mena weekly monitor...week 49 november 29 - december 5, 2020 1 bank audi sal - group research...

1Week 49 November 29 - December 5, 2020

Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected]

MENA MARKETS: WEEK OF OCTOBER 11 - OCTOBER 17, 2020

Economy__________________________________________________________________________p.2 J.P. MORGAN FORESEES GRADUAL RECOVERY IN MENAP AFTER A DIFFICULT YEARThe dire consequences of the COVID-19 pandemic have been felt deeply across the MENAP region and expectations are for a gradual recovery in 2021 and a complete recovery in 2022, said J.P. Morgan.

Also in this issuep.3 Atradius says COVID-19 crisis lends fresh urgency to MENA economic diversification effortsp.3 KSA Q3 construction deal value down to US$ 2 billion amid COVID-19, as per US-Saudi Business Councilp.4 Egypt's non-oil private sector growth slows on pandemic worries

Surveys_________________________________________________________________________p.5 DUBAI AND ABU DHABI CLIMB UP GLOBAL RANK AS MOST TRANSPARENT REAL ESTATE MARKETS IN MENA, ACCORDING TO JLLThe UAE’s real estate industry registered improvements in JLL’s Global Real Estate Transparency Index (GRETI) 2020, which provides a measure of real estate market transparency and an indicator of a city’s overall “real estate investment health”.

Also in this issuep.5 GCC healthcare sector to ramp up investments to spur growth, as per Alpen Capital

Corporate News__________________________________________________________________________p.7 SAUDI ARAMCO INKS STRATEGIC DEALS WITH TOP GLOBAL FIRMS Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains.

Also in this issuep.7 Omani State-led alliance wins bid to develop Duqm fisheries portp.7 AXA to sell insurance operations in Gulf to GIGp.7 Saudi AlHokair unit Marakez opens new retail hub in Egyptp.8 Kuwait's KPC signs deal to store 3.14 million barrels of oil in Japanp.8 Saudi Arabia’s MiSK foundation acquires 33.3% of Japanese gaming companyp.8 Delivery Hero backs UAE tech start-up Quiqup in US$ 5.5 million funding roundp.8 UAE start-up Distichain closes in on funding deals for international expansion

Markets In Brief__________________________________________________________________________p.9 WEEKLY PRICE GAINS ACROSS MENA CAPITAL MARKETSMENA equity markets registered shy price gains this week, mainly supported by some favorable market-specific factors, and tracking global equity strength (+1.6%) as optimism about latest COVID-19 vaccine developments continued to support global recovery hopes. This was reflected by a 0.3% rise in the S&P Pan Arab Composite index. In parallel, activity in MENA fixed income markets was mostly skewed to the upside this week, as concerns about rising Coronavirus cases globally and escalating geopolitical tensions more than offset the impact of progress in COVID-19 vaccine development and optimism about a second US stimulus package.

Stock market weekly trend ⬆Weekly stock price performance +0.3%

Stock market year-to-date trend ⬇YTD stock price performance -3.1%

Bond market weekly trend ⬆Weekly Z-spread based bond index -3.2%

Bond market year-to-date trend ⬇YTD Z-spread based bond index +20.4%

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NOVEMBER 29 - DECEMBER 5, 2020WEEK 49

MENAWEEKLY

MONITOR

MENA MARKETS: WEEK OF NOVEMBER 29 - DECEMBER 5, 2020

Week 49 November 29 - December 5, 2020


2

Source: J.P. Morgan

1,5181,688

1,857 1,964 1,936

924

200

0

500

1,000

1,500

2,000

2015 2016 2017 2018 2019 H1-19 H1-20

(000s)

- 78.4%

-6

-4

-2

0

2

4

6

MENAP GCC Other MENAP

2019 2020F 2021F 2022F

%

GDP GROWTH IN MENAP

ECONOMY______________________________________________________________________________J.P. MORGAN FORESEES GRADUAL RECOVERY IN MENAP AFTER A DIFFICULT YEAR

The dire consequences of the COVID-19 pandemic have been felt deeply across the MENAP region and expectations are for a gradual recovery in 2021 and a complete recovery in 2022, said J.P. Morgan in a recent note on the region. Oil exporters are expected to pay the highest price in 2020 with their economies impacted by a deep contraction in both hydrocarbon and non-hydrocarbon sectors. OPEC+ curbs and very low demand for oil products weighed on the GCC performance with the area expected to end the year at a level almost 5% lower than in 2019. The non-hydrocarbon sector was hindered by very stringent restrictions on mobility, which alongside top-notch testing capacities helped Gulf countries to contain the virus and to avoid a second wave in most of the region. Limitations on international travel and social interactive activities, reflected in the mobility indicators, had dire consequences for the service sector. Mobility has remained mostly flat after the initial pick-up and remains about 13% lower than the baseline.

