monthly insights - emirates nbd · 2015. 9. 21. · with soft inflation data in august (wpi -4.95%...

Monthly 16 September 2015

Monthly Insights

Policy makers are facing significant challenges as diverging growth trends

between developed and emerging market economies are being compounded

by falling commodity prices amidst volatile financial market conditions.

Global macro: With the crisis in Greece having abated, the late summer was

dominated by two issues; the turmoil in Chinese equity markets and the prospect of

US monetary policy normalization.

GCC macro: Survey data on economic activity in the GCC suggests that while

activity has picked up in the third quarter, the pace of non-oil growth has likely

slowed this year. In the UAE, higher than forecast oil output has partially offset

slower growth in the non-oil sector, but we have revised our 2015 growth forecast

down slightly to 4.0% from 4.3% previously.

MENA macro: Non-GCC economies across the Middle East are relatively insulated

from the two major headwinds undermining the outlook for other emerging markets

around the world – China, and the possibility of a Fed rate hike.

Fixed Income: Macro risks such as falling commodity prices, particularly oil, and

fears of a hard landing in China, ensured lock-step movement in risk assets across

developed and emerging markets. Average sovereign and corporate bond investors

recorded net losses in the range of 0.5% to 1.9% over the month as a result of China

induced volatility

Currencies: Alternating expectations about the FOMC meeting this week are

effectively keeping the USD hemmed-in, having moved sideways overall during the

summer. With the current market sentiment being towards no change in interest

rates, the USD is likely to benefit should the Fed finally pull the trigger.

Equities: Since the start of H2 2015, the meltdown in Chinese equities accelerated

the decline in global equities and accentuated volatility amid concerns over global

growth. The immediate focus of investors will remain on the Fed before the focus

turns to the interpretation and ramifications of what the Fed has or has not done.

Commodities: Raw materials struggled over the summer as bearish fundamentals

are now being compounded by heightened volatility in financial markets.

Oil prices continue to fall as supply soars

Source: Bloomberg, Emirates NBD Research

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Tim Fox

Head of Research &

Chief Economist

+971 4 230 7800

[email protected]

www.emiratesnbdresearch.com

mailto:[email protected]

Content

Global Macro ......................................................................................................... Page 3

GCC Macro ............................................................................................................ Page 5

Non-GCC Macro ................................................................................................... Page 7

Sector Focus ........................................................................................................ Page 9

Fixed Income ..................................................................................................... Page 11

Currencies .......................................................................................................... Page 13

Equities .............................................................................................................. Page 15

Commodities ...................................................................................................... Page 17

Key Data & Forecast Tables .............................................................................. Page 20

Global Macro

With the crisis in Greece having abated, the late summer was

dominated by two issues; the turmoil in Chinese equity

markets and the prospect of a US monetary policy

normalization. Both were seen as destabilizing to global

financial markets, and to emerging markets in particular, even

as there were signs of economic recovery in a number of

developed economies

Chinese markets spread fear

Looking through the noise, China’s slowdown has been with us for

some time, so it was some surprise that its actions to spur growth

in late August were met with such a volatile reaction. In particular,

the decision to depreciate the Chinese currency by 3% should not

necessarily have been such a shock, with our own USD/CNY

forecasts being 6.40 for much of this year, seeing a weaker

currency as one way the authorities could eke out a bit more

competitiveness. However the manner and timing was quite

abrupt, with the consequence that other emerging markets came

into the firing line as commodity prices sold off.

Chinese markets tumble


Casting doubt on a Fed rate hike

This also provided a jolt to growing expectations that the US Fed

would shortly begin to normalize monetary policy, with the volatility

casting doubt on whether the FOMC would have the nerve to

move as early as this month. Our own view is somewhat different

in that we see the persistence of zero interest rates as actually

contributing to much of the instability that has recently been seen.

But volatility probably reinforces the need to act

Increasingly, the level of concern over what is likely to be a

relatively small adjustment in interest rates does appear to be

becoming excessive. To an extent this hyper-sensitivity may also

hint at how zero percent interest rates have actually become part

of the problem, rather than the solution. In fact it might be argued

that they are not only contributing to current financial markets

instability but arguably to low growth and low inflation as well.

Interest rates have been kept too low for too long, which is

contributing to excessive risk taking and increased leverage in

many parts of the world. Much of this has flowed into emerging

markets and commodities, contributing to bubbles, which in places

like China have become unsustainable. As such, the sooner the

Fed moves to start tightening monetary policy, arguably the better

it will be for financial markets in the long run.

And the economic arguments are also strong

From the real economy’s perspective too it could be said that zero

rates might even be deflationary by discouraging investment in real

assets, thus contributing to the current era of low growth.

In terms of the immediate domestic arguments for the Fed going

ahead, these also look quite compelling. The US August jobs

report showed a further tightening in the labour market which on

balance adds to the case for a September interest rate rise.

Although the headline rise in non-farm payrolls was less than

expected at 173k, there were positive revisions to the prior two

months (41,000) which more than made up for the August shortfall.

There is also awareness that the August result will probably get

revised higher as well given historical patterns.

Furthermore, the unemployment rate dropped two-tenths of one

percent to 5.1%, the lowest reading since 2008, taking it to where

the FOMC sees NAIRU as well as to the mid-point of its central

tendency forecast for Q415. To illustrate the risk that wage

pressures should not be far away if the unemployment rate stays

at current levels or falls further, hourly earnings also rose a little

more than expected by 0.3%, taking the yearly rate to 2.2% up

from 2.1%. The absence of more significant inflation pressure is

not necessarily a reason to hold off either, with the Fed’s Vice

Chair Stanley Fischer saying that Fed has to move before the

inflation rate reaches the Fed’s 2.0% target.

US employment strongest since 2008


Giving the Fed a window of opportunity

The Fed clearly has the opportunity to tighten monetary policy at

the upcoming FOMC meeting therefore, a chance they may not

want to miss if they fear losing policy flexibility the longer they wait.

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It also has the cover of tightening against a backdrop of ongoing

stimulus measures in most other parts of the world, which should

serve to soften any blow globally stemming from US policy steps.

The Chinese authorities are likely to deliver more fiscal and

monetary policy easing, on top of the recent steps they have

already taken. We have previously talked about

China’s challenges in terms of a high wire act between achieving

a mix of sustainable long-term growth and the need to maintain a

sufficient level of short-term growth in order to maintain social

stability. While overall we back it to succeed, this is unlikely to

prevent growth falling back towards 6.5% in 2016 and is unlikely to

prevent further periods of sharp volatility in its markets.

As ECB hints at more QE…

Meanwhile the Eurozone has continued its steady, if unexciting

recovery, with Q2 GDP being revised up to 0.4% from 0.3%, and

with Q1 also up to 0.5% from 0.4%. Other more contemporaneous

data, however, show that momentum remains sluggish overall in

H2 with PMI activity treading water in the low 50’s, while

production and retail sales data have also been mixed. As a result

the ECB has hinted at further easing steps, with President Draghi

recently talking about more QE and at extending the period over

which it will be implemented. The ECB raised the issue limit to

33% from 25% and cut inflation and growth forecasts in its staff

revisions, although for now the central bank sees the lower

inflation rate as transitory being caused mainly by energy price

developments.

Further BOJ easing comes nearer…

Developments in Japan have not altered our expectation that more

stimulus measures will eventually be needed either. The Bank of

Japan left policy steady this month, maintaining the JPY80 trillion

annual increase in the monetary base in place since last October.

The Bank seems to be betting that the weakness in growth and

inflation during Q2 will be temporary, with an improvement seen in

the second half. However with Q2’s contraction being revised

stronger to -1.2% (q/q saar) from -1.6% before, largely due to

firmer inventories, most estimates are now that H2 growth will also

still be weak. And as we suspect that inflation will still undershoot

the Bank's time frame for a return to 2% inflation, we find it hard to

believe that the BOJ will not increase QE further. The late October

meeting probably presents the first opportunity as this is when

updated economic projections will be released.

And easing bias remains elsewhere

Easier monetary policy also seems likely to be on its way in India,

with soft inflation data in August (WPI -4.95% and CPI 3.66%)

benefiting from the recent collapse in oil and commodity prices.

These trends are likely to keep inflation below the RBI’s 6.0%

January target, which should allow the bank to cut the reverse

repo rate further from its current 6.25%. New Zealand also cut

interest rates earlier this month to 2.75% and looks capable of

doing more, while the RBA in Australia and the Bank of Canada

also appear to be never too far away from easing policy further

either, even as earlier rate cuts continue to work their way through

these economies.

Only the BoE looking to follow the Fed’s lead

The only other notable country where there is a debate about

tightening monetary policy is in the UK, with the Bank of England

probably about six months behind the Fed in terms of when it

might happen. The economic data on the whole shows growth

continuing, but it has still been rather fitful from month to month,

especially over the summer. Interestingly the minutes of the

September MPC meeting showed an acknowledgement of the

risks stemming from emerging markets, but the overall view was

still that it was unlikely to alter the likely path for policy.

Furthermore there have also been comments from a number of

MPC officials warning about the likely need to raise interest rates

sooner rather than later, and this in spite of headline inflation

reverting back to 0.0% in August.

The BoE usually follows the Fed


Tim Fox +9714 230 7800

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US Federal Funds Target Rate UK Official Bank Rate

GCC Macro

Survey data on economic activity in the UAE and Saudi Arabia suggests that while activity has picked up in the third quarter, the pace of non-oil growth has likely slowed this year. In Saudi Arabia, this has been more than offset by much higher than expected oil production year-to-date and we have upgraded our GDP growth forecast to 3.0% from 2.5% previously. In the UAE too, higher than forecast oil output has at least partially offset slower growth in the non-oil sector, but we have revised our 2015 growth forecast down slightly to 4.0% from 4.3% previously.

