5 11.4 1.75 2.00 UAE 2.5 3.1 3.3 6.7 1.42 1.25

Source: IMF, Central Bank, Bloomberg

* 2017 forecast, ^O/N rate

Kuwait - Sector Returns and Value Traded

The healthcare sector led gainers in March 2017. The sector rose 8.0%, driven by a 13.9% rise in Al Mowasat Healthcare Co. However, the sector was the lowest in terms of value traded.

The industrials sector emerged as the second-best performer after advancing 1.6%. National Consumer Holding Co. (up 31.3%) was the top gainer.

The technology sector declined the most and dropped 7.7% in the month of March. The decline was primarily due a 6.5% fall in Automated Systems Co.

Sector Returns (%) (KSE IXW)

Value Traded (KWD mn) (KSE IXW)

(7.69)

(5.97)

(4.07)

(3.55)

(3.47)

(3.08)

(2.78)

(2.66)

(1.47)

1.32

1.62

7.99

Technology

Insurance

Consumer Services

Consumer Goods

Banking

Telecom

Financial Services

Oil & Gas

Real Estate

Basic Materials

Industrials

Health Care

0.05

0.73

3.55

9.34

12.87

13.63

14.92

48.54

61.76

131.42

177.60

179.04

Health Care

Insurance

Technology

Consumer…

Oil & Gas

Basic Materials

Consumer Goods

Telecom

Industrials

Real Estate

Banking

Financial Services

Index Market Cap

(USD) Level

Performance

P/E Dividend Yield MTD YTD Bahrain (BAX) 21,714 1,355.99 0.47 11.11 8.88 5.79 Kuwait (KSE) 93,684 7,029.43 3.63 22.29 21.75 3.39 Oman (MSM) 16,591 5,550.60 (3.97) (4.01) 11.03 5.26 Qatar (DSM) 131,372 10,390.60 (2.91) (0.44) 15.36 3.74 Saudi Arabia (TASI) 436,636 7,001.63 0.42 (2.90) 17.41 3.41 UAE (ADX) 116,820 4,443.53 (2.38) (2.26) 16.74 5.44 UAE (DFM) 82,216 3,480.43 (4.13) (1.43) 14.77 3.92

Source: KSE

GCC monthly market snapshot

March 2017

Kuwait Market Summary

Open

High

Low

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Change (%)

Traded Volume (mn)

Traded Value (KWD mn)

Number of Trades

Market Capitalization (KWD bn)

2

Commodity Tracker Gold ended the month at USD1,242.7/troy oz., offering a negative month-

to-date return of 0.5%. Gold prices are likely to increase due to US President Trump’s unclear vision and his inability to approve key strategic reforms. Recent US air strikes on Syria also resulted in the increase in gold prices. The geopolitical uncertainty, such as the security situations in West Asia, and Brexit negotiations may further raise gold prices.

Brent crude closed at USD53.5/barrel in March 2017, providing a negative month-to-date yield of 5.5%. Oil prices are expected to stabilize as all OPEC members are likely to extend the production cut deal. However, an increase in US shale production may affect the oil prices.

Silver closed at USD18.1/troy oz., offering a negative month-to-date return of 1.1% in March 2017. The outlook for silver has turned bullish in 2017, given the lack of clarity in the new US government’s policies and geopolitical uncertainty in West Asia.

Commodity Close MTD (%) YTD(%)

Gold (USD/troy oz.) 1,242.67 (0.45) 7.85

Brent Crude (USD/bbl) 53.53 (5.52) (5.79)

Silver (USD/troy oz.) 18.12 (1.08) 13.82

Source: Bloomberg

Stock Watch (Kuwait)

Amwal International Investment Co. (up 112.8%), which reported a 174.0% YoY

increase in net profit in 2016, was the top gainer in March.

Jeeran Holdings (down 36.3%), which decided to voluntarily delist itself from Boursa Kuwait, was the worst performer during the month.

Stock Watch (Saudi Arabia)

United Electronics Co. (up 26.5%), which reported a net profit of SAR12.9mn in

2016, led the gainers.

Emaar The Economic City (down 13.5%), which reported a decline of 69% YoY in the net profit for 2016, led the losers.

Name M Cap

(SAR mn) Last (SAR) MTD (%) YTD (%)

Shares Traded

(Mn) P/E P/B

TOP GAINERS

EXTRA 1,220.4 34.1 26.5 28.8 18.7 NA 2.3

BJAZ 6,736.0 16.5 23.0 19.0 96.0 7.8 0.8

NADEC 2,431.7 28.3 22.8 18.9 18.6 24.3 1.7

HAMMADIINVEST 4,896.0 40.8 16.1 (1.6) 10.8 65.6 3.6

MCDCO

18,522.0 105.4 15.5 24.5 2.1 59.4 2.4

TOP LOSERS

EMAAR.TASI

14,365.0 17.0 (13.5) (2.0) 32.0 148.6 1.7

QACCO 4,522.5 50.7 (12.8) 25.3 1.0 11.0 2.5

SAGRINSURANCE 950.0 37.7 (12.6) (5.0) 17.2 6.3 2.0

SOLIDARITY 458.8 18.3 (10.2) (3.8) 28.6 NA NA

NGIC 2,481.0 32.4 (10.2) (0.7) 2.4 17.1 2.2

Source: Gulfbase, CapIQ

Kuwait (KSE)

Source: Bloomberg

Saudi Arabia (TASI)

Monthly market updates Kuwait’s benchmark index advanced 3.6% to 7,029.4 points in March as investors actively bought stocks, encouraged by the high demand for the country’s first-

ever dollar-denominated bond sale.

Saudi Arabia’s TASI ended 0.4% higher at 7,001.6 points on hopes of a possible extension of the OPEC production cut deal.

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Name M Cap

(KWD mn) Last

(KWD) MTD (%) YTD (%)

Shares Traded

(Mn) P/E P/B

TOP GAINERS

AMWAL 15.0 83.0 112.8 300.0 95.7 78.9 NA

REAM 62.4 600.0 60.0 1,124.5 0.0 NA NA

EDU 66.0 270.0 32.4 10.7 0.2 14.2 1.7

NCCI.KSE 11.7 130.0 31.3 165.3 0.1 6.0 1.7

HCEMENT 16.6 216.0 27.1 71.7 1.0 167.3 NA

TOP LOSERS

JEERANH 6.3 46.5 (36.3) 10.7 3.8 NA 0.9

TAHSSILAT 5.4 32.5 (32.3) (34.3) 0.3 32.8 NA

KBMMC 3.9 128.0 (24.7) 271.0 0.6 NA 0.6

ALMAL 13.1 19.5 (23.5) (65.2) 122.8 NA 0.6

ITHMR.KW 103.2 48.0 (21.3) (92.3) 535.4 12.1 0.2

GCC monthly market snapshot

March 2017

Kuwait Market Summary

Open

High

Low

Close

Change (%)

Traded Volume (mn)

Traded Value (KWD mn)

Number of Trades

Market Capitalization (KWD bn)

3

In the US, the Fed raised its key interest rate by 0.25 percentage points, signifying confidence in the US economy.

The Eurozone economy expanded 0.4% QoQ in Q4 2016, primarily driven by household consumption and government spending.

In Asia, China’s industrial production expanded 0.6% MoM and 6.3% YoY in February. Japan’s consumer price index gained 0.3% YoY in February.

GCC monthly market snapshot

March 2017

Kuwait Market Summary

Open

High

Low

Close

Change (%)

Traded Volume (mn)

Traded Value (KWD mn)

Number of Trades

Market Capitalization (KWD bn)

4

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