Wealth Monitor_June-July 2015

www.wealth-monitor.com June-July 2015 10 Face RAMADAN ISSUE
Value
VOLUME: 01 | ISSUE: 03 Adil Taqi, Group CFO, DAMAC Properties

WmEAoLnTiHtor 43 Blue Chip
Get Your Money’s Worth
The Future of Bitcoin

42 Taking Stock

Investing the REIT way

Bahrain: BD 1.50 | Kuwait: KD 1.20 | Oman: RO 1.50 | Qatar: QR 15 | Saudi Arabia: SR 15 | UAE: AED 15 | US$: 5 COOPNTITMINISUMED MRAERWKIENTDS

Why there is a lot more The History of IPOs
steam left in the region’s
equity markets TECHNOLOGY
TRENDZ
BBEUALRLSSVS
Cloud Trading
Time To Stock Up?
MCOASRMKOEST

Metals Under
Pressure

GETTING FUTURE READY

H.E. Rashed Al Balooshi, CEO, Abu Dhabi Securities Exchange (ADX), provides
insight into the UAE economy, impact of the opening of the Saudi market, and the

steps his exchange is taking to enhance liquidity and attract more investors

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Adil taqi, CFO, Damac Group
Ali Al Hashimi, Executive Vice President, Head of Financial Services Division,
Borse Dubai
Brad douglas, Director, Markets, Dubai Financial Services Authority
Fahima Al Bastaki, Senior Vice President, Head of Business Development Division,
Dubai Financial Market
dr. Mounther Barakat, Senior Advisor, Securities and Commodities Authority
dr. r. Seetharaman, Group CEO, Doha Bank

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lev radin / Shutterstock.com RAMADAN ISSUE EDITOR’S FLOOR

June- July 2015 Peter Lynch, one of the most successful money managers and investors of
VOLUME: 01 | ISSUE: 03 all time, and author of various best-sellers on investing, once said, “The real
key to making money in stocks is not to get scared out of them.”
WmEAoLnTiHtor While Lynch’s investment philosophy has worked wonders for him and
Get Your Money’s Worth for investors who followed it, stock investors in the GCC region however are
learning it the hard way.
www.wealth-monitor.com
Publisher The meltdown in the UAE’s and the region’s stock markets especially in
Semantics Global Media FZ LLC the closing months of last year wiped billions of dirhams off the market
capitalizations and left a number of investors worried and scared. Those who
Office139, Building10 had put in their money when markets were trading high got their fingers
Dubai Media City burned when, suddenly, stocks across the region started falling like a house of
PO Box 500683 cards triggered by the drop in the crude oil price. Many of these are now sitting
Dubai, U.A.E on the fence, waiting for a ‘good’ time to enter.
T: +971 4 2766080 F: +971 4 2766081
[email protected] | www.semantics.ae Though this year has seen relatively better run up, the investor sentiment
hasn’t recovered fully yet, as oil bearishness continues to push regional markets
Editor in Chief to the wall. Crude oil price is still trading in the range of $60-$67/bbl and analysts
Arshad Khan | [email protected] are having a hard time fathoming how low oil prices can go.

Editor The question is: will fallen angels rise, eventually?
Sunil Kumar Singh | [email protected] Definitely, yes! As our cover story points out and as the proverbial saying goes
— there’s definitely light at end of tunnel.
Research Analyst Markets in the region could trade sideways in the near-term but in the mid
Ravindran Manickam | [email protected] and long-term the outlook is bullish. So don’t get scared of the quiet markets
as yet.
Contributors The cover story also includes an exclusive interview with H.E. Rashed Al
Wayne Andrews Balooshi, CEO, Abu Dhabi Securities Exchange (ADX). Plus, Dr. Fadi Khalaf, the
Deeptan Chakraberty Secretary General of the Arab Federation of Exchanges, has written a special
Ashley Freeman guest column in the cover story.
Gerhard Schubert Meet Adil Taqi, Group Chief Financial Officer, DAMAC Properties, in the ‘Face
Dr. Garbis Iradian Value’ section of this issue. In a detailed conversations with Wealth Monitor, Taqi
Tradepedia says Dubai is a right place to be in where property prices remain attractively
priced.
Marketing & Advertising This time in the‘Bulls Vs Bear’section, we have picked outlook of the UAE’s and
George Wahba | [email protected] the region’s equity markets as the topic of debate. Here four experts, namely,
M: +971 50 9800 630 Mohammed Ali Yasin, MD - Head of NBAD Securities, Nabil Al Rantisi, MD –
Brokerage, Menacorp, Amr El Alfy, Head of Research, MubasherTrade, and Vijay
Subscriptions Harpalani, Fund Manager, Al Mal Capital, argue on the prospects of the region’s
Diana Kardava | [email protected] stock markets.
M: +971 55 2100 533 Happy reading!

Design ARSHAD KHAN
Bhargavi Mohan | [email protected]
Editor in Chief | [email protected]
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P.16 Interview P.19 More Steam Left

H.E. Rashed Al Balooshi, CEO, ADX The panic selling in the UAE’s and the region’s equity markets
triggered by a sharp drop in crude oil price last year has receded.
P.43 Blue Chip There could be pains in the near-term, but the long-term outlook

The Future of Bitcoin for the regional equities remains positive

CONTENTS P.48 What’s Not Bulls vs Bears

US Stocks Underweight; Bond P.12 GCC Equity Markets: Where to
Markets Battered From Here?

P.52 Dashboard P.34 GTrhaein Glut
Food Grain Prices Continue to
Sector Valuations of GCC Stock Fall as Inventories Build Up
Markets; a Snapshot of High
Dividend Yielding Stocks in the www.wealth-monitor.com | June-July 2015

Region, and M&As in Q1

P.60 The Last Laugh

Equities: Hold or Fold?

P.04 Opening Bell CONTENTS P.10 Face Value

Major News Stories from Around the Adil Taqi, Group
Region Chief Financial
Officer, DAMAC
P.27 Markets Cosmos Properties

News and Data on Precious Metals, Base P.42 P.50 Technology Trendz
Metals, Energy, Agri/ Soft, Currencies and
IwtnhaveyeRsEtiInTg Cloud Trading
Arabian Bourses

P.44 Markets Rewind

The History of IPOs

P.45 What’s Hot

Oil Looks up; EM Equities Cheaper; Russian
Hedge Funds Surge on Oil, Rouble Gains

P.49 Mastering the Markets

Sweat Equity: Worth the Sweat

P.30 A Long Road Ahead
Base Metal bPericUensdCeornPtrinesuseutroe

P.36 Currencies

Dollar Cools

June-July 2015 | www.wealth-monitor.com

OPENING BELL

News

In Numbers

“Small and medium enterprises represent 95%
of the businesses operating in Dubai today and
account for about 42% of the total workforce
and 40% of gross domestic product (GDP) of the
emirate. This vital sector is a major source of
innovations, products, and services as well as new
markets and business models.”

HE Sami Al Qamzi, Director General, Department of
Economic Development (DED), Dubai

64% The percentage of respondents in the AED 2b
UAE believing the country’s stock market
will continue to move upwards this year, The total automated collection of revenues
according to the 2015 Franklin Templeton by the UAE Federal Government through the
e-Dirham system during the first quarter of the
Global Investor Sentiment Survey. current year.

12th 218.3m
The ranking of the UAE among
61 countries globally, according The number of
to 2015 World Competitiveness residential Internet
Ranking by IMD, a global users in the Middle
business school in Switzerland East and Africa with
and Singapore. The UAE, followed fixed access by 2019,
4 closely by Qatar at 13th, is ranked according to Cisco
top in the MENA region. Visual Networking

Index Forecast 2015.

www.wealth-monitor.com | June-July 2015

OPENING BELL

“These successful $11.5b 970m
issuances demonstrate
The total volume of The number of mobile
our expertise in 18 bond and Sukuk subscriptions that is expected
Debt Origination & transactions managed to grow in the Middle East and
Distribution and our by National Bank of
growing credibility Abu Dhabi (NBAD) North East Africa region by
among international so far this year, as on 2020, Ericsson Mobility Report
investors in Asia and in
the rest of the West-East June 8, 2015. estimates.

Corridor.” 14 times
Alex Thursby, Group CEO,
The pace at which monthly mobile
NBAD data traffic in the Middle East and
North East Africa region will grow
2.7% The growth of Saudi Arabian between 2014 and 2020 (from an
economy in 2016 as projected average of 0.8GB to 5GB), while
by International Monetary
globally data will grow 9 times,
Fund (IMF). according to Ericsson Mobility
Report for the Middle East and
AED 750m
North East Africa
The syndicated term finance
facility for Pacific Controls, 40%
an Internet of Things
(IoT) and ICT company in Of the 970 million mobile
Dubai for which Al Khalij subscriptions predicted at the
Commercial Bank acted as end of 2020, 40 percent will
underwriter and mandated
lead arranger in partnership come from smartphones.
with the National Bank of
Fujairah. 5

$172b 210m

The forecast for projects The number of LTE
planned and underway subscriptions expected
to reach by 2020 in the
in the GCC in 2015,
the highest on record region, equating to
to date, according to around 20 percent of all

Deloitte. mobile subscriptions,
as per Ericsson Mobility

Report.

June-July 2015 | www.wealth-monitor.com

OPENING BELL

News That Made Headlines

Past Performance of UK Property Market Attractive for Expats: Report
a Mutual Fund Key for
UAE Investors: Survey

While looking at factors that influence the With the return of record high Election, has meant that there has
decision to select a mutual fund (MF), as much temperatures, British expats and local been an upturn in overall activity,
as a quarter (24%) of UAE-based investors residents are once again preparing with properties coming back on
tend to look at the past performance of to leave Dubai for the summer to the market and buyer numbers
a mutual fund (MF), more than any other months and return to the UK, where beginning to creep up in tandem,
factor followed by fund liquidity (16%) and the real estate market is presenting Cluttons said in a statement.
professional advice (15%), according to the significant opportunities for non-
2015 Franklin Templeton Global Investor resident investors, according to Cluttons’ market outlook for
Sentiment Survey, that has included the UAE international real estate consultants, London shows further house price
for the first time. Cluttons. increases of between 2% and 3%
expected this year. Over the next 5
The leading factor behind investors’ The surprise majority win by the years, total growth should approach
decision to sell a mutual fund was revealed Conservatives in the recent General 18% to 20%.
as profit booking (25%), followed by
market volatility (24%), and achievement of Rents Pushing up Inflation in UAE: IMF staff
investment goals (24%), with the remainder
providing a range of other reasons to sell.

Then survey also revealed that investors
in the UAE are increasingly concerned about
falling oil prices, with 39% listing this as their
top concern, followed by inflation (33%) and
the state of the global economy (30%).

