Welcome Remarks Speakers

Welcome Remarks
Speakers
Suvo Sarkar
General Manager | Retail Banking and Wealth Management
Khatija Haque
Head of MENA Research | Global Markets & Treasury
Arjuna Mahindra
Chief Investment Officer | Wealth Management
Anita Gupta
Equity Strategist | Wealth Management
1
GCC Outlook
May 2014
Khatija Haque
Head of MENA Research
2
Global context improving – US regain momentum
US non-farm payroll growth recovers
400
change in non-farm payrolls (000s, lhs)
350
unemployment rate (%, rhs)
US 10y bond yields
9.0
4.0
US 10y Tsy yields (%)
3.0
300
8.0
250
200
2.0
150
7.0
100
1.0
50
0
Jan-12
6.0
Sep-12
Bloomberg, Emirates NBD Research
May-13
Jan-14
0.0
Jan-12
Sep-12
May-13
Jan-14
3
Europe / Asia – still some concerns
Eurozone – Inflation at multi-year lows
China’ s PMI shows divergent trends
3.5
52
Eurozone CPI (% y/y)
3.0
51
2.5
50
49
2.0
48
1.5
47
1.0
46
0.5
45
0.0
Jan-10
May-13
Jan-11
Bloomberg, Emirates NBD Research
Jan-12
Jan-13
Jan-14
Aug-13
Official
Nov-13
Feb-14
HSBC / Markit
4
Global FX and rate forecasts
FX Forecasts - Major
Spot 09.05
3M
6M
12M
EUR/USD
1.3758
1.34
1.30
1.28
USD/JPY
101.86
106.0
109.0
112.0
USD/CHF
0.8864
0.93
0.96
0.98
GBP/USD
1.6851
1.65
1.63
1.64
AUD/USD
0.9362
0.90
0.88
0.85
USD/CAD
1.0898
1.11
1.13
1.15
Current
3M
6M
12M
10y
2.62
3.00
3.10
3.25
2s10s (bp)
224
250
255
265
0.2241
0.25
0.35
0.50
0.74
0.74
0.70
0.75
Current%
3M
6M
12M
FED
0–0.25
0.25
0.25
0.25
ECB
0.25
0.25
0.25
0.25
BoE
0.50
0.50
0.50
0.50
BoJ
0.10
0.10
0.10
0.10
SNB
0.25
0.25
0.25
0.25
RBA
2.50
2.50
2.50
2.50
US Treasury Forecasts
USD 3M LIBOR Forecast
3M EIBOR Forecast
Policy Rate Forecasts
Bloomberg, Emirates NBD Research
5
GCC has been one of the fastest growing regions
12
Advanced economies
Emerging and developing Asia
Emerging and developing Europe
Latin America and the Caribbean
Sub-Saharan Africa
GCC
10
8
6
% y/y
4
2
0
-2
-4
-6
2008
2009
Source: IMF WEO April 2014, Emirates NBD Research
2010
2011
2012
2013
2014F
2015F
6
GCC growth to be driven by non-oil sectors
Purchasing Managers’ Indices
Infrastructure spending - Qatar
100
64
UAE
Saudi Arabia
90
62
80
60
70
60
QAR bn
58
56
50
40
30
54
20
52
10
50
Jan-12
Jun-12
Nov-12
Apr-13
Sep-13
Feb-14
0
2008
Markit/ HSBC, IMF, Emirates NBD Research
2010f
2012
2014f
7
GCC growth to be driven by non-oil sectors
Bank loans and deposits growth
Public and private sector borrowing
16
40
Bank loans
Bank deposits
Private sector
Public sector enterprises
35
12
30
25
% y/y
% y/y
8
4
20
15
10
0
5
-4
Jan-12
Jul-12
Jan-13
Haver Analytics, Emirates NBD Research
Jul-13
Jan-14
0
Jan-12
Jul-12
Jan-13
Jul-13
8
UAE: Liquidity conditions remain supportive
3M EIBOR and 3M LIBOR
Spread is not at historical lows
3.5
1.4
3M EIBOR
3M LIBOR
3.0
1.2
2.5
1.0
2.0
1.5
%
%
0.8
0.6
1.0
0.5
0.0
0.4
-0.5
0.2
-1.0
0.0
Jan-13
May-13
Bloomberg, Emirates NBD Research
Sep-13
Jan-14
May-14
-1.5
Sep-06
Sep-08
Sep-10
Sep-12
9
UAE: Which sectors will drive growth?