Since our last Monthly Insights publication in July, global markets

have seen a renewed bout of volatility. Oil prices have declined

nearly 20% on concerns about oversupply and slower growth in

China, while a sharp sell-off in Chinese equity markets combined

with a devaluation in the renminbi led to declines in global equities

and emerging market currency depreciation. Uncertainty about

when the Fed will begin to normalize monetary policy has not

helped.

Regional economies facing headwinds

In the GCC too, equity markets declined as concerns about the

global economy and oil were exacerbated by regional geopolitical

tensions, not least the conflict in Yemen. GCC FX forwards

surged on concerns about the sustainability of currency pegs in the

face of widening fiscal deficits and shrinking current account

surpluses. (For more on this, please see our report of 25 August

2015, “MENA Devaluation Risks”).

Interbank rates in the UAE and Saudi Arabia have increased, while

deposit growth has slowed, indicating tigher liquidity conditions in

the domestic banking system. Anecdotal evidence in the UAE

suggests that corporates are feeling strain as payments from

customers are being delayed, with firms in some sectors missing

loan payments to banks.

3m interbank rates have increased


Growth is robust, but slower than 2014

However, economic and survey data suggests that the situation is

not as dire as some might think. The latest Emirates NBD

Purchasing Managers’ Indices for Saudi Arabia and the UAE show

a faster expansion in economic activity in the non-oil private

sectors in August compared to June and July.

UAE and Saudi Arabia PMIs

Source: Markit, Emirates NBD Research

However, the pace of expansion in the non-oil sectors in both the

UAE and Saudi Arabia is slower this year compared to 2014:

average PMI readings are slightly lower in January-August 2015

relative to the same period last year. The same trend is evident in

the Dubai Economy Tracker, which surveys Dubai firms using a

similar methodology to the PMI surveys. Business activity/ Output

in Dubai has picked up in August, but the average index reading

year to date is lower than for the same period last year, suggesting

a slower pace of growth relative to 2014.

Dubai Economy Tracker


It is important to recognize that ‘manufacturing’ accounts for a

significant share of the non-oil sectors in the UAE and Saudi

Arabia. Refining and other downstream activities are included in

‘manufacturing’ from a national accounts perspective, and also

included in the PMI surveys of economic activity. Higher crude oil

production this year has underpinned growth in these oil-related

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industries and thus contributed to the robust PMI readings and

overall non-oil sector growth.

While the headline PMI data looks pretty robust in the context of

low oil prices and a strong dollar, the more granular survey data for

Dubai suggests that activity in the services sectors is more

sluggish than the whole economy output index suggests. While

firms remain very optimistic about the growth over the next twelve

months, the activity index for the key travel and tourism sector was

only slightly above the neutral level 50 level in July and rose to just

52.6 in August. Wholesale and retail sector activity expanded at a

slightly faster pace in August, but the activity index for this sector

was still below that for the whole Dubai economy.

Dubai Economy Tracker


2015 GDP growth revisions

At the start of this year, we had pencilled in a 1% rise in

hydrocarbon sector growth, and 5.8% growth in the non-oil sector.

Given the lower readings for average PMI, and the softness in the

services sectors year-to-date, we have revised our forecast for

non-oil growth down to 4.7% this year, down from 5.2% in 2014

and the slowest pace of non-oil growth in the UAE since 2010.

However, Bloomberg oil production data shows that oil output in

the UAE (a good proxy for hydrocarbon sector output) has growth

2.8% year-to-date. Overall, we now expect GDP growth of 4.0%

in 2015, down from our previous forecast of 4.3% and also

lower than the 4.6% growth recorded in 2014.

In Saudi Arabia too, our initial forecasts for hydrocarbon growth

were much lower than has been the case so far this year; Saudi

Arabia has boosted oil output to an average 10.2mn bpd in the

year to August, nearly 6% higher than 2014, and likely more than

offsetting any slowdown in the non-oil sectors. Indeed, we are

revising our 2015 GDP growth forecast for Saudi Arabia up to

3.0% from 2.5% previously.

Khatija Haque +971 4 230 7803

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Non-GCC Macro

Non-GCC economies across the Middle East are relatively

insulated from the two major headwinds undermining the

outlook for emerging markets around the world. First, limited

reliance on short-term portfolio investment will help mitigate

potential capital outflows caused by the U.S. Fed raising

interest rates in H2. Second, with the exception of Iraq and

Iran, every non-GCC economy in MENA runs relatively large

trade deficits with China, meaning there will be less of a direct

impact from either slowing demand or a weaker currency in

the world’s second largest economy.

That is not to suggest that this region is heading into the final

months of 2015 from a position of strength. For the hydrocarbon

exporters – Iraq, Iran, Algeria and Libya – ongoing weakness in

global oil prices is resulting in significant macro and market strains,

and will force economic growth onto a lower trajectory over the

coming quarters. The Algerian government announced in August

that it would seek to cut spending by 9% in 2016, on top of the

lower expenditure they had already announced for 2015.

Iraq also looks set to reduce public spending, with estimates from

MEED suggesting the value of major capital expenditure projects

in process now stands at only USD10bn, compared to USD24bn a

year earlier. As growth in the non-oil sectors of this region is driven

predominantly by government spending, these cutbacks will

undoubtedly result in a slower pace of economic expansion in the

near term, while such large reductions to CAPEX can also threaten

the long-term outlook by reducing potential GDP growth.

Oil Dependency

Source: Haver Analytics, Emirates NBD Research

Similar to the GCC, some of the stress that has resulted from

lower hydrocarbon revenues will be offset by increased debt

issuance. The majority of this is likely to come from Iraq, which in

addition to receiving USD1.2bn in emergency financial assistance

from the IMF in late July, is also seeking to raise up to USD6bn in

international bond markets this year. As part of this process, Iraq

received its first sovereign credit ratings from Fitch and Standard &

Poor’s in recent weeks, both of which rated the country a B-,

putting it on par with Jamaica and Egypt. While Iraq’s outlook has

been undermined by both the drop in global oil prices in addition to

the deteriorating security environment, we would also note that oil

production has continued to expand at a healthy pace, with output

hitting an all-time high of 4.3mn b/d in August.

Net oil importers still under pressure

For some of MENA’s net oil importers – Morocco, Tunisia, Egypt,

Jordan and Lebanon – the past several months have proven

difficult, with economic momentum appearing to slow over the

summer, disappointing hopes that 2015 would be a year of

recovery. Tunisia is a case in point, with data showing real GDP in

Q2 expanding only 0.7% y/y (-0.2% q/q), which was the slowest

pace of expansion since the second quarter of 2011, and which

brought growth in the first half of the year to 1.2%.

Tunisia Real GDP Growth


Not surprisingly, one of the worst performing sectors was the

Hotels and Restaurants industry, which declined 8.5% y/y between

April-June. Two separate attacks since April targeting foreign

tourists will likely result in even steeper declines for the hospitality

sector in the second half of 2015, and should offset the boost from

this year’s stronger-than-expected agricultural harvest. As a result,

we have revised our 2015 real GDP growth forecast lower, and are

now projecting the economy to expand only 0.6%, compared to

2.7% in 2014.

Lebanon’s already weak economic outlook has also suffered in

recent months, as large-scale protests have broken out over the

government’s failure to address the ongoing crisis over a lack of

garbage collection. Policy paralysis is nothing new in the country,

however a spike in public demonstrations may threaten to

undermine consumer and business confidence even further in the

near term. Some of this was likely reflected in the August

Purchasing Managers’ Index, which dropped to an 11-month low of

47.8, and down from July’s reading of 49.3. The central bank has

stated it is planning to undertake an USD1bn stimulus program in

the hopes of stimulating credit growth, however their forecast is for

growth of only 0-1% this year.

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Positive news from Egypt

The most positive news has come out of Egypt, where Italian

energy group Eni has recently announced that it had discovered

what it called a ‘supergiant’ underwater gasfield, which might turn

out to be one of the largest in the world. The field – known as Zohr

and containing the equivalent of 5.5bn barrels of oil – sits near

existing infrastructure in the Mediterranean Sea, meaning that it

can be relatively easy to develop.

Egypt Natural Gas Reserves

Source: BP, Emirates NBD Research

Tapping into such resources would undoubtedly have a positive

impact on the domestic economy, and reduce Egypt’s recent

reliance on energy imports to meet local demand. The prospects of

an increase in foreign direct investment in the near term, and an

improved goods trade balance over the long term, would also help

ease balance of payments pressures, and mitigate downside risks

to the Egyptian pound.

Jean-Paul Pigat +971 4 230 7807

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Sector Focus

Dubai’s tourism and hospitality sector

The hospitality sector accounted for 5.6% of total GDP in Q1 2015.

Growth in the sector accelerated to 9.2% y/y in Q1 2015 from 3.9%

y/y in Q1 2014. However, the GDP breakdown for the hospitality

sector measures only restaurants and hotels. Tourism in the

broader sense is a much bigger driver of economic growth in

Dubai; some officials have indicated 20-30% of Dubai’s GDP is

tourism related. This would include transport, impact on retail and

other associated industries and services.

Dubai’s hospitality sector, % y/y, Q1 2015

Source: Dubai Statistics Centre (DSC), Emirates NBD Research

Dubai’s tourism sector business activity and confidence

Activity in the travel and tourism sector picked up in August 2015

with the index rising to 52.6 from 50.5 in July, according to our

latest Dubai Economy Tracker. The tourism sector however

recorded the lowest growth across the three key sectors surveyed

(construction, wholesale and retail trade). The relative softness in

the travel and tourism sector may be partially due to the summer

‘low season’, but the strength of the USD against key emerging

market currencies has likely been a big contributor to relatively

weak activity growth in this sector.