However, investor sentiment is running
high on the subject of reaching investment
goals in the 2015 survey. As much as 94% of
respondents expect to meet their targets,
putting the country on par with China,
and second only to India amongst the 23
markets polled.

Sales prices in the UAE real estate since 2009 to 2.3%.
market have stabilized, but increases “The UAE has benefitted from
in rents more than offset the building up large external and fiscal
dampening effect of the US dollar buffers over the years thanks to its
appreciation on imported prices, hydrocarbon wealth. However, with
pushing up inflation, which is the decline in oil prices, the fiscal
expected to reach 3.8% on average balance this year is projected to turn
in 2015, a team of International negative for the first time since 2009
Monetary Fund (IMF) has said. to record a deficit of 2.3% of GDP,
The outlook for the UAE’s economic and fiscal expansion over the last few
activity is expected to moderate with years has increased vulnerability to oil
non-hydrocarbon growth projected prices and moved the fiscal position
at 3.4% in 2015 amid lower oil prices away from the level consistent with
and an appreciation of the real inter-generational equity. The current
6 effective exchange rate, it said. account surplus is also projected to

The team added that the country’s decline substantially, to 4.1% of GDP,”
fiscal deficit will dip for the first time it said.

www.wealth-monitor.com | June-July 2015

OPENING BELL

UAE 7th Most Attractive Retail Menacorp First in Region
Market Globally to Receive NASDAQ Dubai’s
Derivative Membership

Menacorp, the UAE’s leading financial
services firm, has announced that is has
become the first brokerage firm in the
region to receive Derivative Membership
under international financial exchange
NASDAQ Dubai Limited. It will act as
a Trading and Clearing Member for
Securities and Derivatives with the aim
of leading the market by launching new
financial products that are unique to the
region.

S-F/ Shutterstock.com

The UAE has been ranked seventh with consumer industries and retail Racha Al Khawaja, Senior VP, Menacorp
most-attractive markets globally clients show that retail sales growth In cooperation with NASDAQ Dubai,
for development opportunities in is expected to continue. Indeed, the Menacorp will be significantly involved
retail, according to the Global Retail retail space pipeline remains strong, in product development to ensure the
Development Index (GRDI) released with several major projects under way success of the new offerings, a statement
by A.T. Kearney. The GRDI has placed in Qatar, the UAE, and Oman.” said.
six Middle Eastern countries in the Racha Al Khawaja, Senior Vice
top-30 most-attractive markets for China tops the 2015 GRDI ranking, President, Menacorp said: “Our
development opportunities in retail. followed by Uruguay, Chile, Qatar, Derivative Membership under NASDAQ
This includes Qatar, UAE, KSA, Jordan, Mongolia, and Georgia at second, Dubai Limited will change the financial
Oman, and Kuwait. third, fourth, fifth and sixth ranking investment landscape in the GCC in
respectively. general and the UAE in particular. Our
Martin Fabel, Partner and Global brokers and sales team have been
Head of the Strategy Practice, A.T. According to the report, the key trained on the upcoming products to
Kearney Middle East, said, “Despite focus for the region will be on the ensure success right from the launch.
the record drop in oil prices, our work long-term prospects for growth in the Additionally, we have in-house team
retail sector. proficient in international futures
trading to make sure that our expertise
DGCX Group receives ‘Recognised Body’ Status by DFSA reaches out to our clients.”

The Dubai Gold and Commodities enabling DIFC companies to access its 7
Exchange (DGCX) and its CCP Operator products.
arm, Dubai Commodities Clearing
Corporation (DCCC) has been granted the The Recognized Body status takes
status of a‘Recognised Body’by the Dubai effect immediately and enables financial
Financial Services Authority (DFSA), institutions domiciled in the DIFC and
the regulatory authority for the Dubai licensed by the DFSA to become members
International Financial Centre (DIFC), of the DGCX, the leading “Exchange of
Choice” in the region.

June-July 2015 | www.wealth-monitor.com

OPENING BELL

UAE Banking Industry Stable: S&P Policy Rates in the
UAE Could Rise: IIF
Standard & Poor’s Ratings Services (S&P) with generally healthy balance sheets.
expects slower deposit growth in 2015 “Accordingly, we expect no material The UAE’s currency peg to the dollar has
due to lower oil prices, but it expects implied a real effective exchange rate
the banking system to maintain healthy shocks to the system and we view the appreciation given the strength of the
liquidity metrics. Considering the UAE prospective correction as a healthy dollar against most other currencies. As
banking industry to be stable, S&P says development. UAE banks, and particularly financial conditions tighten this year in
the decline in oil prices has not been Dubai banks, have seen significant loan the US, policy rates in the UAE will rise in
conducive to UAE’s market sentiment recoveries over the past two years as line with the US Fed, but with some time
as evidenced by recent volatility in the collateral values have increased, but we lag, the Institute of International Finance
country’s equity markets. believe this trend has peaked. Although (IIF) has said.
we expect some gradual acceleration in
“We also expect some weakness in nonperforming loans in 2015 and beyond, UAE banks are expected to remain
residential real estate prices as a large we still expect banks’ credit losses to sound because of their strong initial
number of new projects come to market remain largely flat, as the banking system financing positions, and will continue
after two years of very strong price had already increased its coverage levels to be supported by growth in public
growth, it said. visibly over the past few years,” it noted. spending on infrastructure—albeit at a
lower pace than in the past—which has
However, the banking system’s direct S&P classifies the banking sector of the been driving bank credit and profitability,
exposure to equities is very limited and United Arab Emirates (UAE) in group ‘5’ the Washington-based institute said in a
domestic banks have adopted more under its Banking Industry Country Risk report “UAE: Successfully Weathering the
conservative underwriting practices in the Assessment (BICRA) methodology. Peers Oil Price Slump”.
corporate real estate segment since the in this group include Brazil, China, India,
global financial crisis of 2008-2009, while and South Africa among other countries. The appreciation of the UAE currency
key domestic developers are operating and the prospect of persistently low
oil prices call for intensification of
diversification efforts and deeper reforms
to raise and sustain high growth.

Qatar’s Business Outlook Improves,
but Challenges Remain: D&B

Qatar’s overall business environment sector is lower by 9 points to 40 in Q2. The
outlook has improved in both the composite BOI for the Finance, Real Estate
hydrocarbon and non-hydrocarbon & Business Services sector has retracted
sectors, but declines in key areas throw up significantly from the record highs
a number of challenges. According to the achieved in Q1.
Business Optimism Index (BOI) released
by Dun and Bradstreet and sponsored by Despite these challenges, Qatar’s Paul Cowan / Shutterstock.com
the Qatar Financial Centre (QFC) Authority, economy continues to thrive and drive
confidence in Qatar’s overall business business to all sectors. According to
environment is at an all-time high. the BOI report, the overall business
environment outlook has improved in both
However, respondents expressed a the hydrocarbon and non-hydrocarbon
cautious optimism for the overall outlook sectors.
given the many challenges faced in key
areas. The outlook for the construction 27% of hydrocarbon and 39% of non-
8
sector has witnessed a slight moderation hydrocarbon firms expect no negative
with the composite BOI declining from 52 factors to impact business operations in
in Q1 to 46 in Q2. Whereas the composite Q2, compared to 22% and 23% respectively
BOI for the Transport & Communications in the previous quarter.

www.wealth-monitor.com | June-July 2015

OPENING BELL

Demand for Islamic Funds to Reach
$185 Billion by 2019

The global Islamic funds are a $60 billion term to bridge the $108 billion demand- the past five years remained the same or
industry forecasted to grow to at least $77 supply gap, the report added. surpassed expectations. Building on this
billion by 2019, while the latent demand momentum, most asset managers are
for Islamic funds is projected to grow to The study is based on a survey of key asset willing to increase their Islamic investment
$185 billion, according to the findings of managers, investors, and other market holdings in the next 12 months.
Global Islamic Asset Management Outlook, players such as regulators, consultants, and
published by Thomson Reuters. financial institutions. Despite the financial Investors and asset managers chose
crisis, the Arab Spring in the MENA the GCC as their preferred investment
There are substantial growth region and the Euro crisis, the majority of destination, with Sukuks and equities
opportunities but the industry will struggle investors and asset managers still believe being the preferred asset types for 2015
to reach its potential in the near- to mid- that performance and efficiency during and 2016. Most asset managers also
highlighted a preference for a more
Source: Thomson reuters supportive Shariah framework within their
markets.

Outside of core markets Malaysia and
Saudi Arabia, there are other growth
pockets on the horizon for Islamic funds.
Pakistan and Indonesia currently enjoy
stable political climates and a renewal
of efforts to expand and deepen their
respective Islamic finance industries
across all sectors. China is also opening
up to Shariah-compliant funds – in 2014,
Malaysian and Hong Kong asset managers
started collaborating to market Islamic
funds to China’s retail clients, with funds
focused initially on the Far East and
Southeast Asia, the report added.

DMCC, DMCA Tie-up

DMCC, one of the world’s leading in Dubai in accordance with the Dubai 9
commodity hubs for trade and enterprise Smart Government initiative.
and the largest and fastest growing
Free Zone in the UAE, has signed a Krysta Fox, Head of Free Zone at DMCC,
Memorandum of Understanding (MoU) said: “This MOU is an important framework
with the Dubai Maritime City Authority for DMCC. It reflects our strong support for
(DMCA). the maritime sector in Dubai and is part
of our ongoing efforts to promote Dubai
The MoU provides a collaborative and attract new companies to our Free
framework for DMCC Free Zone and Zone as well as delivering more ideas and
DMCA to help promote Dubai to the innovative technologies to the maritime
maritime sector as a global destination for industry.”
companies wanting to set up and expand
into the GCC and MENA region. The MoU The signing ceremony was attended by
will also jointly explore the development the Executive Chairman of DMCC, Ahmed
and implementation of m-Government Bin Sulayem and Amer Ali, Executive
initiatives relevant to the maritime sector Director, Dubai Maritime City Authority.

June-July 2015 | www.wealth-monitor.com

FACE VALUE | ADIL TAQI

“Dubai Property Remains

ATTRACTIVELY PRICED”

Adil Taqi, Group Chief Financial Officer, DAMAC Properties, tells Wealth Monitor how
offering the right product at the right time positioned and priced attractively remains key to success

Since its listing in January this year, shares
of DAMAC Properties have risen by 21%
as at May 21, 2015, outperforming DFM
Index. How do you look at the stock’s
performance till date?
DAMAC has been operating in Dubai’s
property market since 2002 and has quickly
risen to become a household name, not only
in Dubai but the entire Middle East region.
It is a natural development for a company
to ultimately find itself on the stock market.
Our customers are a shared part of our
success in terms of not only investing in
the properties that we have been offering
but also by buying and enjoying the
financial investment in terms of investing
in DAMAC stock. This only underlines the
fact that DAMAC stock is a great asset
valued attractively and the capital market
recognizes that.