J.P. Morgan believes that a gradual tapering of oil curbs in 2021 sustained by higher global demand, as well as a pick-up in non-oil activities will help GCC countries to recover in 2021 when the bank expects a 3.2% annual growth. However, a full recovery is unlikely before 2022, when it forecasts the GDP level to eventually exceed the level of 2019 by 1%. Saudi Arabia, the largest GCC economy, is expected to record the worst economic result since 1987. The recovery so far has been slower than other major EM countries mainly due to the high share of hydrocarbons in economic activity, with 3Q seeing only a modest increase in oil production due to ongoing OPEC+ production curbs, as per J.P. Morgan. High frequency data have shown that moderate growth is extending to 4Q. Whilst major progress in the fight against the pandemic and a potential rapid recovery in tourism and oil prices leave room for growth to surprise to the upside, ongoing fiscal adjustment will be a constant drag on growth. J.P. Morgan sees GDP contracting by 4.4% this year before picking up in 2021, going on to mark a full recovery in 2022, at a level more than 2% higher than 2019.

Amongst oil importers, performances have been much more heterogeneous in 2020, with some countries reporting slower growth rates rather than contractions, and others experiencing deep recessions. Egypt and Pakistan, the largest non-GCC economies in the MENAP region, both reported preliminary FY20 results in positive territory for GDP at market prices. On the other hand, countries such as Jordan, Tunisia, and Morocco are expected to contract by between 5%-10% in 2020, and Iraq and Lebanon are likely to contract in excess of 10% and 25%, respectively this year alone. J.P. Morgan expects oil importers to return to growth in 2021 owing to a pick-up in global demand and easing of COVID-19 related restrictions.



The group will be beneficiaries of the easing of restrictions, with tourism receipts expected to pick-up after their dramatic drop in 2020. Despite the prospect of a vaccine massively boosting the fight against the pandemic, J.P. Morgan believes that tourist inflow will take a while to return to pre-pandemic levels, with 2022 likely to report a better result than 2021, when some effects of pandemic are likely to linger.

The difficulties of 2020 are likely to have repercussions on repayment risks for several countries in the region. Despite large and prompt IMF interventions this year through the RFI facility and the more conventional EFF and SBA programs, the drop in economic activity, budgetary imbalances, and balance of payments deteriorations have had an effect on the repayment risks for sovereign debt for countries in the MENAP region.

_____________________________________________________________________________ATRADIUS SAYS COVID-19 CRISIS LENDS FRESH URGENCY TO MENA ECONOMIC DIVERSIFICATION EFFORTS

Atradius' latest report on Middle East and North Africa analyzes challenges faced by the region and identifies opportunities for economic diversification to fuel future growth. The oil-dependent economies of the MENA region have been dealt a fresh blow by COVID-19, but the region can limit the damage and rejuvenate growth by focusing on fiscal consolidation, technological innovation, and economic diversification, according to the latest MENA economic report of Atradius, a global provider of trade credit insurance, surety and collections services. Buffeted by geopolitical challenges and a range of social issues, the MENA region has been further weakened by the pandemic and faces an unprecedented slowdown of -7.0% in 2020, the report notes, arguing that it is in the countries’ best interests to intensify diversification efforts, which have been underway for some time now, in order to secure long-term growth.

Shakeups in the oil industry have seen traditional oil exporters cede market share to the US shale industry and lose control over the price of oil while a potential easing of sanctions on Iranian oil exports poses another risk, leaving even the most financially robust GCC countries, such as Kuwait, Saudi Arabia, UAE and Qatar, vulnerable and struggling to maintain current living standards for coming generations, according to the report. As the steady flow of petrodollars -which helps fund government spending and private consumption- has dwindled, it has contributed to widening the persistent twin deficits of the region’s economies. This, in turn, is blunting the policy tools at the disposal of MENA governments and hurting their ability to support other traditional growth engines, such as construction and real estate, which contribute between 10%-15% to the GDP of GCC countries, according to the report. The twin oil-coronavirus crisis has had a large negative impact on most sectors in the non-oil economy with significant credit risk implications, noted the Managing Director Middle East at Atradius. The IMF in its latest report on the region estimates that the default risk for corporates has doubled and Atradius can confirm that payment performance has deteriorated across the weaker sectors due to falling demand, cash flow constraints and insufficient support from banks, as per the same source.

The Atradius report forecasts the MENA region will expand by 3.6% in 2021 and 4.0% in 2022 -most of which will be driven by the non-oil sector as oil prices are unlikely to rise significantly in the near future- and identifies the most promising sectors to help drive growth in the region. These include education, information & communication, fintech and pharmaceuticals. Other focus areas are aiding the growth of the manufacturing sector in North Africa and the Middle East’s push for renewables. North African economies, specifically Morocco and Tunisia, can build on the ongoing shift to high-tech manufacturing and expansion of their trade networks while the Middle East is well endowed with renewable energy sources and raising funds for renewable energy projects is becoming easier, noted a Senior Economist at Atradius. These efforts must be taken to the next level because holding on to the current economic model will form an increasing drag on growth, according to the same source.

_____________________________________________________________________________KSA Q3 CONSTRUCTION DEAL VALUE DOWN TO US$ 2 BILLION AMID COVID-19, AS PER US-SAUDI BUSINESS COUNCIL

Saudi Arabia said the total value of awarded contracts for the third quarter of 2020 fell to SR 7.4 billion (circa US$ 2 billion) as COVID-19 related strains on government and private sector entities persist leading



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to a slowdown in the construction sector. The total value of awarded contracts through the first three quarters of 2020 reached SR 63.6 billion (US$ 17 billion), stated the US-Saudi Business Council in its Q3 Contract Awards Index (CAI).