Growth rates
15
% Total GDP (2012)
Hospitality
Manfctg
Construction
Real estate
Trade
Transport, Comms
Hospitality
2%
10
Manfctg
8%
5
Oil
31%
Transport,
Comms
9%
0
Construction
10%
-5
Real estate
10%
-10
Trade
12%
-15
Other
18%
-20
2008
2009
2010
Haver Analytics, Emirates NBD Research
2011
2012
10
Dubai: Real Estate
Real Estate – Residential
80
Real Estate - Commercial
Mid range villas
40
Prime commercial
Mid range apartments
60
Secondary commercial
Low end apartments
20
High end villas
0
% y/y
% y/y
40
-20
20
-40
0
-60
-20
-80
2009
2010
2011
2012
2013
2014
-40
Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14
Cluttons
, Bloomberg, Emirates NBD Research
11
Global Markets Outlook
May 2014
Arjuna Mahendran
Chief Investment Officer
12
Which Risk Assets Climbed a Wall of Worry?
Major Asset Classes - 2013 Performance
Silver*
Gold*
Aluminium*
Platinum*
Copper*
MSCI EM ($)
G7 Govt Bonds**
EM Credit
Global Commodities*
USD v G6
Palladium*
Brent Oil*
US HY Index***
MSCI FM ($)
MSCI Europe ($)
BBG GCC200 ($)
MSCI US ($)
-40%
-30%
-20%
* GSCI
-10%
0%
10%
20%
30%
40%
** BBG/EFFAS ***Barclays Capital
*GSCI **BBG/EFFAS *** Barclays Capital
13
Global Growth Driven by the US
Credit Conditions Supporting US GDP Growth
7%
40%
5%
20%
3%
0%
1%
-20%
-1%
-40%
-3%
-60%
-80%
Sep-92
-5%
Sep-96
Sep-00
Banks tightening Loans to Large Firms (inverted, LA)
Sep-04
Sep-08
Sep-12
US GDP (YoY %, lagged 3 Quarters)
•
Credit conditions lead economic growth
•
Easy credit conducive to higher GDP growth further down the road
Source: Bloomberg
4
14
Valuations Sustainable …
SP500 and MSCI EM Trailing P/E
35
30
25
20
15
10
5
0
SP500 Trailing P/E
•
MSCI EM Trailing P/E
Valuations for the SP500 run at 17.3X trailing earnings. Considering data since
1940, this historically implies a 5.4% average upside potential
•
EM valuations are 30% cheaper: but we currently think it is still a value trap
Source: Bloomberg
4
15
Unless Bond Yields Rise Sharply …
Treasury Yield Movements explained by Economic Surprises
3
2
1
0
-1
-2
-3
2004
2005
2006
2007
2008
US Economic Surprises
2009
2010
2011
2012
2013
US 10 Yr Yields (YoY)
•
Economic surprises are expected to be positive, as US GDP improves
•
US long-bond yields will rise accordingly
Source: Bloomberg
4
16
Earnings Growth higher in DM vs. EM …
Consensus EPS Growth as Per May 2014
(annual, EPS positive – 05/02/14)
2014f
2015f
DM
11.65%
8.04%
EM
4.29%
7.75%
•
Consensus earnings growth seems quite realistic
•
Expectations have come down especially for EM equities
Source: Bloomberg
4
17
… As China is still Struggling
China Manufacturing PMI
55
54
53
52
51
50
49
48
47
46
45
2011
2012
2013
HSBC China Manufacturing PMI
•
Manufacturing PMI below 50 for fourth consecutive month
•
Expect yearly GDP growth to fall short of government 7.5% target
Source: Bloomberg
18
Rise in Equity Volatility a Buy Opportunity
2
70
1
60
0
50
-1
40
-2
30
-3
20
-4
10
-5
1992
0
1994
1996
1998
2000
2002
2004
US Yield Curve - 3Month minus 10Year (LA)
2006
2008
2010
2012
2014
VIX Index - Delayed by 24 Months
•
The US Yield curve suggests equity volatility is set to rise by Summer
•
Rise in volatility a buy opportunity, due to resilient macro backdrop
Source: Bloomberg
19
SP500 10 Year Cycle Projects New Highs
500
1991 -2000
450
400
350
300
1981 - 1990
250
200
2010 - current
1971 - 1980
150
100
50