In Q1 this year DAMAC Properties posted
a 3% quarterly growth in net profit to
AED 793 million. How do you read this
at a time when the moderate property
10 market has tempered sentiment?
Adil Taqi, Group Chief Financial Officer, DAMAC Properties

www.wealth-monitor.com | June-July 2015

FACE VALUE | ADIL TAQI

A villa at AKOYA Oxygen (GDRs) on the London Stock Exchange What would be your thrust going forward. 11
In any market, you need to have the right (LSE) – was it valuation issues, or tapping Are you going to focus only on luxury real
product at the right time positioned and into a larger group of investors and estate market or diversify across mid- and
priced attractively. Dubai is a right place to be benefitting from less stringent ownership affordable housing segment too?
in where property prices remain attractively rules? We believe value buying and luxury are
priced. Real estate in Dubai offers a fantastic Although we got GDRs listed on LSE in not inconsistent. We’ll continue to offer our
investment avenue bolstered by its location, December 2013, the decision to launch the customers the best property for that sum of
attraction, tax-free lifestyle, cost of living, IPO was made in January-February that money. Whichever category our customers
tourism hotspots, the cost of investment year. That time the market conditions in the are in, DAMAC will be at the top of that
and the list goes on. We believe DAMAC is UAE were not appropriate to take the IPO of category. We have got a range of products
in a right city, in the right sector and at the that size. That was the reason why we opted from studios to penthouses worth millions
right time, well positioned to offer the right for LSE as a better avenue to open the IPO of dirhams. Naturally, Akoya and Akoya
product. We pride ourselves in doing that window. And while London listing was right Oxygen will be our focus because it’s all
consistently. Add to that is our commitment and it served its purpose, our preferred place about being the right product at the right
and focus on execution reinforcing the belief would always be Dubai. time and pricing and delivering it profitably.
of our customers and investors that we are And now when DAMAC has delisted The weakening of the euro against the
a developer that will deliver on time. We GDRs, how this delisting has added value strengthening dollar has negatively
have so far managed to deliver over 14,000 to your shareholders? impacted the inflow of European tourists
units, and around 9,000 of those have been The swapping of GDRs into for shares listed to UAE. How this has impacted your
delivered since 2012. on the Dubai Financial Market (DFM) was a hospitality business — Damac Hotels &
bespoke transaction that by all standards Resorts?
In its latest Q1 financial statements, the first of its kind in the region. Our We have been seeing a mix of customers
DAMAC had announced that the dividend management team worked hard with our in our hospitality business. This includes
payment this year will be made over advisors to get it right and we managed to do customers from China who are not affected
at least two payments: an interim of that in a very seamless operation. There were by the euro, or the GCC-based families who
10% and a final payment of 15%. Is actually two elements here – listing in Dubai
there any latest update on this for your and delisting from London and each of the sppeegngdeAdi.ndBileolccTaaaul sqceuir:oreTfnhcthieeiss, Ptohruaotr fahiroleespdiotalllaitry-
shareholders? two has brought value to our shareholders.
Quarterly earnings announcements contain I don’t think there is any dispute on how business is not sensitive to the dollar
forward-looking statements relating to coming to DFM brought in value, as there is movement. The only people that could have
future events or future financial performance lot of liquidity, lot of visibility, this is where lost are European customers because of the
of a company. Whilst, operationally, we the retail money sits. The delisting from LSE euro’s weakening.
stand committed to what we said in the helped the company in two ways – one, it
announcement, we have already made a reduced the administrative costs of running DAMAC Residenze in Dubai Marina
regulatory announcement where we have two companies. Most importantly, the
said that these are the statements about the delisting hasn’t split our float, and we are
future, subject to realization of performance still under 15% float as a company. If you
and subjective to regulatory procedural split that between two markets you get very
events such as board meetings, AGM small float in each of the markets and the
approval, etc. trading gets very small.
How do your assess the demand for
What was the objective behind listing affordable housing in Dubai? Is it going
DAMAC’s Global Depositary Receipts to occupy key position in any regional
developer’s business plan going forward?
There is no market anywhere in the world
that doesn’t have the latent demand for
affordable housing. Whether it is New York
where some penthouses sell for $100 million
or London where you’ve £6,000 per foot
property, there is and will always be demand
for affordable housing. Having said that, I
prefer to use the term value buying than
affordable housing, because affordable is
more of a relative term. Also, one cannot
ignore the fact that there is a general
shortage of villas too in Dubai. So it’s not
only about affordability.

June-July 2015 | www.wealth-monitor.com

BULLS VS BEARS | Equity Markets

StoTcimk eUTpo?

Where the GCC markets are headed in 2015 and beyond? As the
traditional quiet summer sets in, is it a good time for bulls, sitting on the
12 fence, to romp? Or, have the markets entered a cycle where bears are
waiting to swarm the streets? Is it a perfect time to go bargain hunting? Four
experts debate on the road ahead and if market crash fears are overblown

www.wealth-monitor.com | June-July 2015

BULLS VS BEARS | Equity Markets

To buy or not to buy? This is the one discuss the outlook of the UAE’s and the going to play up in the short and medium
Hamletian dilemma many stock region’s stock markets. We asked a few term in the region; are regional markets in
investors in the region may be going questions from these experts, such as the wait-and-watch mode; do you expect
through. And the reasons are obvious: whether now is a good entry point for the UAE and regional markets to remain
markets around the region are bogged fence-sitters as the fall in crude oil price range-bound for months or until the next
down by the dip in crude oil price, global and the related bearish trend in the quarterly earnings season, prompting
economic recovery is still slow and, more regional markets over the last couple of investors to book profits; is the opening of
importantly, while equities markets in months have also brought down valuation Tadawul to direct foreign investors going
many parts of the world are trading with levels; are crude oil’s pullback and to remain largely a sentimental rub off, or
bullish overtones, investor sentiment in regional geopolitical concerns the biggest it would fundamentally impact investor
this region has yet to play catch up. headwinds for regional markets; what other participation on the ground?
domestic, regional and global triggers are
Wealth Monitor invited experts to And here’s what they had to say….

Mohammed Ali Yasin, Managing Director - Head of NBAD Securities

Room for Appreciation Quiet Time May be Good 1133
The slow-down in the UAE markets in The economy in the UAE is balanced well
Q1/2015 due to pessimistic expectations at the moment, and the current conditions
of effects of low oil prices on public justify the stock market movements of
companies profits made the valuations late. The seasonal factors like Ramadan
of many of them very attractive, as P/E and the summer holiday months coming
were probably the lowest in the region from around June 18th – September
(average around 11 times) especially if will insure that the slow market activity
we compared to Saudi Arabia market continues in that period. Therefore, the
where the average P/E was 19 times in quiet time may prove a good period for
that period. Hence when Q1/2015 results many of the liquidity waiting on the side-
started to be announced in April, we saw lines to accumulate and build positions
a strong recovery in the markets in terms gradually.
of traded value and prices, which turned
the DFM index from negative to positive Saudi Opening to Have Long Term
territory. We believe valuations to be more Effects
fairly priced now, but there is still room for We should not judge the initial reactions
appreciation especially if the companies upon opening of the Saudi Tadawul
continue to announce positive growth market and would like to see the more
results in the coming quarters of the year. long term effects. Many foreign liquidity
Oil and Geopolitics Biggest Headwinds has been invested in that market already,
The crude oil’s pullback and regional some for years, under different GCC and
geopolitical concerns are the main two SWAP vehicles. So some of the initial
concerns outside internal specific market trades will be to transfer such structures to
factors, i.e. public companies performing direct company ownership. The real effect
well and meeting revenue expectations. of foreign investor participation in the
But the region is now part of the emerging Tadawul market will take place when that
market universe, and any volatile moves market is added to the MSCI Emerging
on markets within that universe will affect markets index which is expected in 2016
our equity markets too. at the earliest.

June-July 2015 | www.wealth-monitor.com

BULLS VS BEARS | Equity Markets

Nabil Al Rantisi, Managing Director – Brokerage, Menacorp

Different Dynamics Stock prices in the UAE have multiplied
You can’t really look at the GCC region as in the past two years so they are taking a
one market. Each country today has its own breather now, until a new catalyst shows
dynamics and they are being affected with up to identify the direction. Stocks in the
different things happening around them. UAE and regional markets tend to move
Saudi Arabia is the most affected by the all together. We have defensive stocks and
geopolitical issues as it neighbors countries non-defensive stocks but when the party
with political instability. Also, low oil price starts everyone participates.
is seen as a huge risk as the economy
heavily depends on oil. UAE has a different MSCI Inclusion Added Depth
angle. It is perceived as the safe haven in It [the upgrade to ‘Emerging Market’ status
the region for wealthy people. Also, with by MSCI] only added more institutional
the Expo 2020 happening in the UAE, this depth to the market. In terms of volumes
is a catalyst to push the growth further in it hasn’t given any more to it as we had
coming years. The major risk for UAE is the higher volumes before the upgrade. Since
strong dollar as it will hinder non-dollar the MSCI upgrade the market hasn’t been
pegged economies from bringing money performing positively.
to invest here and will encourage them
to cash out. Also, the strong dollar affects Tadawul Opening Positive
the European and the UK tourists as they Opening Tadawul is positive on all angles;
find the country more expensive. Qatar for Saudi and neighboring markets. Saudi
also is different. Along with its ambitious Arabia will be eyed by more funds globally
plans, the 2022 FIFA World Cup is another and hence we will have the opportunity to
catalyst. Since its population isn’t big, its capture some in the neighboring markets.
expenses are manageable even with low For Saudi Arabia, the QFI will trigger more
oil and gas prices. interest from foreigners. It’s a big market
Markets Taking a Breather and most of the international houses are
Markets do price in different factors. The set up there. They are expecting a decent
lack of clarity that we are seeing now is flow of business otherwise the setup won’t
due to many instable factors around us. make sense.