The CAI index fell to 105.26 points by the end of the third quarter, steadily declining through the quarter as the slowdown in the construction sector continued. The CAI ended at 134.27 points in July, 119.50 in August, and 105.26 in September. The CAI declined by 45.55 points compared to Q2 2020 and by 130.73 points compared to Q3 2019. The steep declines in the CAI have not been witnessed since 2016 as the Kingdom was faced with budgetary pressures stemming from volatile oil markets, as per the report. The USSBC Contract Awards Index report provides a sense of direction on construction activities that will transfer to the execution phase over the next 6 to 18 months. It encompasses construction related contract awards across all sectors within Saudi Arabia. The USSBC CAI is intended to be used as a forward-looking indicator to gauge the health of construction activities. The CAI is calculated using a 12-month exponential moving average. In general, a CAI reading of 100 points and above indicates an expansion while a sub-100 point reading indicates a possible contraction.

A majority of the awarded contracts were in transportation, power and real estate, which accounted for approximately 59% of the total value of contracts awarded. Water, urban development and petrochemicals accounted for 32% of the total value while oil & gas accounted for only 7% of the total, the lowest on record. About 2% were awarded in other sectors. Among the regions, the Eastern Province accounted for nearly a third of the value of awarded contracts (32%) in Q3, including a new chlorine derivatives plant and an industrial wastewater processing plant in Jubail. Makkah Province came a distant second with 20% of contract awards, primarily in the power and real estate sectors followed by Tabuk Province, which hit a new high this year with SR 1.4 billion worth of contracts (around 19%) including major infrastructure works at Red Sea International Airport. Other mega project contracts in Q3 include transportation infrastructure works at mega entertainment project Qiddiya in Riyadh Province.

According to the report, the construction sector continued to weather the COVID-19 pandemic as project owners and contractors faced ongoing challenges. Revised budget spending along with fiscal consolidations by the government and private sector strained the pipeline of awarded contracts during Q3 as the value reached SR 7.4 billion (US$ 2 billion), stated the council in its Q3 review. The government’s commitment to absorbing the financial impact of the pandemic on the economy through fiscal spending cuts has mainly impacted its capital expenditures, it added. According to the Q3 2020 budget update report from the Ministry of Finance, capital expenditures have decreased by 26% compared to Q3 2019. Furthermore, the Economic Resources sector, which includes infrastructure and tourism related spending witnessed a 38% decline through Q3 2020 compared to 2019. ______________________________________________________________________________EGYPT'S NON-OIL PRIVATE SECTOR GROWTH SLOWS ON PANDEMIC WORRIES

Egypt's non-oil private sector activity growth slowed in November and consumer confidence dropped to its lowest in nearly a decade on worries about a resurgence in the coronavirus pandemic. IHS Markit’s Purchasing Managers' Index (PMI) came in at 50.9, down from 51.4 in October but holding above the 50.0 threshold that separates growth from contraction.

Weaker rises in output and new business suggested a tail-off in the economic recovery in November, although it came after output growth reached its highest in over six years during October, said an IHS Markit economist. Egyptian firms were also the least optimistic about future output in the series history, amid concerns that activity could weaken if COVID-19 cases rise again domestically. Output and new orders climbed for a fifth month, although at slower rates than in October. Output registered 52.0 in November, down from 53.4, and new orders 52.7, down from 53.6 in October.

Stricter coronavirus lockdowns in European markets have led to increased worries among Egyptian firms that virus infections could rise in the future and potentially hamper the economic recovery, IHS Markit said. Future output expectations were at 55.6, down from 62.0 in October and the lowest reading since the PMI began measuring in April 2012. Private employment continued to contract for a 13th month, although at a slower rate than in October, with the sub-index improving to 48.5 from 47.8, marking the slowest rate of contraction since October 2019.



SURVEYS_____________________________________________________________________________DUBAI AND ABU DHABI CLIMB UP GLOBAL RANK AS MOST TRANSPARENT REAL ESTATE MARKETS IN MENA, ACCORDING TO JLL

The UAE’s real estate industry registered improvements in JLL’s Global Real Estate Transparency Index (GRETI) 2020, which provides a measure of real estate market transparency and is an indicator of a city’s overall “real estate investment health”.

In this year’s edition, the index reveals the increasing attractiveness of Dubai as an investment hub within the region. The city climbed up three ranks (36th) to maintain its position as the most transparent market in the Middle East. JLL’s GRETI report this year is being launched at a time of massive economic and societal disruption. As governments and businesses recover from the impact of COVID-19, questions around transparency and trust have been bought into even sharper focus, as per the CEO of JLL Middle East and Africa (MEA).

During times of such uncertainty, the need for transparent processes and accurate, timely data becomes more important than ever. The findings of this report provide reasons for optimism with the current disruption forcing the pace of change, as per the same source.According to the report, the most significant initiative launched in 2019, and a key contributor to Dubai’s ranking, was the creation of an official residential transaction-based index, Mo’asher, by the Dubai Land Department (DLD) in partnership with a private sector entity. Mo’asher constitutes a potentially important step forward for Dubai, as it means the establishment of a single index that is widely used by all market participants, as per the Head of Research for JLL MENA.