Separately, Dubai has been recognized as one of the top 5 global

destinations for international travelers, retaining its top rank in the

MENA region, according to the 2015 MasterCard Global

Destination Cities Index. The index provides an overview and

ranking of the 132 most important global cities. In 2015, Dubai is

expected to receive roughly 14.3 million international visitors, up

by 8% y/y. Dubai is in the top ten ranking in terms of visitor

spending, which is estimated to reach USD 11.68bn in 2015 while

it will remain the city that generates more international overnight

visitor expenditure per resident than any other city (USD 4,668).

ENBD’s travel and tourism indicators, August 2015

Source: Markit/ Emirates NBD, Emirates NBD Research

Dubai’s tourism strategy on track The number of tourists coming to Dubai and staying in hotels, hotel

apartments, holiday rentals and onboard cruise ships rose to

13.2mn in 2014, up by 8.2% y/y, according to Dubai Department of

Tourism and Commerce Marketing (DTCM). Dubai is on its way to

achieving the ambitious travel and tourism strategy which aims to

attract 20 million visitors to the emirate by the end of the decade,

according to DTCM. A strong tourism and hospitality industry will

also provide an important boost to retail and other associated

industries and services.

2015 global top 10 destination cities by international overnight visitors, million

Source: MasterCard, Emirates NBD Research

There is a high degree of concentration of hotel room supply

(number of hotel rooms) within a few key segments. For instance,

upscale, upper upscale and luxury hotel rooms (4* to 6* stars)

accounted for 52.6% of Dubai’s total existing supply and 61.9% of

the additional projected supply. The midscale and upper midscale

segment (2* to 3* stars) accounted for 10.6% of Dubai’s total

existing supply. In our view, Dubai’s tourism strategy to strengthen

the midscale and upper midscale segment is moving in the right

direction with 22.3% of the additional projected supply directed to

that segment. This should perhaps shift the focus of the

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government to the economy range too as the market is top heavy

on the luxury end.

The supply of hotel rooms in Dubai increased by 6.2% y/y in Jan-

July 2015 to 75,669 rooms. The Department of Tourism and

Commerce Marketing (DTCM) is targeting 140,000 to 160,000

hotel rooms by the end of the decade. Data from STR Global also

shows that a further 17,548 hotel rooms are currently under

construction in Dubai, of which 3,040 are due to come online by

year end. Another 15,788 hotel rooms are in planning stages.

Dubai hotel room supply by type, July 2015

Source: Bloomberg, STR Global, Emirates NBD Research

Similarly, Dubai’s hotel supply (number of hotels) is equally

segmented with upscale, upper upscale and luxury hotels

accounting for 39.2% of Dubai’s total existing hotels and 59% of

the additional projected supply as the graph below shows. Again,

the focus should be on the midscale and upper midscale range.

Separately, the difference between hotel and hotel room supply for

the independent segment highlights the fact that independent

hotels are relatively smaller in size (fewer rooms) compared to

luxury segments where 19.9% of the existing hotel room supply is

absorbed by the 12.4% of the existing hotels.

Dubai hotel supply by type, July 2015

Source: Bloomberg, STR Global, Emirates NBD Research

The substantial growth in the supply of accommodation is already

being reflected in lower hotel occupancy rates. Dubai’s hotel

occupancy averaged 77.2% in Jan-July 2015, down from 78.2% in

the same period of 2014. With the supply of hotels rooms still

outpacing demand growth for the period of Jan-July 2015,

occupancy rates are likely to remain stable or ease slightly with

demand gradually catching up as we approach the 2020 Expo.

Data from the transport sector also shows growth in capacity and

visitor numbers. Passenger traffic at the Dubai International Airport

(DXB) rose to 45 million in Jan-Jul 2015, up by 12.9% y/y. In July

alone, 6.7mn passengers passed through DXB, up by roughly 30%

y/y. Passenger traffic is expected to exceed 79 million at DXB by

the end of 2015 and 103.5 million by 2020, according to Dubai

Airports. Separately, freight volumes at DXB increased by 8% y/y

in July 2015 to 205,526 tons. Year to date volumes totaled

1,438,320 tons, up by 3.5% over Jan-Jul 2014.

Passenger traffic and freight volumes in DXB, Jul 2015

Source: Bloomberg, Dubai Airports, Emirates NBD Research

Bank credit to the transport sector

Bank credit to the transport sector increased to 11.9% y/y in H1

2015 from 52.5% y/y in H1 2014, according to the UAE Central

Bank. Loans to this sector accounted for 4.6% of total bank loans

in H1 2015. In H1 2015, bank credit to the transport sector reached

AED 60.8bn compared to AED 54.4bn for H1 2014. The transport

sector continued to gain momentum in Q1 2015, with growth rising

to 46.2% q/q and 5.7% y/y, down from 7.2% y/y growth in Q4

2014.

Thanos Tsetsonis +971 4 230 7629

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Hotels, % of total existing supply

Hotels, % of additional projected supply

29.3

32.9

38.039.8

45.0

1.05

1.15

1.25

1.35

1.45

1.55

20

25

30

35

40

45

50

Jan-Jul2011

Jan-Jul2012

Jan-Jul2013

Jan-Jul2014

Jan-Jul2015

Passenger traffic (LHS) Freight volumes (RHS)

mn people mn tons

Fixed Income

Despite the diverging path of central bank policies, macro

risks such as faling commodity prices, particularly oil and

fears of hard landing in China ensured lock-step movement in

risk assets across developed and emerging markets. Average

sovereign and corporate bond investors recorded net losses

in the range of 0.5% to 1.9% over the month as a result of

China induced volatility.

Global Bonds

The first half of this year was all about the diverging path of central

bank policies in two of the world’s largest economies i.e. the US

and the Euro area. However, now, as we grapple with falling

commodity prices, the theme has shifted to divergence of

economic growth in developed world vs the emerging world. US

and Europe are on the path of improving economic growth while

most economies in emerging markets seem to have adopted a

decelerating trend. Russia and Brazil are contracting, India is

growing slower than expectations and China is slowing faster than

expectations. Amid this rainbow of economic health, thin liquidity

and fragile investor sentiment, fixed income market had one of its

most volatile summers. The volatility index, VIX, touched a high of

40 during the month vs its long term average of 16.

Although the recent positive economic growth and trade data out

of Europe as well as the US didn’t get much attention amid China

concerns, the fear of risk from eventual rate rises has begun to

outweigh the technical bid from QE. We think the discussion

should not be wether the US needs to raise rates to contain an

over-heating of its economy but whether the rates need to continue

at ‘emergency levels’ at all. We expect at least one rate rise in the

US before the end of the year.

10Yr Government Bond Yields

Yield % 1M chg 3M chg YTD chg

US 2.26 +6 -5 +9

UK 1.91 +3 -8 +16

Germany 0.74 +8 -6 +20

Greece 8.35 -90 -413 -73

Russia 5.08 -44 -7 -139

Brazil 5.67 +71 +102 +158

China 3.28 -20 -35 -31

Source: Bloomberg

Though major indices swung wildly on a daily basis, overall month

on month prices reflects a more sombre trend. Government bonds

in the developed economies have now turned the corner to reflect

gradual increase in yields. And despite the assurance from ECB

about continued ultra lose monetary policy, Bund and Gilts

followed suit with UST. 10 Yr UST widened 6bps to 2.26% and

now stand 9bps away from where it opened the year.

Outside of the developed economies, not all emerging markets are

same. The impact of falling currencies is somewhat cushioned by

the positive benefit from low oil and metal prices in the commodity

importing nations. However, the fate of commodity exporters

hangs on thin threads. S&P recently stripped Brazil of its

investment grade rating, downgrading it to BB+ from BBB-.

Brazilian bonds are under considerable stress and are likely to

remain so as its rating continues to remain on negative watch.

In addition to the credit risks arising from low oil prices, the

corporate bond market has had to balance the impact of

weakening sentiment on emerging market economies and

consequently a hiatus in capital inflows. Since the beginning of this

year average credit spreads on corporate bonds have widened by

20 to 50 bps across the US and Euro, on investment and non-

investment grade bonds as well as on all emerging market bonds.

Much of this widening has occurred over the last three months as

hopes of recovery in oil prices got displaced.

In the rising rate environment, IG bonds underperformed HY and

we expect this trend to continue for the remainder of this year.

Global Corporate Bond OAS (bps)

OAS 1M chg 3M chg YTD chg

US IG Corp 171 +3 +24 +33

US HY Corp 593 +2 +92 +48

EUR IG Corp 113 +16 +25 +34

EUR HY Corp 445 +43 +52 +45

USD EM SOV 310 - +2 +18

USD EM CORP 483 +42 +97 +36

Source: Bloomberg

Credit markets were held hostage by fears of hard landing in China

which were sparked by Chinese policy makers devaluing the Yuan

last month. Although official GDP growth in China is still above 7%,

anecdotal evidence from slowing factory orders and weaker trade

data point to a deeper puncture in the economic growth. Though

devaluation of Yuan is easily justifiable in terms of weakening

trade balance, an actual official reaction by the policy makers

fuelled fears of currency wars and saw risk assets tumble downhill

in a rush. Looking at the ferocity of these move, its not surprising

to see capital outflows from the emerging markets.

GCC Market

GCC credit markets, being almost entirely dollar denominated,

fluctuates more in tandem with the US rates than other EM bond

markets where local issuance and currency valuation cushions the

impact of global forces. Although correlation with oil remains high,

the tightly held nature of bonds in a minimal new supply

environment has made this market relatively resilient.