Amr El Alfy, Head of Research, MubasherTrade

Slower Growth in GCC Economies Markets to Remain Range-bound
Given that oil remains their primary Both DFM and ADX might continue
engine for growth, the GCC economies moving laterally for some months, as the
are expected to suffer from slower growth market is still lacking sufficient liquidity
this year. On the other hand, lower prices to maintain the major up-trend.
should act as a catalyst for growth in oil- For Saudi Arabia, the major up-trend
importing countries, including the Arab’s remains intact despite the 23% drop
second largest economy, Egypt. Moreover, in late 2014; with liquidity still at good
politics and oil remain very much related. levels, promoting further advances. For
The political front in the MENA region is Qatar, the index is moving sideways
heating up as regional conflicts arise and between the 11,000 support level and
continue to drive the volatility of oil prices the resistance zone of 12,800-13,000
higher. Nevertheless, the anticipated nuclear and below its 50-day simple moving
deal between Iran and the US means average. It is expected to trade within
14 sanctions against Iran can also end; reflecting this range absent high trading volumes

significantly on its energy production. or regained momentum.

www.wealth-monitor.com | June-July 2015

BULLS VS BEARS | Equity Markets

Inclusion in MSCI Index Key put a maximum limit on foreigners’ home to many IPOs, even at times
Opening of Tadawul market to foreign ownership of 10% of total market cap, when other markets in the region dried
investors is definitely an important we believe the inflows could be more up. Going forward, we could see some new
step in terms of market development. significant after the inclusion of the IPOs in the region to the tune of $1.8bn, but
It should eventually result in its Saudi market in MSCI Emerging Markets timing will depend on market conditions.
classification as an emerging market index, which is likely to be in 2017. New IPOs would probably come from the
which should bring in more liquidity New IPOs Expected financial and real estate sectors in KSA,
into the region’s already most liquid The Saudi market has recently been UAE, Qatar, Egypt and Oman.
market. Although the QFIs rules

Vijay Harpalani, Fund Manager, Al Mal Capital

Government Spending to be Key Driver in the GCC and offers depth and diversity.
In the near-term, the outlook of GCC stock With that being said, the near-term impact
markets is likely to be more correlated with is likely to be more sentimental in nature
the direction of crude oil prices. In the rather than fundamental, in my view. Prior
long-term, geopolitical risks and global to investing in the market, international
macro will play a larger part. Saudi Arabia institutional investors will evaluate
is unlikely to scale-back its spending geopolitical risks, valuations and also
significantly even at lower oil prices as the operational risks. On the operational
diversification holds more importance now side, for example, the settlement cycle
than ever before. Government spending, in Saudi Arabia continues to be T+0 as
therefore, is likely to be the major driver of compared to T+2 followed globally, and
corporate earnings growth. the existing custodian model is still not
Oil and Markets More Correlated fully independent. We believe these issues
While quarterly earnings announcements will be addressed sooner than later as
continue to be one of the key catalysts the market is expected to be classified as
for the markets in the near-term, it is ‘emerging’ by MSCI in 2017.
also important to realize the fact that IPOs Success Depends on Valuations
the shorter-term correlation between Compared to last year, the regional primary
crude oil prices and the GCC markets has market has seen a very slow start this year
significantly increased, and has become (with an exception of Egypt). Events such as
one of the key drivers. the new commercial Companies Law in the
Opening of KSA More Sentimental UAE and the opening of the Saudi Arabian
Saudi Arabia’s opening of its stock market stock market should encourage more
to international institutional investors is a listings in future. However, the success
major positive development for the whole of these IPOs will eventually depend on
region from a longer-term perspective. The valuations - there has been a tendency of
Saudi Arabian stock market is the largest leaving little on table for investors in the
recent past.

Wrapping Up 15

Stocks markets are, by their very nature, volatile, and to expect them to keep moving up eternally is like asking for the moon. There
is no stock market, or for that matter, any asset class in this world that keeps on giving good returns day by day, month by month,
and year by year to investors. The time comes, and it is usual, when markets face shocks, forcing them to take a pause, assess their
positions and then move forward. Markets in the GCC region are going through hibernation because of factors beyond their control.
However, the bottomline is that the fundamentals of the UAE and the region remains strong and investors, domestic as well as foreign,
are willing to put money on the table. Shocks, internal and external, will keep on coming, but those investors who are scared of seeing
their investment value in red and crash out of the market when they see the markets plunge, are those who don’t understand the
nature of how stock markets function. For long term investors whose goal is to get returns by owning a portion of companies’ profits,
and not by trading stocks and/or speculation, the current situations might be a good opportunity to enter.

June-July 2015 | www.wealth-monitor.com

PORTFOLIO | Interview

“It’s Time for GCC Exchanges
to Think Differently”

In an exclusive interview, H.E. Rashed Al Balooshi, CEO, Abu Dhabi Securities Exchange
(ADX), speaks to Wealth Monitor on a range of issues such as the impact of the MSCI
upgrade of the UAE, emerging challenges for the regional stock markets, new products in
the pipeline, and much more…

Last year, MSCI upgraded UAE to ‘Emerging
Market’ status. What tangible impact has this
upgrade brought in ADX in terms of investor
participation and average daily trading
volumes?
ADX becoming part of the MSCI is a recognition
of our market functioning and structure. Being
a part of the MSCI incorporates implementing
the standards and procedures that are used
internationally. Another meaning of being part
of the MSCI is that a portion of fund managers
tracking the MSCI index will redirect the
investment to ADX and the UAE. We have already
started seeing the positive difference. From June
1, 2014 until end-2014, we saw AED1.5 billion
coming in as net foreign investment in ADX, the
net foreign investment in the exchange rose to
AED 3.1 billion during June 1 last year up until
May 24th this year.

In terms of institutional investor, we’ve also
seen a jump. Last year, 1106 new institutional
investors opened accounts in ADX; most of them
came in the second half of last year after the MSCI
upgrade. The number rose sharply compared

16 H.E. Rashed Al Balooshi, CEO, ADX

www.wealth-monitor.com | June-July 2015

PORTFOLIO | Interview

with 2013, when new institutional investors and hopefully we are going to see more investment approach and doing research
were only 380 that’s an increase of 191%. of this cooperation strengthened in the on the companies whose stocks they are
These numbers underscore the success of future. I believe it’s time for GCC exchanges investing in.
ADX in attracting foreign investment. to think differently.
What strategy are you working to Last year, ADX had put in place the The main objective of this circuit breaker
enhance foreign investor participation Circuit Breakers system (suspension of is to give such investors the chance for
on the exchange, especially in the trade for 5 minutes if the price falls by 5 minutes to sit back and think if their
context of the opening of the Saudi 5%), the first in the GCC region to do decision was a wise one or was it a decision
stock market? so, to stem sharp price swings. What based on just rumours. There are various
We consider the opening of the Saudi benefits do you believe it would bring to mechanisms to protect investors and
market more as an opportunity than investors and the overall markets in the companies and circuit breakers is just one
a threat. Since UAE is part of the MSCI region? Do you believe stocks exchanges of them.
now, foreign investors looking to invest across the region should implement this What are new products and
in Saudi Arabia will also be looking for mechanism? technological solutions that ADX is
opportunities elsewhere in other markets One of the critical functions of stock planning to introduce?
of the region. At the same time, we at ADX exchanges around the world is to protect As for new products in 2014, ADX listed AD
need to develop our structure, put more the interests of all the stakeholders, which Gov bonds in Oct 2014 worth ($ 1.5 billion)
transparency and disclosure in place and includes investors, securities dealers, listed which comes as a step towards building
be more accessible to investors. We also companies and others. We continually a bond market operating under the best
need to adopt international practices so work to draft and implement a set of standards as with international financial
that foreign investors looking at this region rules and mechanisms that go a long way markets. The listing solidifies the status
to invest, we must be visible to attract their in achieving this objective. One of these of the Emirate of Abu Dhabi as regional
attention. We have already started working mechanisms is to put in place the circuit and global financial centre offering vast
towards that by organizing road-shows breaker system whereby the trading of a investment opportunities.
globally to promote and attract more stock is suspended, should the price falls
investors. Overall, Saudi market opening or rises by 5% in a trading session. The As for technological solutions, it was
presents a good opportunity for us to take purpose of circuit breaker is to protect the also in 2014 that we replaced our trading
advantage of the situation. interests of not only the listed company system with X-stream Trading platform
Are you looking for any tie-ups with but a large chunk of retail investors who which can handle not only the trading
stock exchanges in the region or buy or sell stocks based on rumours of equities but also will support Market
beyond? or trends, instead of following a sound Making activity as well as transactions of
ADX has been a pioneer in implementing fixed income and ETF instruments.
various market-leading processes and ADX Trading Floor, Abu Dhabi
innovations in the GCC and the wider Also in 2014 we introduced a mobile
Middle East region. We were the first
to include the surveillance system, first 1177
to disclose information about those
investors who own 5% stake and above
stake in a stock, first to implement
minimum disclosure requirements by
board members of the listed companies
and other insiders. However, we believe
despite the rapid strides we have made
over the years, we still have a lot to do in
terms of shoring up investor participation,
increasing the number of listed securities
from the current 70 listed securities (65
public joint stock companies, 2 private
joint companies, 1 convertible bond, 1
ETF, and 1 Abu Dhabi government bond),
and bring in more foreign investment to
bring us at par with the global peers. This
is why we need to cooperate with other
GCC exchanges, in order to find solutions
and exchange ideas to better protect the
interests of all stakeholders. We are already
cooperating with exchanges in the region,

June-July 2015 | www.wealth-monitor.com

PORTFOLIO | Interview

H.E. Rashed Al Balooshi, CEO, ADX app which included 7 to 8 features that with the involvement of a market maker.
18 are unique to ADX, such as providing Having a market maker will further
information/data related to stock price,
value and volume, % change, among strengthen ADX’s unique listing and
others to stakeholders. This app could trading experience where liquidity
be used by all, ranging from investors, providers and market participants meet to
listed companies to brokers and others. trade in ADX listed companies in an open,
This year we want to bring into practice transparent and fair marketplace.
more innovative ideas. One of them is to What are the current as well as
develop this mobile app further and add emerging challenges you are seeing in
more features. By the end of this year, we stock market in the UAE and around the
are going to announce new features and region?
services for the stakeholders that would Markets in the GCC region, including the
give them easier access to the services UAE, have been unrelated or immune to
we offer. Another innovation that we are global market developments to a large
working on is improving our website to extent. However, subsequent to becoming
make it more user-friendly, more flexible part of the MSCI, the UAE has become a
and more accessible to all types of users. part of the emerging market map and,
therefore, no more immune to what’s
The policies happening in other parts of the world.
and flexibility of the This poses to us a big challenge in that
government and the we are now more susceptible to what’s
overall UAE economy happening globally. However, at the same
have always enabled time, we see it more as an opportunity
us to move on the than a challenge or threat.