Driven by the introduction of further initiatives to promote corporate and real estate sustainability, Abu Dhabi emerged as a top performer globally, reflecting positively on the overall transparency ranking and future investment outlook.

Among the many initiatives introduced, the UAE Ministry of Climate Change and Environment signed a pledge with the Abu Dhabi Global Market (ADGM), a financial Freezone, to embed sustainable finance policies in the UAE, contributing to the emirate’s ranking. The policies cover all forms of corporate and investment financial services which yield environmental, social, and economic benefits, as per the same source.

Other factors include the first Green REIT, established at the ADGM in early 2020 by Masdar, a subsidiary of Mubadala Investment Company and one of the world’s leading renewable energy and sustainable real estate companies. Beyond sustainability, The Abu Dhabi Digital Authority (ADDA) also unveiled a new Abu Dhabi Data Management Program (DMP), offering a data-centric platform and sharing ecosystem. This falls under the Open Data initiative as part of Ghadan 21, Abu Dhabi's accelerator program, which is designed to fulfil the government’s vision of a diversified knowledge based economy making the Emirate one of the best places in the world to do business, invest, live, work and visit.

According to JLL’s report, Saudi Arabia continues to demonstrate a strong commitment to the implementation of positive reforms to expand the economy and the real estate market. Conscious of the role data plays in market transparency, the Saudi government rebranded its publicly available central database - The General Authority for Statistics – and has continued to collate more data from government agencies. Ministries and government organizations such as the Ministry of Finance and the Saudi Arabian Monetary Authority have also begun to publish more micro-level indicators on a monthly and quarterly basis. Data from the Ministry of Justice has also become a valuable indicator for commercial and residential real estate transactions and performance.

______________________________________________________________________________GCC HEALTHCARE SECTOR TO RAMP UP INVESTMENTS TO SPUR GROWTH, AS PER ALPEN CAPITAL

The GCC Healthcare industry is expected to witness a boost in investments to meet the growing demand owing to the pandemic. Additionally, a post pandemic expected economic recovery coupled



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with favorable policy changes will offer interesting opportunities to encourage investor interest, Alpen Capital said in a report.

Driven by the pressure exerted by the COVID-19 outbreak, health systems in the GCC states are likely to further ramp up investments in digitization to drive future growth and improve operational efficiencies, the report from the investment banking group said.

Service providers are also likely to upgrade existing infrastructure to better prepare for any potential outbreaks in the future, the report noted, adding, the industry is expected to witness increased collaborative measures that will pave the way for better disease management and improved care services across specialties.

Industry shortcomings are anticipated to be addressed by boosting domestic manufacturing. The governments continue to support local manufacturers by offering various incentives in a bid to make healthcare sector more self-sufficient.

With exceptional planning and fiscal support from the regional governments the sector has maintained a moderate growth momentum, as per the Managing Director of Alpen Capital (ME).

Increasing life expectancy at birth, improvements in infant mortality rate and an ageing population are the key demographics expected to drive the region’s healthcare system. Technological advancements and digitization will also play a crucial role in driving growth and improving operational efficiencies, as per the same source.

Among the other trends, the report noted that health systems are likely to scout for inorganic growth opportunities through acquisitions and further diversify their offerings. The sector has seen robust M&A activity over the last two years, specifically in the UAE and Saudi Arabia, it said.

Investment in research activities and digitization of services is also expected to spur innovation.

While the region observed a handful of cross-border acquisitions, there were several intra-regional deals as companies are looking to offer integrated services and increase market share. Health systems are also looking to scout for inorganic growth opportunities to further diversify their offerings. The region is likely to show high interest in acquiring stakes in LTPAC and home healthcare services, as per the Executive Director, Alpen Capital (ME).

The GCC economy is expected to rebound over the next two years with the GDP to see a 2.3% and 3.5% growth in 2021 and 2022, respectively, as the COVID-19 situation normalizes. This is likely to drive recovery in the healthcare sector as demand escalates and health systems evaluate expansion plans that were otherwise put on hold due to the pandemic.

Increasing life expectancy at birth, improvements in infant mortality rate and an ageing population are the key demographics driving the region’s healthcare system, the report said. The number of older people (aged 50+) are expected to increase at a CAGR of 6.9% between 2020 and 2025, while population is likely to grow at a CAGR of 2.3% during the same period, the report noted.

The GCC countries are witnessing a high prevalence of NCDs, a major cause of most of the deaths in the region. Considering the high cost and length of treating such lifestyle ailments, the healthcare expenditure in the region is set to rise. The gradual rollout of mandatory health insurance across the region will increase the utilization of medical services at private healthcare facilities, it said.

The GCC has an estimated 161 healthcare projects with a combined value of US$ 53.2 billion under various stages of development. Such massive project pipeline is likely to augment the scale of healthcare services in the region. The GCC countries continue to promote the region as a hub for medical tourism as part of their economic diversification plans. Dubai and Abu Dhabi lead the region in attracting the highest number of medical tourists in the region.