2001 - 2010
0
2000
1
2001
2
2002
3
2003
4
2004
5
2005
6
2006
7
2007
8
2008
9
2009
102010
•
In the SP500 10-year cycle years 7 or 8 tend to be down years
•
The run-up from year 4 to year 7 or 8 portends equity bull markets
Source: Bloomberg
20
Precious Metals & Oil - YTD Price Performance and Forecasts
Metal / Oil
01/01/2014
USD
30/04/2014
USD
YTD
performance
(%)
Year End (F)
USD
Gold**
1,205.90
1,291.60
7.11
1,200
Platinum**
1,367.45
1,425.69
4.26
1,560
Palladium**
714.20
810.33
13.46
850
WTI***
94.63*
99.74
5.40
95
Brent***
106.82*
108.07
1.17
103
(F) Forecast
*Price as of 2/1/2014
**Price per troy ounce
***Price per barrel
21
Fixed Income
Demand and scarcity of debt continues to compress yields
•
Regional credit markets outperform peer EM counterparts YTD
•
Geo political tensions / EM elections - elevated volatility supports GCC credit markets
•
USD denominated debt to mitigate FX risks in their portfolios
•
Global Investment grade debt issuances soars to $360 BN – GCC total issuances under $9 BN
•
Bonds we like ; We favor GCC in spite of fair value.
CEE - Central Eastern Europe sovereigns ; continues to offer investors decent returns
Russia, Turkey and Brazil offers decent spreads / yields for the risk adjusted basis for investors
seeking higher returns.
•
Bonds we dislike ; Local currency debt, Subordinated debt . High Yield ; Asian industrials / Real
estate, inflation linked bonds, HY bonds beginning to look RICH
22
Regional Debt Issuances - YTD
Issuer
Kuwait Projects
Security / Ticker
Currency
Maturity
Coupon Moody's Fitch S&P Amount Issued Issue Price
KWIPKK 4.8 19
USD
02/05/19
4.800
Baa3
N.A.
BBB- 500 MM
100.00
Dubai Investment Park
DICUH 4.291 19
USD
02/20/19
4.291
N.A.
N.A.
BB
300 MM
100.00
Abu Dhabi Commercial bank
ADCBUH 3 19
USD
03/04/19
3.000
N.A.
A+
A
750 MM
99.77
1.813
Islamic Development Bank
ISDB 1.8125 19
USD
03/06/19
Aaa
AAA
N.A.
1,500 MM
100.00
Damac - Alpha Star Holding
DAMACR 4.97 19
USD
04/09/2019 4.970
NR
NR
BB
650 MM
100.00
Saudi Electricity Co
SECO 4 24
USD
04/08/2024 4.000
A1
AA-
NR
1,500 MM
100.00
Saudi Electricity Co
SECO 5.5 44
USD
04/08/2044 5.500
A1
AA-
NR
1,000 MM
100.00
DOF - Dubai Sovereign
DUGB 5 29
USD
30/04/2029 5.000
N/R
N/R
NR
750 MM
100.00
Mubadala
MUBAUH 3.25 22
USD
28/04/2022 3.250
Aa3
AA
NR
750 MM
98.53
Majid Al Futtaim
MAFUAE 4.75 24
USD
07/05/2024 4.750
NR
BBB
BBB- 500 MM
99.84
TAQA - Abu Dhabi National Energy
TAQAUH 3.875 24
USD
06/05/2024 3.875
A3
NR
A-
99.37
750 MM
GCC matures USD 18 BN of debt in FY 2014 - Supply constraints hold bond prices.
23
Preferred Names – Emerging Markets
C
A
U
T
I
O
U
S
ISSUER
MALAYAN BANKING
KOREA EXCHANGE BANK
SIME DARBY
GOVT OF BERMUDA
KOREA GAS CORP
MALAYSIA SOV
SINGTEL GROUP T
KOREA FINANCE CORP
KOREA DEVELOPMENT BANK
GOVT OF BERMUDA
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
S&P
Country
MAYMK 3 17
KEB 3.125 17
SIMEMK 2.053 18
BERMUD 5.603 20
KORGAS 4.25 20
MALAYS 4.646 21
STSP 4.5 21
KOFCOR 4.625 21
KDB 3.75 24
BERMUD 4.854 24
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
3.000
3.125
2.053
5.603
4.250
4.646
4.500
4.625
3.750
4.854
02/10/17
06/26/17
01/29/18
07/20/20
11/02/20
07/06/21
09/08/21
11/16/21
01/22/24
02/06/24
103.60
104.18
99.84
111.79
107.67
108.17
107.60
109.03
102.39
104.16
88
81
92
145
84
108
103
94
81
167
1.66
1.75
2.10
3.47
2.94
3.35
3.32
3.26
3.46
4.33
N.A.