right track The UAE economy is well-balanced and
diversified. If you take the performance of
SCA has brought regulations in respect the banking sector, infrastructure, tourism
to short selling and market making. and other sectors, Abu Dhabi and the
How is that resulting in enhancing UAE have made rapid progress and have
liquidity and attracting more investors managed to successfully face challenges.
in the market? Additionally, the policies and flexibility
There are a whole lot of issues ranging of the government and the overall UAE
regulations, structure, procedure, etc, economy have always enabled us to move
which needs to be addressed in order to on the right track.
attract liquidity in a stock market. One of One of the major provisions of the
such issues is short selling and securities recently issued Commercial Companies
lending and borrowing which help Law is that it allows companies to float
increase liquidity and give more stability to a minimum of 30% of their equity from
the market. We are working with the SCA 55% earlier. Do you believe it would
on these issues. At the same time, there encourage family-owned businesses to
is a need to include other stakeholders go public?
including banks, government, brokers, etc Definitely it would help companies
that need to be made part of this collective to go public. Moreover, it would help
effort. us to introduce new products such as
developing the bond/sukuk market, the
Last year ADX introduced National Bank REITs and ETFs (though we were the first
of Abu Dhabi (NBAD) to operate in the in the region to introduce ETFs, we would
exchange as the UAE’s first market maker. like this product to develop further).
One of the significant benefits of having a Additionally, we have plans to develop
market-maker in stock exchanges is their the fledgling derivatives market. We
commitment to provide bid and offer believe the new Companies law would
prices in all market conditions, which help us do that. At ADX, our first priority
ensures there is always a price at which is to attract institutional investors while
investors can buy and sell in their stocks the second one is to diversify financial
products listed on the exchange. REITs is
one of the financial products that would
add value to us.

www.wealth-monitor.com | June-July 2015

PORTFOLIO | Markets: What’s Next

Have Faith

in Stocks

Stock markets in the UAE and the region look skittish as oil
prices have plummeted. But the long-term growth story looks

much more promising. Sunil Kumar Singh finds out why

Exactly a year back, in June last year, if you make things worse, property markets in Dubai 1199
asked three separate market analysts are off-peak and regional geopolitical issues
the outlook of the UAE’s and the region’s are hogging the limelight. A particularly sharp
stock markets, you could have got three fall in oil prices toward the end of 2014, saw
different answers and probably none of them corresponding volatility in the local equity
would have been right. The reasons: crude markets.
oil was trading at its high above $115/bbl,
investors were upbeat about the opening of So what’s the takeaway? Have the UAE’s
Saudi stock market, the biggest in the region, and the wider GCC region’s markets bottomed
to direct foreign investment and property out, or are there more corrections in store?
prices in Dubai were far from showing any Have the markets run out of steam, as some
signs of cooling off — all strong catalysts doomsayers say? Are markets in the region
to keep investors and market mavens over- headed for a big fall as the US Federal Reserve
bullish, with everyone coming up with his is likely to raise rates this year? How is the IPO
own speculative forecast of where markets are pipeline in the UAE and the region expected to
heading upwards. be going forward? Will it revive this year? Is the
opening of Tadawul to direct foreign investors
Cut to June 2015 — investor sentiment going to remain largely a sentimental rub
looks tempered now as markets in the region off, or it would prompt foreign investors
have fallen in the last one year mainly on the overwhelmingly to invest in Saudi Arabian
back of the sharp dip in crude oil prices that market?
have almost halved since June last year. To

June-July 2015 | www.wealth-monitor.com

PORTFOLIO | Markets: What’s Next

Time to Be Greedy or Fearful? strong and companies are moving in the Adel Merheb, Director - Equity
The UAE’s and the most equity markets in right direction. Capital Markets, Shuaa Capital
the region have had a decent run-up so far
this year. Barring Bahrain, Qatar and Kuwait “The momentum that we saw in 2013 up
markets, the performance of UAE, Oman until first half of 2014 is no longer there. But
and Saudi stock markets have been positive there is obviously a positive bias. However,
year-to-date (as on June 10, 2015). However, the near and mid-term risks cannot be
on a yearly basis these markets have given discounted. One of the key risks is regional
negative returns, bracing for volatility. geopolitics,” Adel Merheb, Director – Equity
Capital Markets, Shuaa Capital, says.
If you take the case of DFM Index, for
instance, it has been moving within a wide Over the next few months markets
range of 3300 to 4300, a 25-30% range since will likely remain range bound, lacking a
the beginning of the year even though that clear direction. However, there could be an
range has tightened in May. upside potential of 5-10% in Dubai in the
near term. That said, the upside is very much
But should a volatile UAE and regional dependent on the developments on the
stock market really worry an investor? In macro front, regionally or globally, such as
the UAE especially, there are mixed signals the Iran nuclear talks, regional geopolitics
coming in. While on the one side there and others, he adds.
are domestic macro tailwinds including
the strong Q1 earnings results and robust Another positive factor for regional
banking performance, there still are markets has been the inclusion of UAE and
headwinds such as bearish oil price and Qatar to ‘Emerging Market’ index. It was
moderation in the property prices. exactly a year back in May 2014, when MSCI
officially upgraded the UAE and Qatar to
Analysts however believe the UAE and ‘Emerging Market’ status. This year again
the regional markets have had a fast up in its semi-annual review on May 12, MSCI
move since late 2012 up until mid-last year added Dubai’s Emaar Malls to its emerging
when the fall in crude oil prices coincided markets index and increased the weighting
with the drop in equities. Nevertheless, of Abu Dhabi Commercial Bank. For MSCI
the fundamentals of the UAE economy are Qatar, Ezdan Holding and Qatar Insurance

“There Is a Lot That Needs to Happen”

Robert Ansari, Executive Director, Head of the Middle East, MSCI, Dubai, tells Wealth Monitor that Saudi Arabia could enter the MSCI
Emerging Markets Index by June 2017 but there is a lot though that needs to happen before this

MSCI plans to launch MSCI Saudi Arabia MSCI to include Saudi Arabia into MSCI
Indexes as Standalone Market Indexes Emerging Market Index? Any tentative
effective June 1, 2015. What’s the timeline?
objective behind this launch? As per MSCI’s standard process, the earliest
Therewasastronginterestfrominstitutional that Saudi Arabia could enter the MSCI
investors for MSCI to create a benchmark Emerging’s Markets would be June 2017.
that represents the equity opportunity set There is a lot though that needs to happen
for international investing to be available before this and this starts with international
as soon as the market opened for foreign investors investing in the Saudi Arabia
direct investments. The launch of these equity market and then sharing the
new Saudi Arabic benchmarks addresses experience of this with MSCI and from that
that demand. Of course it wasn’t possible we are able to gain sense of the demand for
for MSCI to create these new indexes until Saudi Arabia to be reviewed for potential
the CMA confirmed the final rules, which reclassification.
it did recently, and with that confirmation
came the announcement by MSCI a few Would the opening of Tadawul to direct
20 days later. foreign investors next month prompt

a large number of foreign investors
Robert Ansari, Executive Director, Would the opening of Tadawul to direct to invest in Saudi Arabian market? Or
Head of the Middle East, MSCI foreign investors next month prompt are there still some challenges foreign

www.wealth-monitor.com | June-July 2015

PORTFOLIO | Markets: What’s Next

are additions while weight for Doha Bank overtones. Market observers caution that Gary Dugan, Managing Director - GW
is increased. the bearishness in oil price could spill over CIO & Head of Investment Strategy,
to companies’ balance sheets impacting Global Wealth Division, NBAD
“Inclusion in the MSCI was a game their earnings that could, in turn, scare the
changer and post-inclusion, we have markets and pull them further down.
seen international passively-managed
funds that track the MSCI indices channel “In the early days of the oil price
investment flows into the UAE markets, correction many businesses would have
and that was over and above the flows waited to see whether demand held
from actively managed funds,” says Adel. up. We now suspect that companies
are starting to see a more consistent
Over the next few disappointment on revenue growth,”
months markets will maintains Gary Dugan, Managing Director
likely remain range - GW CIO & Head of Investment Strategy,
bound. However, there Global Wealth Division, National Bank of
could be an upside Abu Dhabi (NBAD).
potential of 5-10% in
Dubai in the near term We believe there could be up to 10%
downside risk for markets in the near term.
The Elephant in the Room International issues may dominate market
While the first quarter earnings declared sentiment with the weakness in global
by UAE companies have been largely in growth and sharp increase in bond yields
line, one of the biggest worries is that the causing some angst in markets,” Dugan
crude oil price could play the spoilsport, adds.
if it continues to trade with bearish
More significantly, if oil prices fall below
$60/bbl that could raise alarm bells as this
could trigger region’s governments to
cutback infrastructure spending that could
decelerate the overall economic growth.

In a recent report, Standard & Poor’s

try. That is not really be addressed once these foreign
15.00% to say though investors physically move into the market
there remains and then voice their feedback.
MSCI EM MSCI GCC questions that Last year, UAE and Qatar were upgraded
international to‘Emerging Market’status by MSCI. Are
10.00% you in the process of considering other
markets in the region for upgrade?
institutional MSCI, through its usual course of its
5.00% investors have business, routinely analyses the regional
and amongst equity markets and more importantly takes
these will be a in feedback from international institutional
0.00% T+0 settlement investors on their evolving experiences
cycle. There of the local markets. The actual decision
-5.00% may maybe on what, if any, markets will be put under
01-Apr-2014 other areas review is announced in MSCI’s annual
01-May-2014 which manifest market classification which falls in June
-10.00% 01-Jun-2014 over a longer of each year. We continue to work with
01-Jul-2014 the exchanges and regulatory bodies in
01-Aug-2014 period of the region and for example we are able to
01-Sep-2014 time and observe changes in both the Kuwaiti and
01-Oct-2014 one of these Bahraini capital market frameworks, but
01-Nov-2014 as mentioned, official announcements are
01-Dec-2014 made in June.
01-Jan-2015
01-Feb-2015
01-Mar-2015
01-Apr-2015

Source: MSCI

investors are waiting to be sorted out? areas may be
foreign ownership limits. At 20% the
There is a well-publicized high expectation limits for Saudi Arabia are relatively low 2211
of foreign investors moving directly into to compared to others in the region. But
the Saudi Arabian equity markets but these like the settlement cycle, the question of

investors won’t actually know until they Foreign Ownership Limits (FOLs) will only