In absence of no material corporate development and no strong

conviction on the direction of the UST, trading activity in the

secondary market was relatively muted during the summer

months. BUAEUL index, comprised of liquid UAE dollar

denominated bond with par amount of more than $500 million and

representing circa two thirds of GCC universe of liquid bonds,

closed the month at 108.97 a little lower than last month, a little

higher than last quarter and circa 2% higher than where it opened

the year.

BUAEUL Index – YTW history


The premium on GCC bonds over the investment grade US

corporate bonds which used to be more than 40 bps just two years

ago has now vanished. In fact using BUAEAUL index as a proxy

for GCC bonds, we note that credit spreads on GCC bonds are

now lower than on similar rated US corps. OAS on BUAEAUL

index is at 151bps vs 171 bps on BUSC (Bloomberg USD

Investment Grade Corp Index) compared with 191bps on

BUAEAUL in early 2013 and 149bps on BUSC at the same time.

GCC Primary Market - Issuance in the primary market has been

surprisingly low particularly as hopes were building up for higher

issuance this year after low oil prices reduced liquidity in the local

banking systems. While this started out because of issuers

avoiding Ramadan period, the ongoing hiatus is now more an

avoidance of market volatility.

That said, it’s encouraging to see the prospect of development of

the local currency market in the region as sovereigns prepare to

issue debt in LCY to fund their budget deficits. Saudi Arabia

tapped the market for the first time in seven years, issuing circa

SAR 35 billion worth of bonds in the last two months. Kuwait

sovereign is also believed to be in advance stages of doing a

sovereign bond. Depending on market conditions, it could do either

a dollar or dinar denominated bond before the end of the year.

Etihad Airways pricing a USD500 million, five year, senior

unsecured Reg S tranche at 6.875% became the first real

corporate deal to come to the dollar market this quarter. For a B-

rated, complex structured, airlines’ paper to price that tight is

simply a reflection of how skewed the demand vs supply dynamics

are in the region.

Anita Yadav +9714 230 7630

2.40

2.50

2.60

2.70

2.80

2.90

3.00

3.10

3.20

Aug-14 Nov-14 Feb-15 May-15 Aug-15

%

Currencies

Alternating expectations about the FOMC meeting this week

are effectively keeping the USD hemmed-in, having moved

sideways overall during the summer. With the current market

sentiment being towards no change in interest rates, the USD

is likely to benefit should the Fed finally pull the trigger.

Fed rate move favoured

We favour a Fed rate hike this week largely because the US

economy does not justify emergency level zero interest rates any

longer and also because it has guided expectations for months

towards a potential hike at this week’s FOMC meeting (see Global

Macro). The arguments against largely revolve around the recent

volatility in financial markets, although it is debatable whether this

would necessarily change if a rate hike was postponed, and

arguably may become even become worse. Better to get the initial

move over with therefore, rather than get even further boxed in by

events. The impact of a rise could also be softened by revisions to

the Fed’s forecasts, which will be published following the meeting,

including to the ‘dot-plot’ rate projections.

Latest US data may have changed a few minds

In the run-up to one of the most closely anticipated FOMC meetings, the markets have absorbed some mixed Chinese economic data which showed industrial production rising by less than expected in August (up 6.1% y/y from 6.0% in July), fixed investment slipping, but retail sales rising by a more than expected. From the US standpoint the latest retail sales figures appear to have changed a few minds. While headline retail sales rose by a smaller than expected 0.2% m/m in August, this was partly due to lower energy prices. If auto, gasoline and building materials are excluded, the retail sales control group rose 0.4% m/m in August, while June and July data was revised higher, suggesting stronger consumer spending over the past 3 months.

This was apparently enough to offset weaker than expected

industrial production and manufacturing data, with industrial

production down by a more than expected -0.4% m/m in August

and manufacturing production down -0.5%. The market is now

pricing in around at 32% probability of a Fed hike tomorrow, up

from about 25% earlier in the week.

USD well placed to benefit

Although the start of previous Fed tightening cycles have often

seen the USD struggle, at least initially, this time around things

look different. This is because few if any of the other big central

banks are likely to follow the Fed’s path, with the Bank of England

being the only likely exception. As such we think that both

USD/JPY and EUR/USD are capable of responding relatively

swiftly to any Fed move, and we are still projecting 125 and 1.08

respectively over the one-month time horizon premised on this

outcome.

In the JPY’s case the response will also be reinforced by the

prospect of more monetary easing in Japan, possibly as early as

next month. In the EUR’s case as well the ECB has been

concerned about the EUR’s recent strength and would probably

welcome a period of underperformance, using the opportunity of a

Fed hike to highlight the contrast with its own stimulatory policy.

EM currencies to bear the brunt

Elsewhere a rate hike will also reinforce the trend towards outflows

of capital from emerging markets, which will further serve to

undermine growth prospects in those countries as well, doubling

up the pressure on them. This means little respite for Asian

currencies, with the likes of the Brazilian Real, Turkish Lira and

South African Rand also likely to be significant casualties, to say

nothing of the commodity currencies.

Correlation of daily currency movements over the last one month

Pair EUR/USD EUR/GPB EUR/JPY GBP/USD USD/JPY

USD/CAD AUD/USD NZD/USD

EUR/USD

0.816 0.297 0.535 -0.778

0.523 -0.362 -0.327

EUR/GBP 0.816

0.062 -0.052 -0.752

0.610 -0.578 -0.384

EUR/JPY 0.297 0.062

0.425 0.3681

-0.154 0.620 0.319

GBP/USD 0.535 -0.052 0.425

-0.243

0.011 0.218 0.000

USD/JPY -0.778 -0.752 0.368 -0.243

-0.611 0.759 0.527

USD/CAD 0.523 0.610 -0.154 0.011 -0.611

-0.589 -0.332

AUD/USD -0.362 -0.578 0.620 0.218 0.759

-0.589

0.622

NZD/USD -0.327 -0.384 0.319 0.000 0.527

-0.332 0.622


GBP may withstand USD strength better

As mentioned before Sterling might end up being somewhat better

placed to withstand the pressure of a strong Dollar given the

stronger growth performance of the UK economy (relative to other

parts of the world), and the probability that the Bank of England will

be the only major central bank to follow the Fed’s lead, albeit with

a probable six-month lag. However, we would caution about over

interpreting the mounting rhetoric from Bank of England officials

favoring a rate move sooner rather than later, and would also warn

that once it actually begins the tightening process in the UK will

probably be more drawn out than in the US. This is because the

recovery trend is unlikely to be straightforward with fiscal policy

likely to be still restrictive in 2016 and with any nascent inflation

pressure likely to be less acute. Accordingly we see scope for

GBP/USD losses as likely to be less severe than those of the EUR

or the JPY, with the net result that GBP should also benefit on

many crosses.

Beware of ‘gradualist’ rhetoric

Finally although the Fed is likely to lace any tightening with dovish

rhetoric, we think that ultimately such messages may end up being

misleading as the Fed is likely to keep to a fairly regular tightening

pattern once it actually gets started. This may end up surprising

the financial markets which believe that ‘gradualism’ may not add

up to too many more interest rate rises at all. At the moment we

are assuming four further interest rate rises in 2016, but the risk

around this is probably on the upside, especially if inflation shows

a stronger face. In such a scenario the potential for a much

stronger USD would be all too obvious as well.

Tim Fox +9714 230 7800

EM currencies have depreciated sharply (1 Month % Change vs USD)


-4.82

-4.39

-9.88

-3.30

-4.01

-12 -10 -8 -6 -4 -2 0

TRY

IDR

BRL

MYR

ZAR

Equities

Since the start of H2 2015, the meltdown in Chinese equities

accelerated the decline in global equities and accentuated

volatility amid concerns over global growth. Uncertainty over

the direction of monetary policy in the US also came to the

fore. In stark contrast to H1 2015, economic growth was the

primary driver behind movements in equity markets rather

than money flows.

The MSCI World index declined -7.4% 3m on the back of broad

based weakness across region with the MSCI EAFE index losing -

9.0% 3m, the MSCI Emerging Markets index dropping -16.4% 3m

and the S&P Pan Arab Composite index declining -15.4% 3m.

Chinese equities led the decline with the Shanghai Composite

index dropping -38.7% 3m. Volatility increased across the board

with the VIX index and the VHSI index jumping +52.2% 3m and

+50.2% 3m respectively.

The immediate focus of investors will remain on the Fed meeting

scheduled to end on 17 September before the focus turns to the

interpretation and ramifications of what the Fed has or has not

done. China will continue to remain on radar until the authorities

can put forward a comprehensive plan to boost economic growth

instead of piecemeal action. Locally, activity is expected to remain

subdued until the start of Q3 2015 earnings season in early

October.

Where markets stand

Global equities have been extremely volatile over the last quarter

with all major equity markets giving up gains made in the first half

of 2015. In fact all major indices are now negative for the year with

the exception of European and Japanese stock indices. The MSCI

World index has lost -7.8% 3m and is currently -5.2% ytd while the

MSCI Emerging Markets index has dropped -16.8% 3m and is

currently -15.5% ytd and the S&P Pan Arab Composite index has

declined -15.6% 3m and is currently -10.8% ytd.

While European and Japanese equities have outperformed their

peers on a ytd basis, the same has been possible only because of

their stronger gains in H1 2015. The Euro Stoxx 600 index and the

Nikkei index had rallied +11.3% and +16.0% respectively in H1

2015 compared to a gain of +5.9% in the MSCI EAFE index. On a

3m basis, both these indices have performed in line with broader

trends having lost -7.7%3m and -11.6% 3m respectively.