A1
A3
Aa3
A1
A3
Aa3
Aa3
Aa3
Aa3
AAA
AAAAN.A.
A+
AAAAAA-
AAA
AAA+
AA+
A+
N.A
AA-
Malaysia
South Korea
Malaysia
Bermuda
South Korea
Malaysia
Singapore
South Korea
South Korea
Bermuda
Sector
Financial
Financial
Diversified
Sovereign
Oil & Gas
Sovereign
Telecom
Financial
Financial
Sovereign
Low volatile credits . Offers decent yields for their strong fundamentals for their strong ratings and duration
M
O
D
E
R
A
T
E
ISSUER
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
S&P
Country
SLOVENIA SOV
EXPORT IMPORT BANK
MALAYSIA
PETRONAS CAPITAL
VALE OVERSEAS
REPUBLIC OF LATVIA
SLOVEN 4.125 19
USD
4.125
02/18/19
102.39
197
3.58
Ba1
BBB+
A-
Slovenia
Sector
Sovereign
EIBMAL 2.874 19
PETMK 5.25 19
VALEBZ 5.625 19
LATVIA 2.75 20
USD
USD
USD
USD
2.874
5.250
5.625
2.750
02/19/19
08/12/19
09/15/19
01/12/20
100.42
111.73
111.51
97.30
117
107
147
139
2.78
2.84
3.27
3.27
A3
A1
Baa2
Baa2
AA
BBB+
BBB+
N.A
AABBB
Malaysia
Malaysia
Brazil
Latvia
Financial
Oil & Gas
Commodities
Sovereign
NOBLE GROUP LTD
REPUBLIC OF LITUANIA
LI & FUNG LTD
VALE OVERSEAS
HUTCH WHAMPOA
CNPC GENERAL
SIME DARBY
CNOOC
SLOVENIA SOV
NOBLSP 6.75 20
LITHUN 7.375 20
LIFUNG 5.25 20
VALEBZ 4.375 22
HUWHY 4.625 22
CNPCCH 3.95 22
SIMEMK 3.29 23
CNOOC 4.5 23
SLOVEN 5.25 24
USD
USD
USD
USD
USD
USD
USD
USD
USD
6.750
7.375
5.250
4.375
4.625
3.950
3.290
4.500
5.250
01/29/20
02/11/20
05/13/20
01/11/22
01/13/22
04/19/22
01/29/23
10/03/23
02/18/24
111.37
121.59
107.55
104.19
106.58
99.22
95.13
102.88
102.22
258
133
186
139
129
168
145
152
230
4.48
3.24
3.83
3.74
3.63
4.07
3.96
4.13
4.96
Baa3
Baa1
Baa1
Baa2
A3
A1
A3
Aa3
Ba1
BBBBBB+
N.A.
BBB+
AA+
A
N.A.
BBB+
BBB
BBB
BBB
AAA+
A
AAA-
Singapore
Lithuania
Hong Kong
Brazil
Hong Kong
China
Malaysia
China
Slovenia
Diversified
Sovereign
Diversified
Commodities
Diversified
Oil & Gas
Diversified
Oil & Gas
Sovereign
Outliers in the EM space. They offer compelling spreads in the investment grade space and continue to perform
A
G
G
R
E
S
S
I
V
E
ISSUER
STATE OIL / AZERBAIJAN
RUSSIAN RAILWAY
VTB BANK
HDFC BANK LTD
INDIAN RAILWAY
SBERBANK
BANK OF BARODA/ LONDON
EXPORT-IMPORT BANK INDIA
RUSSIAN RAILWAY
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
S&P
Country
SOIAZ 5.45 17
RURAIL 5.739 17
VTB 6 17
HDFCB 3 18
INRCIN 3.917 19
SBERRU 5.18 19
BOBIN 4.875 19
EXIMBK 3.875 19
RURAIL 5.7 22
USD
USD
USD
USD
USD
USD
USD
USD
USD
5.450
5.739
6.000
3.000
3.917
5.180
4.875
3.875
5.700
02/09/17
04/03/17
04/12/17
03/06/18
02/26/19
06/28/19
07/23/19
10/02/19
04/05/22
105.37
103.38
99.41
100.37
100.31
98.20
103.95
99.95
95.15
262
364
537
118
223
385
228
208
411
3.39
4.49
6.22
2.40
3.84
5.59
4.03
3.89
6.49
Ba1
Baa1
Baa2
Baa2
Baa3
Baa1
Baa3
Baa3
Baa1
BBBBBB
WD
N.A.