CORPORATE NEWS_____________________________________________________________________________SAUDI ARAMCO INKS STRATEGIC DEALS WITH TOP GLOBAL FIRMS

Saudi Aramco announced the expansion of its flagship program to increase local content and boost domestic supply chains. The expansion includes plans for new international partnerships and the establishing of companies through an Industrial Investment Program (IIP), which is linked to the development of Aramco's business. In this connection, Aramco has signed deals with Shell and AMG Recycling BV (AMG) from the Netherlands, Chinese firms Suzhou XDM, Shen Gong, Xinfoo and Supcon and Posco from South Korea. These collaborations pave the way for the launch of new businesses across multiple innovative growth sectors, including steel plate manufacturing, industrial 3D printing, digital equipment manufacturing, energy management and control, catalyst manufacturing and recycling, and advanced chip and smart sensor manufacturing.

_____________________________________________________________________________OMANI STATE-LED ALLIANCE WINS BID TO DEVELOP DUQM FISHERIES PORT

The Public Authority for Special Economic Zones and Free Zones (OPAZ) awarded the tender for the development, management and operation of a multipurpose fishing port in Duqm to an alliance of Oman and international companies led by State-owned Fisheries Development Oman (FDO).

Together with Fisheries Development Oman (FDO), the winning alliance includes Al Wusta Fisheries Company, Oman Food Investment Holding Company, Oman Fisheries Company and Port of Duqm along with Lorient Keroman SEM which manages one of the major fishing ports in Europe. The companies will invest an amount of OMR 50 million (US$ 130 million) to develop, manage and operate the multipurpose fishing port, with the potential of expanding the facilities and services to include several operational and services aspects.

The multipurpose fishing port is ten meters deep and works are currently progressing to connect it to the road network and services facilities. It also includes main breakwater which is 2.2 kms long and secondary breakwater 1.1 km long and the total lengths of the jetties are around 1.2 km long, while the area allocated for the services facilities is 248,931 square meters. The port is also equipped with tourism berth, stretching over 75,000 square meters that will provide its services for tourism ships within the plan of the project. Facilities complementing the multipurpose fishing port include fisheries & food processing complex connected to the main road and internal roads, which are 5.2 kms long. The port will shortly provide its services to local fishermen, commercial fishing ships, livestock ships and ships designated for transporting foodstuff in addition to some tourism facilities and other services facilities.

_____________________________________________________________________________AXA TO SELL INSURANCE OPERATIONS IN GULF TO GIG

AXA, an insurer in the region, entered into an agreement with Gulf Insurance Group to sell its insurance operations in the Gulf region, which includes its shareholding in AXA Gulf, AXA Cooperative Insurance Company and AXA Green Crescent Insurance Company. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals, and is expected to close by 3Q 2021.

____________________________________________________________________________SAUDI ALHOKAIR UNIT MARAKEZ OPENS NEW RETAIL HUB IN EGYPT

Marakez, one of the largest mixed-use developers in Egypt and a subsidiary of leading Saudi retailer Fawaz AlHokair Group, has announced the opening of its new 64,000-square-meters retail destination - Town Center.



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Located at the busy intersection of the Ring Road, Ismailia-Cairo Road and in close proximity to the new Adly Mansour metro station and Salam Bus Station, the neighborhood center has more than 25,000 square meters of gross leasable area, stated Marakez, which started work on the US$ 16.6 million project in August last year.

The Town Center, which has a variety of retail outlets for fashion, cosmetics, electronics, home accessories and appliances anchored by Carrefour, Mostafa El Sallab, LC Waikiki, Active and several other brands, will be catering to more than 2 million people who live and work within the area.

_____________________________________________________________________________KUWAIT'S KPC SIGNS DEAL TO STORE 3.14 MILLION BARRELS OF OIL IN JAPAN

State-owned Kuwait Petroleum Corp (KPC) signed an agreement to store 3.14 million barrels of crude oil in Japan, as per the company's Deputy Managing Director of International Marketing. The agreement is part of KPC's efforts to secure storage abroad and increase its market share in the Far East, as per the same source.

______________________________________________________________________________SAUDI ARABIA’S MISK FOUNDATION ACQUIRES 33.3% OF JAPANESE GAMING COMPANY

The Prince Mohammed bin Salman bin Abdul Aziz Foundation “MiSK” announced a strategic investment of SR 813 million (US$ 216.5 million), acquiring 33.3% of Japanese video game hardware and software company SNK. This purchase came with the stipulation that the Saudi foundation would buy another 17.7% of SNK shares in the future, raising its share of investment in the company’s ownership to 51%.

The investment is part of the foundation’s commitment to developing the skills of young men and women in Saudi Arabia, MiSK said. The decision will also enhance the capabilities of SNK, which has many innovative intellectual properties in the gaming sector.

______________________________________________________________________________DELIVERY HERO BACKS UAE TECH START-UP QUIQUP IN US$ 5.5 MILLION FUNDING ROUND

Quiqup, the UAE-based on-demand and same day delivery tech start-up, raised over US$ 5.5 million in a funding round led by Delivery Hero. The company, which was also supported by Cedar Mundi, JOBI Capital, and Transmed, said it will use the capital to further expand its AI driven logistics infrastructure. In parallel, Berlin-based food-delivery service Delivery Hero has agreed to buy InstaShop at a US$ 360 million valuation to expand in the Middle East and North Africa.