June-July 2015 | www.wealth-monitor.com

PORTFOLIO | Markets: What’s Next

(S&P) expects global oil prices to remain valuations up,” maintains John Sfakianakis,
relatively weak through 2016. Regional Director for the GCC at Ashmore.
“This means, given the importance In Saudi Arabia, many sectors continue
of oil-related revenues in the region’s to be over-valued even before the market
economy, a gradual weakening in is formally opened (See In Search of Value
economic conditions for the sovereigns in the Dashboard section of this magazine
of Bahrain, Kuwait, Oman, Qatar, Saudi for more). However, analysts believe high
Arabia, and the UAE….We do not see a valuations in Saudi market is not going to
significant deceleration this year, at least. negatively impact investor sentiment.
That’s because GCC governments have “Even though many stocks or sectors
not announced any major cutback in are expensive there, I don’t think higher
infrastructure spending for 2015, but might valuations may necessarily deter foreign
after that if oil prices remain low,” it notes. investors from getting exposure to Saudi
Dr. Garbis Iradian, Chief Economist, since it is by far the largest in the region
Middle East and North Africa, Institute of and to have exposure to the MENA area
International Finance (IIF) has a similar will mean you will have to have exposure
view. to Saudi. Besides, some of the companies
“The decline in the oil price is one of the that do trade at fairly high valuations offer
biggest headwinds for regional markets. some of the best prospects for growth,”
The GCC equity markets have been under adds Adel of Shuaa Capital.
pressure since oil prices started to decline
in July of last year. Overall corporate
profitability has moderated in the GCC in One of the biggest
the first quarter of 2015. The outlook in attractions of regional
the near term depends on oil prices and
liquidity in the banking system.”
Another headwind limiting the equities is that over the
last couple of months
potential upside of the region’s equity
markets is the strong dollar.
A rising dollar makes regional equities the valuation levels
of many sectors have
expensive for foreign investors. The come down
appreciating greenback has already
impacted investment in the UAE real estate
and slowed down tourist inflow, as it makes
dirham more expensive for non-dollar
denominated currencies. Equities are the The Saudi Factor
latest to bear the brunt of a stronger dollar. While analysts and market experts see
“So even if UAE’s stock prices go down, the opening of the Saudi market to direct
the fact that the dirham is moving higher, it foreign investment a positive event, the John Sfakianakis, Regional Director
might still make them look more expensive more direct and significant push would for the GCC at Ashmore

comparatively speaking,” Adel of Shuaa be felt when the kingdom’s stock market
Capital says. would be included in the MSCI Emerging
Market Index, they argue.
Attractive Valuations As at the end of January this year, MSCI
Notwithstanding the dampened oil price Qatar and MSCI UAE had weights in the
and stronger dollar, one of the biggest MSCI Emerging Markets of 0.8% and 0.6%
attractions of regional equities is that over respectively. MSCI Saudi Arabia, based on
the last couple of months the valuation current data, if it were added to the MSCI
levels of regional markets and many Emerging Markets would occupy a weight
sectors have come down. of around 2%. On May 12 this year, MSCI
It’s this fair value that analysts believe also published a standalone index for
could trigger an equity pullback. Saudi Arabia which includes 19 stocks.
“The UAE market continues to look Analysts believe even before the Saudi
attractive, Abu Dhabi is at 11x P/E and market was allowed to direct foreign
Dubai at 9 so there is still room for growth. investment, foreign investors had access to
22 Saudi Arabia has been re-rating upwards it through swaps and P-notes. Further, the

as the market is opening up to foreigners much-hyped Saudi market opening has
in the month of June, it’s to be expected already been priced in by regional markets.
that the inflow of the market would push So when the markets officially opens on

www.wealth-monitor.com | June-July 2015

PORTFOLIO | Markets: What’s Next

Equities: : Abu Dhabi, Dubai and Emerging Markets (EM) Index 20 17

15
January 2014=100 Dubai MSCI Emerging YTD (December 31, 2014 to 27-May-15)
Abu Dhabi Markets (EM) YOY (May 27, 2014 to May 27, 2015)
160 EM Saudi Arabia
150 10 7.3 Qatar 5.8
140 Bahrain
5 Oman0.8 1
130 Kuw ait-0.8 -0.5-4.8 -3.1 -10.3
0 -0.6 Dubai-4.3-6.3
120 Abu Dhabi
-5 -9.4
110 Source: IIF (Data as of May 15, 2015)-12.8
-10
100
-15

90 -20 -20.3

80 -25

70
Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Apr 15

uwait, Oman, and Emerging Markets market direction. Last year showed signs Dr. Garbis Iradian, Chief Economist,
ary 2014=100 June 15 to direct foreign investment, of recovery in the appetite for IPOs in Middle East and North Africa, IIF
the region led by Saudi Arabia and the
chances of any substantial difference are UAE, with the record IPO of National 23
less. Kuwait Commercial Bank raising $6 billion.

As YoOnmg aWnei Lee, Head of Equities at This year however the primary market
Emirates ENMBD Asset Management, says, is expected to be quiet give the muted
“More importantly for Saudi Arabia would crude oil prices and the overall investor
be the inclusion of the market in the MSCI sentiment.
Emerging Market Index which could occur
as soon as 2017. This would pave the way More importantly for
for much larger foreign inflow.” Saudi Arabia would
be the inclusion of the
For now, he adds, the event is very market in the MSCI
Sep 14 Nov 14pmeuncehJtarnaat1io5tnecohMfniafcorar1le5igonneMinavbyeu1stt5orinscrineastehde Emerging Market Index
which could occur as
market would lead to better disclosure
and corporate governance akin to soon as 2017
international best practices. This would
have a fundamentally positive impact on As Giyas Gokkent, Senior Economist,
the market. IIF says,“The IPO pipeline was healthy until
the middle of last year. Some companies
A report by Washington-based may opt to wait until market conditions are
Institute of International Finance (IIF) more favorable, but they will eventually
‘Saudi Arabia: Opening Capital Markets list their shares. Although some IPOs are
to Foreign Investment’ also says, “Despite going forward, market conditions may
a market capitalization of $576 billion, mean a slow pace of listings.”
equivalent to 37% of MENA and 0.8% of
global stock market valuation, foreign The first quarter of this year saw
portfolio equity inflows have been small only one IPO of Orascom Constructions
until now. A growing allocation to Saudi that listed on Nasdaq Dubai through a
stocks by global investors could translate dual listing with the Egyptian Exchange.
to significant inflows within a few years if
the country is eventually included in major
benchmarks such as the MSCI emerging
market index.”
Return of the Primaries
The revival of the region’s primary market
is another critical factor the overall

June-July 2015 | www.wealth-monitor.com

PORTFOLIO | Markets: What’s Next

According to a report by PwC, BY INVITE

IPO activity in Q1 2015 was lower
compared to Q4 last year, both in
terms of the number and the value
of offerings. With a total of five IPOs
in Q4 2014, the total amount raised
was $7.3 billion, mainly driven by
National Commercial Bank’s IPO, “Opening the Arab Capital Markets:
making it the largest IPO in the Expectations and Requirements”
region during 2014 and the second
largest in the world, after the China by Dr. Fadi Khalaf, Secretary General, Arab Federation of Exchanges
based Alibaba.
Steve Drake, Head of PwC’s
Capital Markets and Accounting
Advisory Services team in the
Middle East region says, “The impact Since 2013, the Arab region is concentrated our doors and windows, allowing visitors
of lower oil prices was reflected in on the opening of the Arab Capital Markets to come inside? Putting our child in front
the subdued IPO performance in to the foreign investors. After the upgrade of all kind of external winds without giving
the region during the first quarter of the UAE and Qatar by the MSCI and him the chance to acquire progressively
of 2015 with investors staying away S&P Dow Jones, to become a part of a natural immunity? And then of course
from IPO’s coupled with uncertainty their Emerging market indices, the Saudi we will blame the wind for having existed
around valuations, creating caution market is getting prepared to be open to and blaming the visitors for having missed
amongst issuers. The outlook for the foreign investment. Many articles were staying in quarantine before interring our
IPO activity for the remainder of the written about the benefits for the region home, and blaming the bad guys for having
year is expected to improve with set for such opening and several comments played with our child.
IPOs and several announcements by were published about the depth that can
issuers mainly on the Saudi and the bring to our Markets. It is normal to have The above example shows us how
UAE stock exchanges.” such positive view when trends are mainly important is the restrictions defined by
UAE regulators have initiated positive. Still, it is worth reminding some some Arab Capital Markets prior to the
significant developments recently, analysts that during the global financial opening of their markets to the foreign
with Nasdaq Dubai’s collaboration crisis, they were accusing the international investment. Step by step and gradually, our
agreement with EGX and the new Hot Money for having stimulated the sharp markets will acquire the required immunity
UAE Commercial Companies Law correction on the Arab markets. Personally, and will be able to face the international
which is expected to, amongst other I believe that the Arab markets cannot hectic environment.
benefits, reduce the minimum float know a long term development if they stay
requirements, support existing isolated from the international markets. Gradually, our
shareholders sell down and allow Their opening is a must and there are plenty markets will acquire
a book building approach which of benefits, but we should consider the pros the required immunity
is expected to further encourage and cons of each and every new procedure and will be able to face
listings, he adds. taken on our markets in order to not only the international hectic
In a nutshell, the decline in the maximize its positive effects and minimize
region’s stock prices hasn’t reached its negative effects, but also to accept the environment
up to a point where liquidity is consequences of our choices in the future.
drying up, being experienced in Still, we should also take in consideration
many markets around the world — Our markets are still young compared the foreign investors’ expectations. For a
which for investors is turning out to the international markets. Saudi Arabia, successful opening of the Arab Markets,
to be a tortuous process to endure. United Arab Emirates and Qatar financial we will have to meet the international
There could be short-term pains and markets were established in the beginning requirements and needs, such as the full
volatility depending on the oil price of the last decade, like 14 years ago. disclosure, the trustable rating agencies,
movement, regional geopolitics and Compared to human life we can consider the analysts’ studies, the Market Making,
quarterly earnings reports, but in they are still in their teen’s age.This period of the shorting and securities landing, among
the mid to long-term the region’s life is the best period to grow, but still a fragile other requirements. I am sure that time
growth prospects, strong fiscal one. We have raised our child in a protected will tell us that a wise opening of the Arab
positions and monetary and fiscal home; we covered him so warm, we sealed markets will draw a success story for the
policies, all point to a sustained well windows and doors, we preserved him Arab region. Till then, we have full trust
24 upside of the economies and the from all kind of bacteria and barely allowed that the Arab Capital Market Authorities
him to play with his close relatives, isolating are caring enough of putting the train on
stock markets. Perhaps, it’s a good him from the external climate changes. Can the right track through their wise rules and
time for bargain-hunters! you imagine if we suddenly open widely regulations.

www.wealth-monitor.com | June-July 2015

3366ttBhh ürgenstock
The international forum for commodities and MdMereeiveeatttiiivnneggs
GGThEEeNNintEEerVVnAaAti,,o22n22a//l22f33o//r22u44mSSefeopprtteecmommbbemerro22d00it11i55es and derivatives