However, when the movement of equity indices are tracked from

the highs touched in 2015, two things notably standout – Chinese

equities have simply collapsed and US equities have been most

resilient. This at a time when US economic data continues to

remain strong and Chinese economic data pointing to a possible

hard landing would suggest that economic fundamentals remains

the primary driver behind equity market movements even if fund

flows drive short-term movements. For the record, the Shanghai

Composite index has lost -41.9% from the highs of 2015 while the

S&P 500 index has declined -8.1% from its highs in 2015.

Despite the recent correction, valuations appear stretched. The

MSCI World index is currently trading at 16.3x 2015E earnings

compared to its 10y average of 13.4x. Among developed market

indices, the S&P 500 index is trading at 16.7x 2015E earnings and

the Euro Stoxx 600 index is trading at 15.2x 2015E earnings

compared to their 10y averages of 13.9x and 12.0x respectively.

Equity Trends


Reversing Down – Up previous month & down this month; Trending Down – Down previous and this month; Trending Up – Up Previous and this month;

Reversing Up – Down previous month and up this month

BovespaMSCI Russia

Euro Stoxx 600

Cac

Dax

FTSE 100

S&P 500

Nasdaq

ADXQatar Ex

Borse Istanbul

Bahrain Bourse

EGX

-13.0

-10.0

-7.0

-4.0

-1.0

2.0

-8.0 -7.0 -6.0 -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0

Pre

vio

us

Mo

nth

(16 J

uly

-15 A

ug

) (%

)

This Month (16 Aug - 15 Sept) (%)

Reversing Down

Trending Down

Reversing Up

Trending Up

The Shanghai Composite index is trading at 15.0x 2015E earnings

compared to its 5-year average of 13.4x with the caveat that

banking sector which generally have low P/E ratios account for the

largest weighting.

The ‘What Ifs’

Since the start of 2015, movement in global equity markets have

been punctuated by key events i.e. collapse in commodity prices,

concerns over economic growth and the US monetary policy

direction. These events and the risks associated with them have

gained greater attention since the start of H2 2015 and how they

pan out over the remaining months of 2015 could very well dictate

the direction of equity markets.

What if the Fed hikes? The Federal Reserve meeting scheduled for September 16-17 is

perhaps the first in recent time that can possibly throw up any of

the many signals possible. The Fed could hike with a very dovish

commentary or they can retain status quo with a hawkish stance or

they can retain status quo with an equally dovish statement. With

investors positioned as close to neutral as possible, the reaction to

the decision is likely to be exaggerated in the short term.

A hike in interest rates by the Fed coupled with a dovish statement

will reflect confidence in the US economy and could very well

provide a boost to global equities which have been plagued by

concerns over slowing global economic growth. The concerns over

emerging market equities, in case of a hike, seems misplaced as

most of them are in a much better position in terms of fiscal

position compared to where they were at the time of taper tantrum.

In fact, a hike in all likelihood will remove a key overhang over

emerging market equities and allow investors to put the cash to

use. Additionally, as we have noted in our earlier publication, the

recent financial market volatility is in part a product of a zero rate

environment and a first step towards normalization could be a way

of addressing those issues as well.

The historical data bares out that on an average the S&P 500

index has rallied +2.6% 250 days after the first rate hike and

+14.4% 500 days after the first hike. This is based on past six rate

hike cycles since 1983.

If the Fed decides to maintain status quo with a hawkish stance, it

would simply imply pushing the inevitable to a future date and in

turn creating another round of uncertainty. However, if the Fed

decides to retain status quo with a dovish statement, equities will

likely rally in the short term before concerns over economic growth

resurfaces resulting in heightened volatility.

The key in each of the scenario is how clearly the Fed telegraphs

its intention to investors. Any vagueness and/or indecision would

be interpreted as weakness and will be an overhang on the

markets. Conversely, an explicit Fed will provide support to

equities irrespective of what they decide to do.

What if commodity prices remain low? The S&P GSCI index has declined -14.0% ytd and -15.4% from

2015 highs while Brent oil futures have dropped -18.4% ytd and -

31.6% from its highs in 2015.

The decline in commodity prices has a mixed impact on equity

markets as commodity importing countries are poised to benefit

from the same. While there is an inflection point beyond which

lower commodity prices reflect weak demand and weaker

economic growth, most commodities are yet to reach that point

which in turn suggests that prices could weaken further. This

coupled with the the fact that energy sector alone has 7.3% weight

in the MSCI World index suggests that if the weakness in

commodity prices is prolonged then it would impact broad equity

markets. The correlation between equities and commodities have

actually increased since the start of this year. The weekly

correlation between the MSCI World Index and the S&P GSCI

index has increased to 0.36 since the start of 2015 compared to

0.30 in 2014.

The impact is likely to be more pronounced on GCC equity

markets where economies are dependent on oil exports and

investor sentiment closely tracks movements in oil prices. The

correlation data bears that out with the weekly correlation between

Bloomberg GCC 200 index and Brent at 0.60. Among GCC equity

markets, the Tadawul has the highest correlation with oil prices at

0.55 and understandably so given the high weighting of

petrochemical stocks (16.8%) in the index. The Tadawul

Petrochemical index has declined -16.6% ytd compared to a drop

of -18.4% ytd in oil prices.

What if there is a hard landing in China? At the moment, both China’s economy and Chinese equities are

the focal points for global equity markets. In fact, what started as a

concern over valuations and margin financing in Chinese equity

markets has turned into a full-blown inquest about the health of

Chinese economy, resulting in a near collapse in Chinese equity

markets amid extreme volatility. The same was actually fuelled by

unprecedented intervention by government authorities in equity

markets and weak economic data despite sustained monetary and

fiscal stimulus by the government and the PBoC.

The importance of Chinese equity markets to global markets can

be gauged by the fact that in terms of market capitalization it is the

second biggest stock market in the world accounting for 8.3% of

world’s market capitalization. While a low foreign ownership of

c.2% of Chinese stocks does limit the direct impact, the indirect

effect has the potential to become a headwind to global economic

growth. The concerns were reinforced by the reaction of Asian

economies to the currency devaluation by China and the fact that

China is the largest consumer of steel, iron ore and coal and the

second biggest consumer of oil. Any slowdown in Chinese

economy will impact commodity prices which in turn will impact

global equities (as highlighted above).

Aditya Pugalia +9714 230 7802

Commodities

The summer months have not been kind to commodities. Of

the 20 markets that we track regularly, only tin has had a

positive start to the second half of 2015. Few of the bearish

fundamental conditions that commodity markets were

contending with in the first six months of the year have

abated and they now have to deal with enhanced volatility in

financial markets.

Prices move wildly at end of August

Benchmark crude oil markets have oscillated widely in the past two

months, hitting lows not seen since the peak of the 2008-09

financial crisis. ICE Brent, the international seaborne indicator, and

NYMEX WTI, the US marker, have given up over 25% since the

start of H2 2015 and have moved as much as USD12/b from their

bottoms to tops in recent weeks. Indeed, over just three trading

days at the end of August and into September, prices gained as

much as 27%.

This year's volatility is elevated when assessed against historical

performance. Brent has experienced a larger number of wide

moves (either positive or negative) than would be expected looking

back to when the contract began trading.

Above-average price swings in 2015

Source: Bloomberg, Emirates NBD Research.

The downward bias that has characterized markets throughout

July-August was initiated by shifting appetites for risk as the

collapse of China's equity markets and persistent worries about the

Greek debt crisis fed into commodities. With these dynamics now

largely baked into the markets, oil is once again trending down on

fundamental conditions. The major forecasting agencies have cut

their projections for 2016 non-OPEC supply growth but we remain

of the view that it will be at least until the end of next year before

the oil market approaches anything close to being balanced.

The oil market's performance so far in Q3 has made our 2015

forecasts a challenge to achieve and we have revised downward

our price outlook for 2015-16. We now expect ICE Brent to

average close to USD62.40/b and NYMEX WTI around USD55.40

in 2016. We still maintain that prices will display a generally

upward trend over the next two years but that any gains will be

unspectacular.

Emirates NBD Research forecasts


We note that several substantial headwinds remain in the face of

the oil market recovering strongly:

The global market surplus remains substantial. We

estimate the market over-supply at 2.9m b/d in Q2 2015

and falling to only 1.7m b/d by Q4. In 2016 the stock-build

will slow but markets will remain oversupplied by over 1m

b/d.

Substantial flows of oil could come onto the market in

2016. We anticipate the nuclear deal signed by the P5+1

and Iran to come into effect from the end of 2015 which

paves the way for Iran to raise oil production and exports.

We are cautiously estimating Iran will add 500k b/d in

2016 but this will help to keep OPEC producing well

above its 30m b/d production target.

Outside of OPEC, production will struggle as companies

have slashed capital expenditure. However, the flexibility

in the US oil industry has meant input costs have fallen

along with oil prices and we expect that the US will

continue to see elevated levels of production, even if

output begins to decline.

The demand outlook is positive but not exceptional.

Considering current prices are around 50% lower than

their five-year average (2010-14) the pace of demand

growth suggests low prices are not enough on their own

to spark a major surge in consumption.

To support our view of gradually rising prices we look to a

substantial slowdown in production outside of OPEC for 2016. In

particular, the double-digit increases in US production growth from

2012-14 will slow markedly and could turn negative along with

limited gains from Canada, where output has risen consistently in

the last five years. While the stockbuild remains positive we expect

it to fall from around 2m b/d on average in 2015 to just over 1m b/d

next year before shrinking further in 2017 as slower output and

gradual demand increases make an impact.