______________________________________________________________________________UAE START-UP DISTICHAIN CLOSES IN ON FUNDING DEALS FOR INTERNATIONAL EXPANSION

UAE-based B2B e-commerce platform Distichain is close to striking deals with venture capital firms (VCs) and larger angel investors to raise capital for its international expansion plans, as per its top executive.The start-up, which provides public and private enterprises with tailor-made marketplaces, is also looking to ramp up its staffing levels to 50 at its UAE offices over the next 18-month period, as well as hiring overseas. Distichain, which has recently revealed its expansion into the US and Australia, proposes to deploy the new funds to finance these and other expansion plans in the pipeline.

Distichain revealed teaming up with 8Corners.com.au, an agribusiness marketplace, to set up a platform to facilitate Australian farm producers to sell their goods globally and directly. The venture also said it would launch another platform this month in partnership with HotelSupplyB2B.com, the marketplace by a US-based hotel venture for the hospitality industry. The company recently revealed that it has also entered into an agreement with Africa Agritech Ltd, an organization funded by the UK government to facilitate African agribusiness sales.



CAPITAL MARKETS____________________________________________________________________________SHY PRICE GAINS IN REGIONAL EQUITIES WEEK-ON-WEEK MENA equity markets registered shy price gains this week, mainly supported by some favorable market-specific factors, and tracking global equity strength (+1.6%) as optimism about latest COVID-19 vaccine developments continued to support global recovery hopes. This was reflected by a 0.3% rise in the S&P Pan Arab Composite index.

The Qatar Exchange posted price increases for the second consecutive week, as reflected by a 1.7% rise in the S&P Qatar index, mainly supported by news that Saudi Arabia and Qatar are nearing a preliminary deal to end a rift that has dragged on for more than three years, and tracking gains in global equities on optimism about latest Coronavirus vaccine developments. QNB’s share price went up by 1.3% to QR 18.30. Masraf Al Rayan’s share price closed 2.8% higher at QR 4.42. Qatar International Islamic Bank’s share price surged by 3.0% to QR 8.998. Qatar German for Medical Devices’ share price jumped by 15.2% to QR 2.020. Qatar Industrial Manufacturing’s share price climbed by 8.7% to reach QR 3.30.

Boursa Kuwait saw mixed price movements this week, as investors balanced Kuwait’s inclusion in the MSCI Emerging Markets Index on November 30, 2020 and optimism spurred by the Coronavirus vaccine against the uncertainty surrounding the outcome of OPEC talks on production quotas. This preceded the cartel’s decision on December 3, 2020 to gradually ease output curbs starting January 2021. Within this context, the S&P Kuwait index registered shy rises of 0.1% week-on-week. Mabanee’s share price rose by 0.9% to KWf 660. Agility’s share price went up by 2.6% to KWf 663. Burgan Bank’s share price increased by 1.0% to KWf 208. In contrast, Boubyan Bank’s share price shed 6.7% to KWf 582. NBK’s share price declined by 0.5% to KWf 845. Kuwait Finance House’s share price closed 1.7% lower at KWf 681.

The UAE equity markets saw two-way flows during this week that was shortened to two working days due to the UAE National Day. This was reflected by a 0.1% weekly increase in the S&P UAE index. In Dubai, Emirates NBD’s share price surged by 3.8% to AED 10.95. DAMAC Properties’ share price went up by 0.9% to AED 1.18. Gulf Navigation Holding’s share price rose by 1.3% to AED 0.405. In contrast, Deyaar Development’s share price plunged by 4.6% to AED 0.272. Emaar Properties’ share price closed 2.4% lower at AED 3.18. Emaar Malls’ share price shed 4.2% to AED 1.83. du’s share price dropped by 2.2% to AED 5.65.

EQUITY MARKETS INDICATORS (NOVEMBER 29 TILL DECEMBER 5, 2020)

Sources: S&P, Bloomberg, Bank Audi's Group Research Department

Market Price Index

week-on-week

Year-to-Date

Trading Value

week-on-week

Volume Traded

Market Capi-talization

Turnover ratio P/E* P/BV*

Lebanon 59.1 0.0% -15.2% 3.7 71.3% 0.5 6,677.0 2.9% - 0.58

Jordan 276.3 0.6% -23.2% 31.3 30.0% 26.0 17,465.5 9.3% 13.9 1.26

Egypt 276.1 0.0% -20.0% 427.7 -7.1% 2,095.4 44,537.6 49.9% 9.5 1.77

Saudi Arabia 378.7 -0.2% 2.8% 14,763.3 2.7% 1,864.6 2,469,494.0 31.1% 18.2 2.61

Qatar 178.9 1.7% -3.1% 1,016.5 87.0% 1,313.9 164,595.0 32.1% 15.9 1.99

UAE 100.7 0.1% -11.2% 507.7 -43.9% 527.9 285,005.1 9.3% 11.6 2.49

Oman 187.4 1.5% -6.8% 14.2 14.2% 24.4 15,664.7 4.7% 10.9 0.85

Bahrain 143.8 1.2% -12.4% 9.2 -0.5% 12.8 23,079.4 2.1% 13.3 5.11

Kuwait 104.8 0.1% -12.6% 3,756.8 248.4% 2,084.3 95,867.2 203.8% 23.0 1.92

Morocco 273.3 2.0% -6.1% 50.4 -0.6% 2.6 62,766.6 4.2% 22.2 2.97

Tunisia 69.0 1.5% -4.6% 7.4 -16.7% 6.5 8,179.0 4.7% 15.0 2.68

Arabian Markets 764.3 0.3% -3.1% 20,588.1 17.9% 7,958.9 3,193,331.1 33.5% 17.4 2.54

