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WEEK ENDING
September 22, 2016


“The Committee judges that the case for an increase in the federal funds rate has
strengthened but decided, for the time being, to wait for further evidence
of continued progress toward its objectives.”
- U.S. Federal Reserve 

 
 
TASI decreases by 2.6%

Tadawul All Share Index (TASI) resumed after the holiday break on a negative note. The index lost 3.7% during the week to close at 5,949 points. TASI lost 2% each on the first two trading days and remained range bound in the last two.

Expectations about subdued Q3 2016 corporate profits and fears about subsidy cuts in the next year's budget probably weighed down the markets.

Regional indices were mixed with Dubai (+0.9%) and Bahrain (+0.8%) gaining the most. Qatar (-1.2%) suffered notable loss after Saudi Arabia.

US Fed leaves rates Unchanged 

​In the oil market, it was reported that Saudi Arabia has offered to reduce oil production if Iran agrees to cap its own output this year. As OPEC members are meeting between Sept. 26 - 28, news like this will act as a market booster. Brent is trading at USD 48 per barrel levels.  

Globally, the central banks opted to continue market stimulus with Japan targeting to  buy 10-year government bonds    and US Fed leaving the interest rates unchanged. The Fed however signaled that a rate increase in 2016 is still likely - possibly after US Presidential elections and IF the result is market friendly.  

 
GLOBAL INDICES – WEEKLY RETURNS

Note: Weekly returns are calculated considering Friday to Thursday week. Numbers indicate weekly returns and index closing values.
SAUDI – SECTOR INDICES
 
 

“All the 15 sector indices closed the week in Red”

 

Amongst sectors, all the 15 indices closed the week with losses.

Energy & Utilities index registered the largest loss, shedding 8% for the week, followed by Industrial Investment (-6.5%).

Banks and Petrochemicals lost 5.3% and 1.5% respectively.

Banks constituted 27.0% of the total traded value and 30.5% of the total volume to become the top trading sector. This was followed by Petrochemicals which contributed 21.5% to the value and 13.8% to the total volume.

 

THIS WEEK’S WINNERS & LOSERS
 
Top Gainer
Saudi United Cooperative Insurance Co.
(+8.2%)
Top Loser
Saudi Industrial Export Co.
(-13.8%)

Saudi United Cooperative Insurance Co. registered the largest gain, last week, by increasing 8.2% to close at SAR 15.79. This was followed by Taiba Holding Co. (+4.8%) and Saudi Airlines Catering Co. (+3.6%).

On the other side, Saudi Industrial Export Co. shed 13.8% and led the losers table, followed by Al Hammadi Company for Development and Investment (-11.8%) and Saudi Transport and Investment Co. (-11.5%).  

SABIC, the gulf’s largest company, decreased 0.8% during the week and clocked a turnover of SAR 1.4bn. SABIC has increased 9.2% during the year to close at SAR 83.53.
 
TOP  GAINERS & LOSERS

 
TOP 10 MARKET CAPITALIZATION COMPANIES

 
SAUDI ARABIA – CORPORATE & ECONOMIC NEWS
  • Saudi Arabia’s crude exports climbed to 7.622 million barrels a day (mbd) in July, up from 7.456 mbd the previous month, official data from JODI showed.

  • Saudi Aramco has awarded EPC company Saudi KAD four contracts to build several pipelines in the Master Gas Program Phase II, as well as in the Fadhili Gas Program projects.

  • Fitch Ratings has affirmed the long-term issuer default ratings of 11 Saudi Arabian banks and downgraded the viability ratings of Riyad Bank and Arab National Bank to “BBB+” from “A-”

  • Umm Al-Qura Cement Co. has commenced commercial operations at its new Portland cement production line.

  • Saudi Electricity Co. will sign a SAR 5bn syndicated Murabaha loan with Samba Financial Group, National Commercial Bank, and Banque Saudi Fransi.

  • National Gas & Industrialization Co.’s board of directors approved capital projects worth SAR 330mn to boost production and services.

  • Almarai has started partial commissioning and commercial operations at its new bakery plant in Hail. It includes four production lines for bread, cupcakes, pastry, and cakes.

  • The government is expected to remove subsidies on ports, passports, car driving license, car transfer, traffic violations, renewal of residence permits (iqama) for domestic workers and tariff (customs) protection for 193 commodities.

  • Middle East Healthcare Co. the operator of Saudi German Hospitals, has approved a ten-year management supervision agreement for Batterjee Medical City in Alexandria, Egypt.

  • Saudi Real Estate Company (Al Akaria) has obtained building permits related to the construction of a 161-unit residential complex in Riyadh for a total cost of SAR 226mn.

  • Electrical Industries Co. signed optional contracts with Saudi Electricity Co. for a total value of SAR 210mn.

OTHER GULF NEWS
  • Moody's Investors Service has maintained a Stable outlook for Kuwait's banking system on expectations of government support and a growing loss-absorbing buffer.

  • France’s energy services firm Technip was awarded an EPC contract by Emirates National Oil Co. that is set to expand its Jebel Ali refinery by 50%.

  • Abu Dhabi’s GDP grew by 2.3% year-on-year at fixed prices to AED 198.8bn in the second quarter this year.

  • Oman’s Gulf Mining Group has plans to set up a major potash mining project targeting prolific reserves in central Oman.

  • Abu Dhabi’s Masdar is reportedly looking to raise project finance from Chinese lenders for its 800 MW solar project at the Mohammed bin Rashid Al Maktoum solar park in Dubai.

  • Qatari telecom operator Ooredoo said it does not plan to sell its controlling stake in Indonesian phone carrier, PT Indosat.

GLOBAL ECONOMIC NEWS
  • China's Baosteel is set to take over its smaller competitor Wuhan Iron and Steel, creating the world's second largest steelmaker.

  • A.P. Moller-Maersk is in talks to buy a portfolio of North Sea assets from Royal Dutch Shell as the Danish group considers adding scale to its oil and gas business

  • Mobile telecoms equipment maker Ericsson plans to close the last of its Swedish manufacturing sites as part of planned savings, cutting about 3,000 jobs

  • Caesars Entertainment Corp said it proposed a settlement offer with an added USD 1.6bn for creditors of its casino operating unit.

  • Airbnb Inc. said it has raised USD 555.5mn in new funds as the company expands around the world.

  • Microsoft Corp said it would buy back up to USD 40bn as part of a new share repurchase program.

 
CHARTS OF THE WEEK


TREND IN CRUDE OIL DEMAND GROWTH FORECAST

Source: International Energy Agency, Bloomberg


INDIAN BANKS — STRESSED DEBT AS PERCENTAGE OF TOTAL ADVANCES

Source: Reserve Bank of India, Bloomberg.
 
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