-

10

20

30

40

50

60

0-1 1-2 2-3 3-4 4-5 5-6 6+

(% o

f d

ays)

% change: absolute value

Positive 1983-2015 Negative 1983-2015

Positive 2015 Negative 2015

30

40

50

60

70

2015q1 q2 q3 q4 2016q1 q2 q3 q4

(US

D/b

)

NYMEX WTI (USD/b)ICE Brent (USD/b)Emirates NBD Research WTI forecast (USD/b)Emirates NBD Research Brent forecast (USD/b)

Our main concern at the moment, however, is volatility. Of Brent's

21 trading days in August, a third showed movements greater than

4% (either positive or negative), far above their historical average

frequency. Speculative length in oil has built since hitting a year to

date (ytd) low in mid-August but the optimism of financial markets

is appearing at odds with the tone from the industry.

Gold looks to the Fed

Gold markets maintained their downward bias over the summer

and trudged to a five-year intraday low of USD1,077/troy oz in late

July. They have since recovered to hold above USD1,100/troy oz

but remain down ytd as the market has consistently been

positioning itself ahead of an eventual rate hike from the US Fed.

Looking back over the last 30 years, during times of significant rate

tightening, gold has displayed inconsistent price trends. During the

June 2004-June 2006 tightening cycle when the Fed raised its

target rate by 425bps, gold prices rose by 56%. The 325bps rise in

target rates that the Fed ran from March 1988-February 1989

coincided with a 9.2% decline in gold prices. Interest rate

movements—or in this year's case, expectations of moves—clearly

factor into investors' thinking when looking at precious metals but

they are hardly the singular driving factor behind price movements.

Gold and the Fed


General market sentiment, inflation expectations, the performance

of the USD and the physical flow of metal all have an impact on

gold prices and, depending on the market conditions at the time,

exert a greater or lesser influence. This year, we feel

underperforming physical demand has also had a major bearing

on weak gold prices as retail investors have not been significantly

tempted into the market despite the low prices.

Physical gold demand has struggled to gain much traction despite

prices being down in year-on-year terms for most of the year.

Physical demand (ie; excluding ETF flows) fell 12.8% yoy in Q2

thanks to substantial slumps in jewellery demand and retail

investment, according to data from the World Gold Council.

Gold demand


Investor interest in gold has also weakened over the last few

months as ETF holdings of the metal have fallen by 2.3m troy oz

as of the end of August, larger than the 550k troy oz draw they

saw for the whole of last year. COMEX gold inventories have also

been dwindling since the start of the year although it is unclear

where the metal is heading. Total reported volumes in storage are

now just over 7m troy oz. Meanwhile, aggregate open interest in

gold futures is holding steady at over 410k contracts, close to its

2015 ytd average. The resulting claim of contracts per oz of

eligible gold for delivery has soared to over 220 contracts/oz which

raises concerns about a substantial squeeze on the futures market

should investors want to take physical delivery of their gold.

A gold inventory squeeze on the cards?


This impending squeeze on physical gold supplies, however, is

unlikely to materialise given the low levels of gold futures that are

generally held to physical delivery. The silver market, by

comparison, is in notionally a far tighter position than gold

according to the metric of contracts/eligible ounces but prices have

nevertheless drifted downward most of the year. Hence while the

dynamics appear alarming and out of the ordinary we do not

believe they indicate a strongly supportive signal for gold.

0

2

4

6

8

10

12

0200

400

600

800

1000

12001400

1600

1800

2000

Aug-86 Aug-91 Aug-96 Aug-01 Aug-06 Aug-11

(%)

(US

D/t

roy o

z)

Gold: USD/troy oz Federal Reserve target rate: %

0

200

400

600

800

1000

1200

1400

2013Q3

Q4 2014Q1

Q2 Q3 Q4 2015Q1

Q2

(to

nn

es)

Jewellery Bar and coin investment

Technology Central banks

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

0

50

100

150

200

250

(US

D/t

roy o

z)

(co

ntr

acts

/ e

lig

ble

oz)

Gold futures contracts/oz Gold futures (USD/troy oz)

Industrial metals

Industrial metals prices hit five-year lows in August as the slump in

Chinese equity markets and underwhelming industrial data casts

doubt on the prospect for further metal demand. Aluminium and

copper are down 12.9% and 15.1% ytd but managed to bounce off

their lows hit in August. We have become more bearish on the

trajectory for price gains in the industrial metals sector and now

expect aluminium to average less than USD1,800/tonne next year

and have cut our copper outlook more modestly.

Signals from the physical market continue to point to weakness.

Chinese fixed asset investment in August expanded at its slowest

pace since 2001 while industrial output has maintained the

downward trend it has run since July 2013. In aluminium, the share

of cancelled warrants of total LME stocks has continued to drift

downward to its lowest level since November 2013 in August while

premiums for immediate delivery (Europe basis) are down 78%

since the start of the year.

Total copper stockpiles have remained above 300k tonnes since

March but the level of cancelled warrants has been rising which is

a glimmer of positivity. Part of the rise in LME inventories this year

will be related to copper moving out of unreported stocks in China

and onto the LME system in Malaysia, Singapore or South Korea

in the fallout from the Qingdao port fraud investigation that began

in 2014.

Edward Bell +9714 230 7701

GCC in Pictures

GCC Oil Production and Reference Price


Inflation


Money supply (ex Government. deposits)


Purchasing Managers’ Index


CDS Spreads

Source: Bloomberg

Private sector credit

*UAE data is total bank loan growth, not private sector credit


40

50

60

70

80

90

100

110

120

12

13

14

15

16

17

18

Jan-14 May-14 Sep-14 Jan-15 May-15

US

D /bbl

mn b

pd

Oil production OPEC Reference Price

Excludes Bahrain and Oman

-1

0

1

2

3

4

5

6


% y

/y

Qatar UAE KSA

Bahrain Oman Kuwait

0

10

20

30


% y

/y

KSA UAE Qatar

50

52

54

56

58

60

62

64

Jan-14 May-14 Sep-14 Jan-15 May-15

UAE KSA

0

100

200

300

400


bp

Abu Dhabi Dubai

Qatar Bahrain

0

5

10

15

20

25

30


% y

/y

Qatar UAE KSA

MENA in Pictures

Inflation


Unemployment


M2 Money Supply


FX Reserves


Oil Production


Goods Exports


-4

-2

0

2

4

6

8

10

12

14

Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15

Jordan MoroccoTunisia Egypt

% y

/y

5

6

7

8

9

10

11

12

13

14

15

Q109 Q409 Q310 Q211 Q112 Q412 Q313 Q214 Q115

MoroccoEgyptJordan

%

-5

0

5

10

15

20

25

30

35

Jan-10 Nov-10 Sep-11 Jul-12 May-13 Mar-14 Jan-15

EgyptMoroccoJordan

% y

/y

0

10

20

30

40

50

60

70

80

90


Tunisia Morocco

Jordan Egypt

US

Dbn

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14 Jan-15

LibyaIraqIran

thsd

b/d

-30

-20

-10

0

10

20

30

40

50

60


JordanMoroccoEgyptTunisia

% y

/y 3

mm

avg

FX–Major Currency Pairs & Interest Rates

Interest Rate Differentials–EUR


Interest Rate Differentials-CHF


Interest Rate Differentials-CAD


Interest Rate Differentials-GBP


Interest Rate Differentials-JPY


Interest Rate Differentials-AUD


1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

Sep-14 Dec-14 Mar-15 Jun-15

German 2yr yield - US 2yr yield FX (rhs)

0.85

0.90

0.95

1.00

1.05

1.10

0.0

0.3

0.5

0.8

1.0

1.3

1.5

1.8


US 2yr yield - CHF 2yr yield FX (rhs)

1.05

1.10

1.15

1.20

1.25

1.30

-1.2

-0.8

-0.4

0.0

0.4


US 2yr yield - CAD 2yr yield FX (rhs)

1.45

1.50

1.55

1.60

1.65

1.70

1.75

-0.4

-0.2

0.0

0.2

0.4


GBP 2yr yield - US 2yr yield FX (rhs)

100.0

105.0

110.0

115.0

120.0

125.0

130.0

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90


US 2yr yield - JPY 2yr yield FX (rhs)

0.67

0.72

0.77

0.82

0.87

0.92

0.97

1.0

1.5

2.0

2.5

3.0


AUD 2yr yield - US 2 yr yield FX (rhs)