The Swiss Futures and Options Association (‘SFOA’) is DAY 1 - Tuesday, 22 September, 2015
oTnhceeSawgaisisnFhuotsutrinegs aitnsdinOteprtnioatnisonAaslsfoocriuamtiofnor(‘ScoFmOmA’o) disities, DAY 1 - Tuesday, 22 September, 2015
doenrciveaatigvaeins ahnodsteinmgeirtgsiinngtemrnaarktieotnsahleforeruinmGfoenr ecvoamomnodities, Welcome event: opening night cocktail party
Sdeepritveamtibveers 2a2nd- e2m4,e2rg0i1n5g. markets here in Geneva on Welcome event: opening night cocktail party
September 22 - 24, 2015.
Now in its fourth decade, the Bürgenstock Meeting will DAY 2 - Wednesday, 23 September 2015
cNoonwtininueitistsfoturardthitidoencaodf ea,tttrhaectBinügrgdeinstsitnogcukisMheedetsinpgeawkeillrs DAY 2 - Wednesday, 23 September 2015
fcroonmtiancureositsstthraedgitloiobneofof rathtirgahc-tlienvgedl idsetibnagtueisahnedddsipsceuaskseirosn. Commodities & Derivatives. Crucially important topics
from across the globe for high-level debate and discussion. oCformelmevoadnictieetso&thDeegrilvoabtaivl ceos.mCmruocdiaitlileysimanpdordtearnivt atotipveicss
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The world is changing fast. So is Bürgenstock. We are now IInntteerrnnaattiioonnaallrReegugulaltaotrosrsanMdeientviintegd(cglouseesdtssmeseseiot nb)e. hind
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eoxfcniteinwgmchaarknegtess, ntoewouorpfplaogrsthuinpiteievse.nWt.eSohawvheamt acdane ysoomu e Regulation Panel. Topics of interest to international
eexxpceitcintgfrcohmantgheesBtüorogeunr sftlaogcskh2ip01ev5emnte.eStoinwg?hat can you rReegguulalatotirosn, inPtaenrenla. tTioopniaclseoxfchinatnegreesst, btouyinatnedrnsaetillo-nsiadle
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• Up to 500 delegates from across the planet from players in derivatives markets.
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eadcgroesisntfhoermpalatinoent who are interested in real cutting- Emerging Markets: Hear representatives from exchanges,
edge information iEnmteermrgeindgiaMrieasrkaentds:tHraedainr grefpirrmessednitsactuivssesthfreosmtaetexcohfatnhgees,
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• This year there will be a trade exhibition for delegates please co+n4t1ac2t2K8e6vi0n2J1an0i3n at SFOA
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June-July 2015 | www.wealth-monitor.com

#Burgenstock2015
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www.wealth-monitor.com | June-July 2015

MARKETS C SMOS

In this section, Wealth Monitor analyses news and data from the regional and international
financial markets with specific focus on precious metals, base metals, energy, agri/soft,
currencies and Arabian bourses

Energy

Precious Metals

Currencies

Arabian Bourses

Precious Metals P.28 Agri/Soft Global View
Base Metals
The Silver Lining 27

Base Metals P.30

A Long Road Ahead

Energy P.32

The Elusive Search

Agri/Soft P.34

The Grain Glut

Currencies P.36

Bracing for Headwinds

Arabian Bourses P.38

Technical Analysis: TASI, ADI & DFM

June-July 2015 | www.wealth-monitor.com

PRECIOUS METALS | Holding Steady

SilTvheerLining

Precious metals hold steady as strong dollar continues to be the headwind. However, gold is expected to
bounce back to its safe haven status on the slightest hint of panic in the global financial system

Gold prices struggled to hold above increased by just 1.1% to 326.68 tonnes Silver: Moving Sideways
the psychologically important in Q1 according to the China Gold For most part of this year, silver prices have
$1200/oz in May although it Association, as equities was the flavour of been oscillating sideways at $16.50/oz.
touched $1224.40/oz in April. The dollar the season in China. Silver prices are trending similar to gold
index had a roller coaster run and breached In India, poor monsoon dampened on reduced investment demand. Industrial
support at 96.16 in the closing days of April physical demand for gold and low oil demand continues to grow, particularly in
and rebounded at 99.99 in mid-April, but prices put a brake in gold demand in the China, in a number of sectors.
has since started to trend lower, recently Middle East. Similarly, lack of interest from Demand for the metal is solid in a
reaching a low of 93.88. The correction in ETF investors pulled down support for gold number of sectors, including renewable
the dollar has come about as the market rally. solar applications. Mine supply continues
now feels that interest rate hike by FOMC Gold mine output continues to grow its robust expansion, with gains mainly
in June is quite unlikely. Gold price failed strongly, aided by falling costs and in the Americas and Asia, both from new
to take advantage of the dollar decline weakening currencies in a number of mines and as by product from new base
and it appears that the inverse relationship producing countries, the World Bank’s metal production, the World Bank report
28 between dollar and gold price is no longer report on Commodity Markets Outlook says.

playing out in the market. says. It is expected that the gold prices Investors in Silver ETFs added a further
Lack of demand from China is another would react positively once the equities 168 tons of silver to their holdings in April,
major reason. China’s gold demand and bonds enter the correction phase. taking holdings to 19,346 tons. Silver prices

www.wealth-monitor.com | June-July 2015

PRECIOUS METALS | Holding Steady

are likely to fall in June if the industrial such as London and Paris would dampen forward, silver prices are expected to fall 8%,
demand does not pick up. platinum demand further. Platinum mine as the metal is generally thought to be more
Platinum: Loses Sheen production is coming back to normal from vulnerable than gold to lower investment
Platinum prices were depressed and fell the five-month strike in South Africa in H1 demand. Gold prices are projected to fall
by 3% in Q1, owing to large stocks and 2014. Holdings in the Platinum ETFs are at 2%, largely driven by expectations of a
weak import demand from the jewellery 2,564,601 oz, compared with 2,640,828 oz rising US dollar and interest rate hikes by
sector in China. Demand from the auto at the start of the year. Platinum prices are the US Federal Reserve, says the World
sector in Europe has been less than expected to soften further in June. Bank report. Geopolitical and financial risks
expected. Proposals to discourage use remain, and are likely to continue their
of diesel fuel in major European cities Overall, precious metals prices are influence on investor sentiment.
projected to decline 3% this year, mainly
due to reduced investment demand. Going

Precious Metals- Average Annual Price ($/toz)

Source: World Bank Quarterly Report, April 2015 and Scotia Bank Metal Matters May 2015Silver

Source: World BankJan-1De9c.(12014)Jan-D3e1c (.21012)

Gold Jan-2De3c.(82013) Platinum

Jan-1D,e2c6(26014) Jan1-D,e6c7(20012) Ja1n-,D3e8c (42014) Jan1-D,e5c5(21012)

29

Jan-1D,e4c1(21013) 1,487

June-July 2015 | www.wealth-monitor.com Jan-Dec (2013)

BASE METALS | Awaiting Revival

A Long Road
Ahead

Base metals continue to be under pressure from a strong dollar and tread water as
consumption in China slows down

Base metal prices are showing mixed
trends with recoveries in copper and
aluminium, after the People’s Bank
of China announced cuts to the Required
Reserve Ratio, which could support lending
to the manufacturing and property sectors.

In general, base metals prices fell on
weak demand, continued gains in supply,
and high stocks for a number of metals.
China’s import demand was noticeably
weak in the first quarter of 2015. China,
which accounts for nearly half of global
metal consumption, has seen its industrial
activity and metal demand growth
moderate in recent years as it transforms
from an investment-led economy to a

30 consumer-driven economy. On the supply

side, large investments in earlier years has
brought significant capacity expansion in
metals like nickel, copper etc.

www.wealth-monitor.com | June-July 2015

BASE METALS | Awaiting Revival

Copper: Dwindling Demand Base Metals Average Annual Price ($/mt)
Copper prices fell 12% in Q1 this year
but rebounded in April. Demand has ec
been weak, notably in China’s property 2014 Jan-D
market, and there are concerns about
slower investment in its construction 17,548
and infrastructure sectors where much 2012 Jan-Dec
of copper consumption is concentrated.
There are also ongoing threats from 1,867
substitutes, notably from lower-priced 2,161
aluminium. Prices are expected to firm up 6,863 7,962
in Q2, 2015. 16,893 1,950
Nickel: The China Factor 2,023
Nickel prices fell 9% in Q1, 2015, with
March prices half from their 2011 high. 1,911,8047 15,032
The slide in prices continued in April. 7,332
High prices and large investments led to
significant new capacity and resulted in 2013 Jan-Dec Source: World Bank
substantial surpluses in recent years. LME
inventories continue to climb to record Aluminium Nickel Copper Zinc
highs in part because of weakness in the
stainless steel sector which consumes
about 70% of the world’s refined nickel.
According to the ‘Commodity Markets
Outlook’ by the World Bank, China, which
imports significant quantities of nickel
ore from Indonesia to produce nickel
pig iron (NPI), has been drawing down
its stocks and partly replacing them
with lower grade ore imports from the
Philippines. Once inventories are drawn,
the nickel market is expected to tighten,
as the Philippines cannot fully replace the
losses from Indonesia.

Source: World Bank Aluminium: Staging a Comeback report. The zinc market is facing supply 31
Aluminium prices fell 9% in Q1, 2015 constraints from closure of several large
and the price decline continued in April, mines due to exhaustion.
caused by weaker demand and higher
exports from China. The market outside Price Outlook
China has been in deficit for some time Base metal prices are expected to decline
because of a number smelter closures, by 11% in Q2 due to new supplies and
but China’s smelting capacity continues slowing demand growth in China, World
to expand and has created a global Bank estimates. The largest decline is for
surplus. Aluminium demand remains iron ore, projected to fall by 30% due to
broadly robust due to its diversified use in significant increases in new capacity. Most
multiple sectors particularly in transport, other prices are also expected to decline
construction, packaging, electrical, and as many markets remain in surplus and
machinery, and recent strong demand with high stocks. Markets are expected
outside of China, the World Bank report to tighten in the medium term due to
says. reduced capital investment, stronger
Zinc: Lacking Zing global demand, and some special factors,
Zinc prices fell 7% in Q1, 2015 despite including Indonesia’s export ban and
falling LME inventories, due to weak upcoming closures of a number of large
demand to galvanize steel, which zinc mines.
accounts for over half of global zinc
consumption, according to World Bank

June-July 2015 | www.wealth-monitor.com

ENERGY | Looking Up

TSEHELAEURSCHIVE Crude oil prices continued to climb
Is the crude oil price stabilising, or has it entered during May 2015 with the OPEC oil price
the lower phase of a commodity super cycle? touching 2015 peak level of $64.96/b
on May 6. The price rally is partly the result
32 of a slowdown in US shale oil production and
the ongoing conflicts in Yemen. Prices rose in
May on the back of positive factors such as an
uptick in demand, moderation in in US shale
production, though markets feared over the
supply flow due to the Yemen situation.