BBBBBB
BBBN.A.
BBB
BB+
BBB
N.A
BBB
BBB
N.A
N.A
BBB
BBB
Azerbaijan
Russia
Russia
India
India
Russia
India
India
Russia
Sector
Oil & Gas
Transport
Financial
Financial
Transport
Financial
Financial
Financial
Transport
Credits bordering investment grade which offers absolute value for those seeking higher returns. Recent geo political tensions and elections
across EM states have had a nice price correction and we begin to see value in spread terms.
24
Preferred Names – GCC
C
A
U
T
I
O
U
S
ISSUER
BSFR
DUBAI ISLAMIC BANK
EIB SUKUK
ADCB
BANK MUSCAT
SABIC INDUSTRIES
AL HILAL BANK
RAK CAPITAL
NATIONAL BK OF ABU DHABI
QATAR NATIONAL BANK
MUBADALA
DOLPHIN ENERGY
IPIC
SAUDI ELECTRICITY CO
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
BSFR 2.947 17
DIBUH 4.752 17
EIBUH 4.147 18
ADCBUH 2.5 18
BKMBOM 2.5 18
SABIC 2.625 18
ALHILA 3.267 18
RAKS 3.297 18
NBADUH 3 19
QNBK 2.875 20
MUBAUH 5.5 21
DOLNRG 5.5 21
INTPET 5.5 22
SECO 4.211 22
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
2.947
4.752
4.147
2.500
2.500
2.625
3.267
3.297
3.000
2.875
5.500
5.500
5.500
4.211
05/22/17
05/30/17
01/11/18
03/06/18
03/26/18
10/03/18
10/08/18
10/21/18
08/13/19
04/29/20
04/20/21
12/15/21
03/01/22
04/03/22
103.25
107.37
105.25
100.38
100.50
101.00
103.50
103.75
101.25
99.00
114.87
113.25
113.50
104.25
95
134
148
117
112
93
97
93
98
109
87
116
114
121
1.84
2.25
2.64
2.39
2.36
2.38
2.43
2.41
2.74
3.06
3.11
3.50
3.51
3.59
N.A.
Baa1
Baa1
A1u
A1
A1
A1
N.A.
Aa3
Aa3
Aa3
A1
Aa3
A1
A
A
A+
A+
AA+
A+
A
AAA+
AA
A+
AA
AA-
S&P Country
A
N.A
N.A
A
AA+
N.A
A
AAN.A
AA
N.A
AA
AA-
KSA
UAE
UAE
UAE
OMAN
KSA
UAE
UAE
UAE
Qatar
UAE
UAE
UAE
KSA
Sector
Financial
Financial
Financial
Financial
Financial
Chemicals
Financial
Sovereign
Financial
Financial
Agency Sov
Energy
Oil & Gas
Utilities
Strong fundamentals, High grade issuers offering attractive spreads when compared to peer counterparts in the EM space
M
O
D
E
R
A
T
E
ISSUER
EMAAR PJSC
MAJID AL FUTTAIM
EMIRATES NBD PJSC
DP WORLD SUKUK
DEWA
COMMERCIAL BANK OF DUBAI
FIRST GULF BANK
MAJID AL FUTTAIM
KUWAIT PROJECTS
ABU DHABI NATIONAL ENERGY
MEDJOOL LTD
MAJID AL FUTTAIM
EMIRATES AIRLINES
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
S&P Country
EMAAR 8.5 16
MAFUAE 5.85 17
EBIUH 4.625 17
DPWDU 6.25 17
DEWAAE 3 18
CBDUH 3.375 18
FGBUH 3.25 19
MAFUAE 5.25 19
KWIPKK 9.375 20
TAQAUH 3.625 23
EMIRAT 3.875 23
MAFUAE 4.75 24
EMIRAT 4.5 25
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
8.500
5.850
4.625
6.250
3.000
3.375
3.250
5.250
9.375
3.625
3.875
4.750
4.500
08/03/16
02/07/17
03/28/17
07/02/17
03/05/18
05/21/18
01/14/19
07/05/19
07/15/20
01/12/23
03/19/23
05/07/24
02/06/25
114.50
110.50
106.75
111.37
101.75
101.75
102.37
108.46
126.35
99.38
98.00
99.94
97.25
133
114
137
154
130
161
114
171
243
121
290
209
325
1.86
1.92
2.20
2.48
2.52
2.91
2.71
3.45
4.46
3.71
4.15
4.76
4.83
B1
N.A.