Values in US$ million; volumes in millions * Market cap-weighted averages



10

In Abu Dhabi, Dana Gas’ share price increased by 0.4% week-on-week to AED 0.683. Taqa’s share price closed 1.4% higher at AED 1.49. Etisalat’s share price rose by 2.6% to AED 17.32. In contrast, First Abu Dhabi Bank’s share price fell by 1.4% to AED 12.62. ADCB’s share price retreated by 0.2% to AED 6.08.

The heavyweight Saudi Tadawul, whose market capitalization represents more than three quarters of the total regional market capitalization, registered shy price declines of 0.2% week-on-week, as uncertainty about the outcome of OPEC talks on extending production cuts weighed on investor sentiment earlier this week, before OPEC+ members reached on December 3, 2020 a comprise deal to gradually taper production cuts starting next year.

Saudi Aramco, whose market capitalization represents circa 77.5% of the total Saudi market capitalization, retreated slightly by 0.1% over the week to SR 35.85. SABIC’s share price edged down by 0.1% to SR 96.70. Petro Rabigh’s share price decreased by 0.6% to SR 13.98. Yansab’s share price closed 0.3% lower at SR 59.90. Also, NCB’s share price went down by 0.8% to SR 42.65. Al Rajhi’s share price declined by 0.3% to SR 74.0. Bahri’s share price dropped by 0.6% to SR 40.85. SABB’s share price plunged by 7.0% to SR 25.20. NatWest Markets and Banco Santander are selling their 5.6% stake in SABB to HSBC Holdings BV and Olayan Saudi Investment Company Limited at an offer price of SR 22.1.

______________________________________________________________________________REGIONAL BOND PRICES MOSTLY UP WEEK-ON-WEEK

Activity in MENA fixed income markets was mostly skewed to the upside this week, as concerns about rising Coronavirus cases globally and escalating geopolitical tensions more than offset the impact of progress in COVID-19 vaccine development and optimism about a second US stimulus package.

In the Bahraini credit space, prices of sovereigns maturing in 2025 and 2029 expanded by 0.50 pt and 1.44 pt respectively this week. NOGA’24 closed up by 0.69 pt. As to credit ratings, Standard & Poor’s affirmed its “B+/B” long-term and short-term foreign and local currency sovereign credit ratings on Bahrain, with a “stable” outlook. The “stable” outlook indicates that S&P expects Bahrain to benefit from further disbursements under the US$ 10 billion GCC support package, and that its neighbors would likely provide additional further extraordinary support, if required.

In the Omani credit space, sovereigns maturing in 2023, 2025 and 2029 registered price gains of 0.67 pt, 1.88 pt and 3.75 pts respectively week-on-week. Prices of Omantel’28 improved by 2.88 pts. Regarding plans for new issues, Oman Electricity Transmission Company plans to tap the international debt markets early next year as the State-owned firm seeks to fund capital expenditure and operations. In the Egyptian credit space, US dollar-denominated sovereigns maturing in 2023, 2025, 2030 and 2040 registered price expansions ranging between 0.25 pt and 1.50 pt this week. Prices of Euro-denominated sovereigns maturing in 2025 and 2030 increased by 1.29 pt and 1.87 pt respectively. Regarding plans for new issues, the Finance Ministry said that Egypt is mulling to return to international debt markets in the first half of 2021.

In the Saudi credit space, sovereigns maturing in 2025 and 2030 saw price contractions of 0.19 pt and 0.38 pt respectively week-on-week. SABIC’28 closed down by 0.13 pt. Prices of Saudi Aramco’24 increased by 0.43 pt. STC’29 was up by 0.19 pt. SEC’24 traded up by 0.35 pt.

In the Dubai credit space, sovereigns maturing in 2029 were down by 0.54 pt week-on-week. Emaar’26 posted price gains of 1.34 pt. DP World’30 closed up by 0.87 pt. Prices of Emirates Airline’28 improved by 0.15 pt. Majid Al Futtaim’29 registered price expansions of 1.38 pt.

In the Abu Dhabi credit space, prices of sovereigns maturing in 2029 increased by 0.06 pt this week. ADNOC’29 closed up by 0.18 pt. Etisalat’24 posted price improvements pf 0.24 pt. Taqa’26 was up by 0.13 pt. As to papers issued by financial institutions, ADIB Perpetual (offering a coupon of 7.125%) posted price contractions of 0.16 pt. ADCB’23 was up by 0.31 pt.