Major Equity Markets

MENA Equity Markets


European Equity Markets


Asian Emerging Equity Markets


US Equity Markets


Latin American Equity Markets


Emerging Europe Equity Markets


-25%

-20%

-15%

-10%

-5%

0%

5%

16-Aug 21-Aug 26-Aug 31-Aug 5-Sep 10-Sep 15-Sep

Qatar Oman Dubai

Saudi Arabia Egypt Morocco

Abu Dhabi Bahrain Kuwait

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%


FTSE 100 Dax Euro Stoxx 600

Cac FTSEMIB IBEX

-32%

-28%

-24%

-20%

-16%

-12%

-8%

-4%

0%

4%


Taiwan Jakarta

Vietnam Sensex

South Korea Shanghai

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%


S&P 500 Dow Jones Nasdaq Composite

-12%

-9%

-6%

-3%

0%

3%


Mexico Brazil Chile Colombia

-16%

-12%

-8%

-4%

0%

4%


Poland Istanbul 100 Russia RTS$

Major Equity Markets

MENA Equity Indices PE/ROE 2015E


D. Market Equity Indices PE/ROE 2015E


E. Market Equity Indices PE/ROE 2015E


MENA Equity Indices PB/ROA 2015E


D. Market Equity Indices PB/ROA 2015E


E. Market Equity Indices PB/ROA 2015E


y = 0.4296x + 9.021R² = 0.2275

4.0

10.0

16.0

22.0

8.0 10.0 12.0 14.0 16.0 18.0

BE

st R

OE

2015

BEst PE 2015

DSM

DFMGI

ADSMI

MADEX

MSM

TadawulISE 100

y = 1.161x - 5.6037R² = 0.3532

6.0

10.0

14.0

18.0

22.0

10.0 12.0 14.0 16.0 18.0 20.0 22.0

BE

st R

OE

2015

BEst PE 2015

AS51 Index

FTSE 100

Dow Jones

SMI

Nikkei

S&P500

Cac

Dax

Stoxx600

Nasdaq

y = 1.0541x - 1.0566R² = 0.2513

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

0.0 5.0 10.0 15.0 20.0

BE

st R

OE

2015

BEst PE 2015

Karachi

Nifty

Jakarta

Taiwan

Vietnam

Bovespa

KospiShanghai

Jo'burg

Micex

y = 0.0897x + 2.1609R² = 0.0029

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1.0 1.5 2.0 2.5

BE

st R

OA

2015

BEst PB 2015

ADSMI Tadawul

ISE 100

MSM

DSM

EGX 30

MADEX

y = 1.4463x - 0.9168R² = 0.6597

0.0

2.0

4.0

6.0

0.5 1.0 1.5 2.0 2.5 3.0 3.5

BE

st R

OA

2015

BEst PB 2015

FTSE 100

S&P500

Dow Jones

SMI

Nasdaq

Nikkei

Dax

Stoxx 600CacAS51 Index

y = 0.5154x + 1.4964R² = 0.1583

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0

BE

st R

OA

2015

BEst PB 2015

Karachi

NiftyJakarta

Taiwan

Bovespa

Kospi

Vietnam

Shanghai

Jo'burg

Micex

Major Commodities in Pictures

US oil production and price


Copper stocks and price


Precious metals prices


International oil production and price


Aluminum (USD/metric tonne)


Agriculture prices


20

30

40

50

60

70

80

90

100

110

7.0

7.5

8.0

8.5

9.0

9.5

10.0


US crude production (m b/d): lhs WTI (USD/b): rhs

4,500

5,000

5,500

6,000

6,500

7,000

7,500

100

150

200

250

300

350

400

LME copper stocks (000 tonnes): lhs

Copper (USD/metric tonne): rhs

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600


Gold (USD/troy oz) Platinum (USD/troy oz)

20

40

60

80

100

120

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0


Total OPEC production (m b/d): lhs

Brent (USD/b): rhs

1,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

LME aluminum stocks (000 tonnes):lhs

Aluminum (USD/metric tonne): rhs

5

7

9

11

13

15

17

19

21

50

70

90

110

130

150

170

190

210

230


Coffee: Arabica (USd/lb): lhs Sugar (USd/lb): rhs

Key Economic Forecasts - GCC

United Arab Emirates 2012 2013 2014 2015f 2016f

Nominal GDP $bn 373.7 387.5 399.7 374.3 413.3

Real GDP % 6.9 4.3 4.6 4.0 4.5

Current A/C % GDP 21.3 18.5 13.7 4.1 4.8

Budget Balance % GDP 10.9 10.4 5.0 -4.2 -1.2

CPI % 0.7 1.1 2.3 3.5 3.0

Saudi Arabia

Nominal GDP $bn 734.0 744.3 746.2 701.9 769.8

Real GDP % 5.4 2.7 3.5 3.0 2.5

Current A/C % GDP 22.3 18.0 10.1 -1.7 1.4

Budget Balance % GDP 13.6 6.5 -2.3 -13.3 -7.8

CPI % 2.9 3.5 2.7 2.5 3.0

Qatar

Nominal GDP $bn 190.3 203.2 211.8 204.5 234.2

Real GDP % 6.0 6.3 6.2 7.0 6.4

Current A/C % GDP 32.6 30.8 24.9 5.0 0.8


CPI % 1.9 3.1 3.0 2.5 3.0

Kuwait

Nominal GDP $bn 173.8 175.8 172.6 139.5 158.4

Real GDP % 7.7 2.1 0.5 1.8 3.4

Current A/C% GDP 45.3 39.8 36.5 14.1 16.4


CPI % 3.2 2.7 2.9 3.5 3.6

Oman

Nominal GDP $bn 76.2 78.1 81.7 77.8 85.1

Real GDP % 6.9 4.6 3.1 3.1 3.3

Current A/C % GDP 10.2 6.6 2.4 -16.0 -11.0

Budget Balance % GDP -0.3 0.9 2.4 -14.7 -12.5

CPI % 2.9 2.1 1.0 1.0 2.0

Bahrain

Nominal GDP $bn 30.8 32.9 33.8 34.2 37.3

Real GDP % 3.6 5.3 4.5 3.5 4.3

Current A/C % GDP 7.2 7.8 5.4 -3.0 -2.1

Budget Balance % GDP -2.0 -3.3 -3.6 -13.3 -11.8

CPI % 2.8 3.3 2.7 3.0 3.5

GCC (GDP weighted avg)

Nominal GDP $bn 476.0 483.1 485.6 457.7 501.7

Real GDP % 6.1 3.6 3.8 3.7 3.7

Current A/C % GDP 25.0 21.3 15.2 1.3 2.9


CPI % 2.3 2.7 2.6 2.8 3.0

Source: Haver Analytics, National sources, Emirates NBD Research

Key Economic Forecasts – Non-GCC Oil Importers

Egypt* 2012 2013 2014 2015f 2016f

Nominal GDP $bn 262.3 268.1 286.4 312.1 333.5

Real GDP % 3.3 2.1 2.2 4.5 5.1

Current A/C % GDP -3.9 -2.4 -0.8 -0.1 -0.4


CPI % 7.2 9.5 10.1 12.0 11.0

Jordan 262.3 268.1 286.4 312.1 333.5

Nominal GDP $bn 27.2 29.6 31.5 32.9 35.3

Real GDP % 2.7 2.8 3.1 3.3 3.5

Current A/C % GDP -17.3 -11.7 -7.7 -5.2 -8.2


CPI % 4.5 5.5 2.8 1.0 4.0

Lebanon

Nominal GDP $bn 44.1 47.2 52.2 56.9 63.1

Real GDP % 2.8 3.0 1.8 2.0 3.1

Current A/C % GDP -22.3 -24.9 -22.4 -13.4 -13.0


CPI % 6.6 4.2 2.0 6.0 5.0

Tunisia

Nominal GDP $bn 45.1 46.3 46.5 46.3 50.2

Real GDP % 4.1 2.9 2.7 2.2 3.5

Current A/C% GDP -8.3 -8.4 -9.2 -6.6 -5.6


CPI % 5.1 6.1 5.5 4.5 5.0

Morocco 3.5 5.6 6.1 6.3 5.8

Nominal GDP $bn 95.9 103.7 104.0 112.3 122.1

Real GDP % 2.7 4.4 2.0 5.8 5.7

Current A/C % GDP -9.7 -7.6 -6.0 0.2 1.4


CPI % 1.3 1.8 0.4 2.2 3.0

Oil Importers (GDP weighted avg)

Nominal GDP $bn 174.3 177.6 189.6 207.9 221.5

Real GDP % 3.18 2.78 2.21 4.26 4.76

Current A/C % GDP -8.0 -6.7 -5.2 -2.2 -2.3


CPI % 5.6 6.8 6.5 8.2 7.8

Source: Haver Analytics, National sources, Emirates NBD Research

*Egypt data refers to fiscal year (July-June)

Key Economic Forecasts – Non-GCC Oil Exporters

Algeria 2012 2013 2014 2015f 2016f

Nominal GDP $bn 207.8 208.8 225.2 180.1 208.0

Real GDP % 3.3 2.8 2.3 3.1 3.5

Current A/C % GDP 5.9 0.4 -4.0 -15.8 -11.9


CPI % 9.7 4.1 3.9 6.0 6.5

Libya

Nominal GDP $bn 95.8 74.6 61.2 61.7 72.4

Real GDP % 104.5 -16.2 -43.7 8.6 14.4

Current A/C % GDP 30.7 21.7 -8.2 -5.2 3.8

Budget Balance % GDP 17.8 -7.8 -32.6 -12.6 6.6

CPI % 6.9 2.6 5.0 9.5 9.5

Iran

Nominal GDP $bn 586.2 524.0 543.6 567.1 575.8

Real GDP % -6.6 -1.9 2.5 4.5 7.9

Current A/C % GDP 4.2 5.4 5.2 5.3 5.4


CPI % 19.7 40.0 15.0 12.0 12.0

Iraq

Nominal GDP $bn 184.2 195.5 188.6 252.9 282.2

Real GDP % 10.3 4.2 -6.2 3.2 8.9

Current A/C% GDP 16.0 12.4 -1.5 -8.9 -5.4


CPI % 2.1 1.9 3.0 3.0 5.0

Oil Exporters (GDP weighted avg)

Nominal GDP $bn 400.3 360.9 378.5 397.3 403.8

Real GDP % 8.1 -0.8 -1.9 4.2 7.8

Current A/C % GDP 8.9 6.9 1.1 -2.3 -0.6


CPI % 13.6 22.3 9.7 8.7 9.1

Key Economic Forecasts - Global

US 2012 2013 2014 2015f 2016f

Real GDP % 2.3 2.2 2.4 3.0 3.0

Current A/C % GDP -2.8 -2.3 -2.3 -2.2 -2.3


CPI % 2.1 1.5 1.6 2.0 2.2

Eurozone

Real GDP % -0.8 -0.3 0.9 1.5 1.8

Current A/C % GDP 1.2 1.8 2.0 2.5 2.2


CPI % 2.5 1.3 0.4 0.5 1.4

UK

Real GDP % 0.7 1.7 3.0 2.5 2.3

Current A/C% GDP -3.7 -4.5 -5.9 -5.0 -4.0


CPI % 2.8 2.6 1.5 0.5 1.9

Japan

Real GDP % 1.8 1.6 -0.1 1.0 1.5

Current A/C % GDP 1.0 0.8 0.5 2.0 1.0


CPI % 0.0 0.3 2.7 1.0 1.5

China

Real GDP % 7.7 7.7 7.3 7.0 6.7

Current A/C % GDP 2.5 1.5 2.1 2.2 2.1

Budget Balance %GDP -1.6 -1.8 -1.8 -2.5 -2.5

CPI% 2.7 2.6 2.0 1.5 2.0

India*

Real GDP% 4.8 4.7 6.9 7.4 8.0

Current A/C% GDP -5.1 -2.6 -1.4 -1.5 -1.5


CPI % 9.3 10.9 6.4 7.0 5.0


*For India the data refers to fiscal year (April – March)