Baa1
Baa3
N.A.
Baa1
A2
N.A.
Baa3
A3
N.A.
N.A.
N.A.
N.A.
BBB
A+
BBBN.A.
AA+
BBB
N.A.
N.A.
N.A.
BBB
N.A.
BB+
BBB
N.A
NR
BBB
N.A
N.A
BBB
BBB
AN.A
BBB
N.A
UAE
UAE
UAE
UAE
UAE
UAE
UAE
UAE
Kuwait
UAE
UAE
UAE
UAE
Sector
Real Estate
Diversified
Financial
Transport
Utilities
Financial
Financial
Diversified
Diversified
Energy
Transport
Diversified
Transport
Issuers to benefit from the strong growth rebound / outlook, these issuers offer decent yields and have strong fundamentals and credit metrics
A
G
G
R
E
S
S
I
V
E
ISSUER
ALDAR PJSC
DUBAI INVESTMENT PARK
ALPHA STAR HOLDINGS
Security
Currency
Coupon
Maturity
Price
G Spread
YTM
Moody's
Fitch
ALDAR 4.348 18
DICUH 4.291 19
DAMACR 4.97 19
USD
USD
USD
4.348
4.291
4.970
12/03/18
02/20/19
04/09/19
103.32
100.37
98.75
203
259
360
3.55
4.20
5.26
Ba2
N.A.
N.A.
N.A.
N.A.
N.A.
S&P Country
BB
BB
BB
UAE
UAE
UAE
Sector
Real Estate
Real Estate
Real Estate
These credits remain the only high yielding credits in the UAE space. Scarcity of High yield should support these credits
25
GCC Equity Markets Outlook
May 2014
Anita Gupta
Equity Strategist
26
GCC markets are correlated and are outperforming emerging markets
GCC and EM Valuations (Price/ Earnings)
GCC equities have been trading at higher valuations than major benchmarks due to
higher growth potential in the region
Why remain invested in GCC Equities
•
Economic and business indicators are improving
•
Earnings growth 1Q median UAE +24%, Saudi +4% Qatar +10% A sustainable
earnings growth of over 10% will help valuations stay reasonable
•
MSCI inclusion positive for Qatar and UAE
•
Volumes, liquidity and Foreign Ownership Limits improving
•
Expect increasing dividend payouts and bonus shares as companies generate more
free-cash-flow
•
IPO’s to provide depth and breadth
Risks
• Will market momentum be sustained post MSCI inclusion?
• Caps on labour immigration leading to higher wages and lower margins
• Will Qatar lose the FIFA?
Dividend play in the UAE, Qatar and Saudi
.
•
•
•
Historically companies in the GCC pay out dividends in the first half of the year.
Qatar in the first quarter, UAE March to May and Saudi pays out quarterly and semi
annual dividends
Often the share price reverts in a few days to the price before the dividend pay out
(unless market conditions are negative)
Post both dividend payouts in 2013 Al Rajhi’s price stayed stable or climbed
Where would we invest?
Sector picks for 2015
Real estate/ construction: Supply/ demand dynamics favourable, attractive investment
yields, govt spend on infrastructure, increasing tourism
Banking: Improving asset quality, improving economic indicators, attractive dividend
yield, brokerage businesses to benefit
Chemicals: Cheap feedstock prices, increasing free cash flows, participation in the
petrochemical wealth of the GCC
Retail: High per capita income, Saudi govt budget focused on increased social spending
Telecom: Data driven revenue growth, strong cash flows, high dividend yields (4.5%)
THANK YOU
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