In the Qatari credit space, sovereigns maturing in 2029 were down by 0.13 pt week-on-week. Amongst financials, prices of Commercial Bank of Qatar’23 declined by 0.13 pt. QNB’24 closed up by 0.33 pt. All in all, regional bond markets saw mostly upward price movements this week, as rising geopolitical tensions and the uncertainty surrounding the outcome of OPEC+ talks on oil output cuts flocked demand for safe-haven assets.

MIDDLE EAST 5Y CDS SPREADS V/S INTL BENCHMARKS

Sources: Bloomberg, Bank Audi's Group Research Department

in basis points 4-Dec-20 27-Nov-20 31-Dec-19 Week-on-week Year-to-date

Abu Dhabi 36 38 36 -2 0

Dubai 118 118 91 0 27

Kuwait 43 44 37 -1 6

Qatar 36 39 37 -3 -1

Saudi Arabia 65 69 57 -4 8

Bahrain 264 297 176 -33 88

Morocco 109 102 91 7 18

Egypt 363 375 277 -12 86

Iraq 638 709 384 -71 254

Middle East 186 199 360 -13 -174

Emerging Markets 55 64 148 -9 -93

Global 149 151 163 -2 -14

Z-SPREAD BASED AUDI MENA BOND INDEX V/S INTERNATIONAL BENCHMARKS


020406080

100120140160180200220240260

JAN-10AUG-10 MAR-11MAY-12 DEC-12 JUL-13 FEB-14 SEP-14APR-15 NOV-15 JUN-16JAN-17 AUG-17MAR-18 OCT-8 MAY-19 DEC-19 JUL-20

Audi Compiled MENA Bond IndexEmerging Markets

Base Jan 2010 = 100



12

SOVEREIGN RATINGS & FX RATES


___________________________________________________________________________DISCLAIMER

The content of this publication is provided as general information only and should not be taken as an advice to invest or engage in any form of financial or commercial activity. Any action that you may take as a result of information in this publication remains your sole responsibility. None of the materials herein constitute offers or solicitations to purchase or sell securities, your investment decisions should not be made based upon the information herein.

Although Bank Audi sal considers the content of this publication reliable, it shall have no liability for its content and makes no warranty, representation or guarantee as to its accuracy or completeness.

SOVEREIGN RATINGS Standard & Poor's Moody's FitchLEVANTLebanon SD/-/SD C/- RD/-/CSyria NR NR NRJordan B+/Stable/B B1/Stable BB-/Negative/BEgypt B/Stable/B B2/Stable B+/Stable/BIraq B-/Stable/B Caa1/Stable B-/Negative/BGULFSaudi Arabia A-/Stable/A-2 A1/Negative A/Negative/F1+United Arab Emirates AA/Stable/A-1+* Aa2/Stable AA-/Stable/F1+Qatar AA-/Stable/A-1+ Aa3/Stable AA-/Stable/F1+Kuwait AA-/Negative/A-1+ A1/Stable AA/Stable/F1+Bahrain B+/Stable/B B2/Stable B+/Stable/BOman B+/Stable/B Ba3/Negative BB-/Negative/BYemen NR NR NRNORTH AFRICAAlgeria NR NR NRMorocco BBB-/Negative/A-3 Ba1/Stable BB+/Stable/BTunisia NR B2/Negative B/Negative/BLibya NR NR NRSudan NR NR NRNR= Not Rated RWN= Rating Watch Negative RUR= Ratings Under Review * Emirate of Abu Dhabi Ratings

FX RATES (per US$) 04-Dec-20 27-Nov-20 31-Dec-19 Weekly change Year-to-dateLEVANTLebanese Pound (LBP) 1,507.50 1,507.50 1,507.50 0.0% 0.0%Jordanian Dinar (JOD) 0.71 0.71 0.71 0.0% 0.0%Egyptian Pound (EGP) 15.67 15.63 16.05 0.3% -2.4%Iraqi Dinar (IQD) 1,189.73 1,192.88 1,182.87 -0.3% 0.6%GULFSaudi Riyal (SAR) 3.75 3.75 3.75 0.0% 0.1%UAE Dirham (AED) 3.67 3.67 3.67 0.0% 0.0%Qatari Riyal (QAR) 3.68 3.68 3.66 0.0% 0.6%Kuwaiti Dinar (KWD) 0.31 0.31 0.30 0.0% 1.4%Bahraini Dinar (BHD) 0.38 0.38 0.38 0.0% 0.0%Omani Riyal (OMR) 0.38 0.38 0.39 0.0% 0.0%Yemeni Riyal (YER) 250.00 250.00 250.00 0.0% 0.0%NORTH AFRICAAlgerian Dinar (DZD) 129.87 128.21 119.05 1.3% 9.1%Moroccan Dirham (MAD) 8.99 9.07 9.57 -0.9% -6.0%Tunisian Dinar (TND) 2.71 2.74 2.83 -1.4% -4.5%Libyan Dinar (LYD) 1.35 1.35 1.40 -0.2% -3.4%Sudanese Pound (SDG) 55.14 55.14 45.11 0.0% 22.2%

mena weekly monitor...week 49 november 29 - december 5, 2020 1 bank audi sal - group research...

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