FX Forecasts

FX Forecasts - Major Forwards

Spot 15.09 1M 3M 6M 12M 3M 6M 12M

EUR/USD 1.1269 1.08 1.03 1.00 0.95 1.1287 1.1311 1.1373

USD/JPY 120.4200 125.0 127.0 130.0 133.0 120.2249 119.9335 119.2350

USD/CHF 0.9740 0.98 1.00 1.03 1.05 0.9707 0.9669 0.9579

GBP/USD 1.5344 1.53 1.50 1.50 1.60 1.5337 1.5334 1.5329

AUD/USD 0.7142 0.71 0.70 0.68 0.65 0.7109 0.7079 0.7028

USD/CAD 1.3249 1.33 1.34 1.35 1.40 1.3252 1.3254 1.3247

EUR/GBP 0.7345 0.70 0.69 0.67 0.60 0.7360 0.7377 0.7420

EUR/JPY 135.7000 134 131 130 126 135.7000 135.6996 135.6991

EUR/CHF 1.0978 1.05 1.03 1.03 1.00 1.0958 1.0938 1.0896

NZD/USD 0.6355 0.63 0.62 0.60 0.58 0.6314 0.6278 0.6215

FX Forecasts - Emerging Forwards

Spot 15.09 1M 3M 6M 12M 3M 6M 12M

USD/SAR* 3.7501 3.75 3.75 3.75 3.75 3.7519 3.7576 3.7811

USD/AED* 3.6730 3.67 3.67 3.67 3.67 3.6760 3.6782 3.6830

USD/KWD 0.3019 0.29 0.29 0.29 0.30 0.3079 0.3166 0.3314

USD/OMR* 0.3850 0.38 0.38 0.38 0.38 0.4076 0.4275 0.4700

USD/BHD* 0.3772 0.376 0.376 0.376 0.376 0.3817 0.3882 0.4022

USD/QAR* 3.6420 3.64 3.64 3.64 3.64 3.6437 3.6470 3.6513

USD/EGP 7.8314 7.90 8.00 8.10 8.30 9.0764 9.6014 10.3514

USD/INR 66.3638 67.00 67.00 65.00 64.00 66.3746 66.3857 66.4067

USD/CNY 6.3699 6.40 6.50 6.60 6.80 915.6899 1505.9899 2240.8799

Data as of 15 September 2015


Interest Rate Forecasts

USD Swaps Forecasts Forwards

Current 3M 6M 12M 3M 6M 12M

2y 0.91 1.11 1.35 1.50 1.08 1.21 1.45

5y 1.65 1.95 2.20 2.25 1.76 1.87 2.08

10y 2.30 2.53 2.78 2.83 2.36 2.43 2.56

2s10s (bp) 139 142 143 133 128 122 111

US Treasury Forecasts 0.97

2y 0.80 1.00 1.25 1.40

5y 1.61 1.90 2.15 2.20

10y 2.27 2.50 2.75 2.80

2s10s (bp) 147 150 150 140

USD LIBOR Forecast

3m 0.3342 0.58 0.83 1.32

EIBOR Forecast

3m 0.8257 1.08 1.35 1.82

Policy Rate Forecasts

Current% 3M 6M 12M

FED 0–0.25 0.50 0.75 1.25

1.00

ECB 0.05 0.05 0.05 0.05

BoE 0.50 0.50 0.50 0.75

BoJ 0.10 0.10 0.10 0.10

SNB -0.75 -0.75 -1.00 -1.00

RBA 2.00 2.00 2.00 2.00

RBI (repo) 7.25 7.00 6.75 6.25

SAMA (r repo) 0.25 0.50 0.75 1.25

UAE (1W repo) 1.00 1.25 1.50 2.00

CBK (dis. rate) 2.50 2.50 2.50 2.50

QCB (o/n depo) 0.75 1.00 1.25 1.75

CBB (1W depo) 0.50 0.75 1.00 1.50

CBO (o/n repo) 2.00 2.25 2.50 3.00

Prices as of 15 Septmber 2015


Commodity Forecasts

Global commodity prices

Current 2015q1 q2 q3 q4 2016q1 q2

Energy

Crude oil: WTI (USD / b) 44.95 48.63 57.94 45.00 53.00 55.00 53.50

Crude oil: Brent (USD / b) 47.86 55.16 63.50 53.00 55.00 62.00 60.00

Crude oil: OPEC Reference

(USD / b)

43.85 50.30 59.89 51.94 53.35 60.14 58.20

Precious metals

Gold (USD / t oz) 1,104.88 1,219.35 1,193.85 1,123.52 1,086.51 1,101.31 1,112.42

Platinum (USD / t oz) 957.50 1,194.56 1,129.42 1,004.19 962.44 1,001.40 1,043.15

Base metals

Aluminum (USD / metric

tonne)

1,613.50 1,814.65 1,791.05 1,625.00 1,675.00 1,700.00 1,750.00

Copper (USD / metric tonne) 5,347.00 5,801.27 6,057.78 5,250.00 5,550.00 5,750.00 6,000.00

Prices as of 16 September 2015


Global Equities Market Watch

Index Last Close ADV Traded

30d USD mn

Mtd %

chg

Ytd %

chg

%membera

bove 200d

MA

BEst PE BEst PB BEst Dvd

Yld

Dow Jones Industrial Average Index 16,600 8,359 0.4 -6.9 20 15.1 2.8 2.6

S&P 500 Index 1,978 38,374 0.3 -3.9 32 16.7 2.6 2.2

Nasdaq Composite Index 4,861 21,045 1.8 2.6 40 21.2 3.3 1.2

FTSE100 Index 6,138 6,592 -0.9 -5.7 33 15.2 1.7 4.2

DAX Index 10,188 4,460 0.5 5.2 13 12.7 1.6 3.2

CAC 40 Index 4,569 4,415 -0.6 8.2 36 14.9 1.4 3.6

Swiss Market Index 8,790 3,048 0.5 -1.3 30 17.0 2.5 3.3

Nikkei Index 18,026 15,170 -3.8 4.1 29 17.0 1.5 1.8

S&P/ASX 200 Index 5,018 3,712 -2.1 -5.8 30 14.8 1.7 5.3

Stoxx Europe 600 Index 356 31,655 -0.8 5.1 36 15.4 1.7 3.6

Dubai Financial Market General Index 3,534 122 -2.2 -5.1 19 11.1 1.4 3.8

Abu Dhabi Sec Market General Index 4,505 63 0.7 -0.1 33 10.7 1.5 5.2

Tadawul All Share Index 7,548 1,432 0.3 -9.4 3 14.1 1.7 3.4

Istanbul SE National 100 Index 73,173 946 -2.6 -14.6 26 9.6 1.2 3.3

Egyptian Exchange Index 7,176 42 -1.1 -19.6 6 10.8 1.3 3.0

Kuwait Stock Exchange Index 5,734 44 -1.3 -12.1 12 - - -

Bahrain Bourse All Share Index 1,275 2 -1.8 -10.6 - - - -

Muscat Securities Index 5,773 8 -1.6 -8.9 30 10.0 1.3 4.5

Qatar Exchange Index 11,504 81 -0.2 -6.1 30 13.0 1.9 4.7

MADEX Free Float Index 7,580 6 -0.8 -3.4 32 15.8 2.3 4.7

Hong Kong Hang Seng Index 21,455 3,987 1.6 -6.7 10 10.6 1.1 3.8

Shanghai Composite Index 3,005 72,321 -1.7 -2.5 7 12.7 1.5 2.3

Korea Stock Exchange Index 1,938 4,469 1.7 3.1 48 12.1 1.0 1.5

BSE Sensex 25,706 84 -1.2 -5.6 20 15.8 2.7 1.7

Nifty 7,829 1,244 -0.9 -4.6 26 16.0 2.6 1.6

Karachi Stock Exchange Index 33,191 92 -4.2 3.5 53 8.8 1.7 5.8

Taiwan SE Weighted Index 8,260 2,511 1.9 -10.5 18 12.3 1.5 4.0

Bovespa Brasil Sao Paulo SE Index 47,364 1,500 1.6 -5.3 33 13.1 1.1 4.5

Micex Index 1,716 458 -0.7 23.2 84 6.0 0.6 4.7

FTSE/JSE Africa All Share Index 49,492 1,500 0.3 0.7 43 16.2 1.8 3.7

Vietnam Ho Chi Minh Stock Index 563 77 -0.4 3.1 43 13.8 1.9 4.0

Jakarta SE Composite Index 4,347 264 -3.8 -17.0 18 14.4 2.2 2.3

FTSE Bursa Malaysia KLCI Index 1,647 256 2.1 -6.5 37 16.0 1.8 3.3

Mexican Stock Exchange 43,270 361 -1.0 0.3 46 20.9 2.5 1.9

Prices as of 15 September 2015


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Patrick Clerkin


monthly insights - emirates nbd · 2015. 9. 21. · with soft inflation data in august (wpi -4.95%...

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