Crude oil futures ICE Brent and Nymex
WTI moved up, with ICE Brent above $60/b
for the first time this year. The rise was driven
partly by the supply glut, that caused prices
to fall by half since last summer and the
higher demand projected ahead of the peak
US driving season. Oil buyers also fuelled the
rally on expectation that US crude output
will shrink further after two straight weeks of
decline.

www.wealth-monitor.com | June-July 2015

ENERGY | Looking Up

ec ec ec Annual
Average

Price
($/bbl)
2014 Jan-D
2014 Jan-D
2014 Jan-D

Source: World Bank
2012 Jan-Dec
2012 Jan-Dec
2012 Jan-Dec
98.9 112.0 96.7 108.9 93.1 94.2

108.9 105.4 97.9
2013 Jan-Dec 2013 Jan-Dec 2013 Jan-Dec

Demand to Pick Up is forecast to decline, although quarterly prices for a long period, as experienced in
According to the OPEC Monthly Oil Report supply growth in 2015 is expected to the 1980s, the report said.
released on May 12, total world oil demand decline in all quarters on a y-o-y basis, as
for 2015 is estimated to expand at a higher per the OPEC Monthly Oil Report of May. A long period of low oil price would be
rate than the previous year, growing by 1.18 The main factors for the lower growth due to the long-term nature of upstream
mb/d. Overall, the average demand of oil is prediction in 2015 are low oil price investments, assuming the historical
expected to touch 92.50 mb/d. Further, it expectations, the declining number of high oil prices in recent decade have led
said oil demand from Americas is expected active rigs in North America, the decrease to excess global oil production capacity
to be on the upside led by transportation in drilling permits in the US and the development. When the oil price drops
and industrial fuels segments. reduction in the 2015 spending plans of it can take many years for actual demand
international oil companies, the OPEC to catch up with the available capacity
“World oil demand growth for 2014 was Monthly Oil Report says. and drive oil prices up again - i.e. what is
left broadly unchanged from the previous
month’s report. Growth for the year stood According to World Bank’s estimates, known as a ‘commodity super cycle’, the
at 0.96 mb/d and total oil consumption at energy prices in 2015 are projected to fall A.T. Kearney report maintained.
91.32 mb/d. In 2015, world oil demand is 42%, largely reflecting a 45%
anticipated to grow slightly more than the drop in oil prices, which remain
previous month’s projection, asFautruerseuolitl oprfiace wipll rroisjeegcrtaeddutaollyabvuetraregmea$in5b3e/blobwl.
positive revision to OECD Europe. W$8o0rplderobilarrel byH2o0w21eavcecro, rdtinhgetolmataersktet paper Future oil price will rise gradually but remain below
dmthebeHm/rodaewnptoedovrriteesras,nacoihdtwh.areeoxupcnerducd9te2ed.5t0ooimlB$1gr2pebr0enopr/tbdwCrauircirrnvbeeelssy2011a.15r8e,” from global strategy and $80 per barrel by 2021
management consulting firm
A.T. Kearney,‘Beware the7/1O/2i0l 1P4rice Brent Curves 7/1/2014
Super Cycle’ says, “The d5e/8p/2r0e1s4sed $ per barrel 5/8/2014
Source: OPEC Monthly Oil Report; World Bank; A.T. Kearney 13sa/2i2/n1/l2c/a20e10s41tl4iantge 120 12/1/2014
Source:IIF 110 3/2/2014
Source:IIF
expected to remain under pre1s1s0ure despite oil prices predominant 100
US oil inventories have decline10d0 for the first last year could herald
time since January this year, according to trend if, as evidence suggests,
a recent IEA monthly report.9T0 he agency we are now facing the low-price 90

said that oil supply continues80to outstrip segment of an oil ‘super cycle’.” 80
demand. Oil supply was tahlempo7rs0etv3io.2usmybea/dr. There is still much volatility in 70
more than what it was in
60 the global oil industry regarding
oil price, and a lot of speculation
60

Will the Tide Turn? growth 5i02n01420210515 on how long the depressed 50 33
Non-OPEC supply is2016oil 20p17rice2s018wil2l019con2t0i2n0ue.202B1ut, 2014 2015 2016 2017 2018 2019 2020 2021
expected to experience increases in 1Q evidence suggests the industry
and 4Q, while supply growth in 2Q and 3Q may have to face depressed oil

June-July 2015 | www.wealth-monitor.com

AGRI/SOFT | Prices Dip

GRGThlAuetIN

The world is sitting on a huge grain mountain, putting
downward pressure on food prices

34

www.wealth-monitor.com | June-July 2015

AGRI/SOFT | Prices Dip

Food grain prices continue the 2015/16 season in spite of Rice, Thailand 2014 Jan-D ec 525.12012 Jan-Dec
to fall as inventories grow the forecast decline in 2015 A1($/mt)
substantially. The US production. Following two 425.1
Department of Agriculture consecutive years of record Meat-Sheep
in its April 2015 assessment crops, world wheat inventories ($/Kg) 474 Average Annual
projected that global are at sufficiently large levels. Price
production of wheat would This, coupled with less buoyant 2013 Jan-Dec
increase by 1.3% while output growth in demand for feed 2014 Jan-D ec 2012 Jan-Dec
of maize and rice would remain wheat, could contribute to
roughly at the 2013-14 levels. fairly stable market conditions 284.9 313.2 Wheat, US
The stocks-to-use (S/U) ratios in the new season,” the FAO
are expected to increase in report says. HRW ($/mt)
maize and wheat but decline
for rice, says the World Bank Similarly, a prolonged period 312.2
report on ‘Commodity Markets of low international rice prices
Outlook’. is prompting governments in 2013 Jan-Dec
exporting countries to shift to
Source: World Bank Quarterly Report April 2015 & FAO Food Outlook, May 2015. The wheat and maize less supportive rice production 2014 Jan-De c2 012 Jan-Dec Source: World Bank
markets are well supplied. policies and reducing public
Wheat prices declined more rice inventories to dampen 6.39 6.09
than 7% in Q1 on favourable global production growth in
prospects of good harvest in 2015, it adds. 5.17
the EU, Russian Federation,
China, and India Maize prices World sugar production is 2013 Jan-Dec
did not change much during expected to increase marginally
the Q1 but dropped by 17% in 2014-15, and will still exceed 2014 Jan-D ec 2012 Jan-Dec
compared to a year prior, as global consumption for the
crop prospects in Argentina, fifth consecutive year, resulting 0.37 0.47 Sugar- World
Brazil, and South Africa are in yet another increase in world ($/kg)
favourable. sugar inventories. International
trade in sugar is anticipated to 2013 0.39
Crop prospects are good for remain relatively unchanged
newly planted crops in China, from last season, as a result Jan-Dec
Mexico, and in India, where of ample availabilities in
harvest is almost complete. traditional sugar importing 35
Rice prices averaged $417/ countries.
ton during Q1, 2015. The U.S.
Department of Agriculture World meat production is
assessed global rice production forecast to expand by 1.3%
for the 2014-15 seasons at this year, mostly driven by pig
474.6 million tons consistent and poultry meat. The trade
with an S/U ratio of 20.4 expansion is predicted to slow
percent. Production declines to 1.7% this year, constrained
are expected to take place in by limited export supplies and
most of the key rice producers subdued import demand.
such as China, Philippines, and
Thailand. As regards oil crops, the FAO
report says a further significant
According to Food Outlook, easing of oil and meal market
the bi-annual report on global fundamentals is expected in
food markets by FAO released 2014/15, thanks to a record-
in May 2015, excessive wheat high soybean production.
supply is likely to persist in the Combined with forecasts of
2015-16 season. Thanks to two only tepid demand growth,
consecutive years of record inventories are expected to rise
crops, world wheat inventories sharply. Accordingly, prices for
are at comfortably large levels. oilseeds, oils and meals are on a
This could lead to stable market marked downward trend.
conditions in the new season.

“Overabundance of wheat
supply is likely to continue into

June-July 2015 | www.wealth-monitor.com

CURRENCIES | Dollar Cools

Bracingfor

Headwinds

The US dollar takes a breather and it may need a big
push to get its momentum back

The US dollar dropped nearly 2% in well supported by job growth, cheaper year, solid domestic sales should maintain
April, the worst monthly performance gasoline prices, low borrowing costs, and expanding manufacturing production.
since September 2013. According to a rising stock market prices and home values.
At the same time, the US economy is
report by National Bank Financial Markets, However, the recovery in the US housing getting a lift from a pickup in local and
a division of National Bank of Canada, market has been slow, with homes sales state government spending, and a reduced
“Weaker than expected US economic data and construction restrained by tight pace of federal fiscal restraint. Headline US
in the first quarter of the year had markets credit conditions, and limited inventory in inflation dropped to -0.1% y/y in March
pare back expectations of Fed rate hikes. some segments of the market. The overall on lower energy prices. However, core
But the US economy is stronger than what’s momentum in industrial activity, business inflation is holding steady at just under 2%,
depicted by Q1 results, the latter being spending and capital goods orders has with lower import costs and still-restrained
impacted by temporary factors such as bad softened in recent months alongside the wage gains tempered by firmer services
weather and port strikes. So, growth and slowing down in oil & gas drilling and price trends. The dollar may not throw any
hence rate expectations should bounce sluggish export sales.
36 back as those factors dissipate.” surprises in the near term.
According to a report by the Bank of
In the US, growth is expected to gather Nova Scotia (Scotiabank), while US dollar Volatile EUR
renewed momentum in the spring. strength and moderate global growth are The euro remains in a volatile territory.
Consumer confidence and spending are expected to weigh on export activity this The economic outlook has shifted as

www.wealth-monitor.com | June-July 2015

CURRENCIES | Dollar Cools

data releases suggest a cyclical turn to show up imminently and put output economy will continue to recover at a
with monetary dynamics improving growth back on an upward trajectory. modest pace and the Bank of Japan’s 2%
and inflation expectations rising. This Consumer spending should remain the inflation target forces the central bank to
development has contributed to the biggest driving force behind growth adopt a more aggressive policy. The JPY is
EUR’s April rally, which could extend in thanks to robust real disposable income expected to be range-bound in June.
the near-term, the Scotiabank report says. growth, it adds.
Nevertheless, the lack of progress on CNY: Holding Its Ground
broad-based structural reform, subdued A report by CIBC World Markets Inc, The Chinese yuan (CNY) is range-bound
growth outlook, negative interest rates and adds, “The unexpectedly clear-cut election concealing large intra-day volatility in
unsupportive investment sentiment may results saw David Cameron’s right of centre the context of clear bias towards further
pull the EUR lower. Conservative party hold a parliamentary monetary easing by China’s central bank.
GBP in Pressure majority for the first time in nearly twenty The Peoples Bank of China announced
The Bank of England kept the interest rate years. Sterling was the main beneficiary rate cut for the second time in less than
intact at 0.5% to help the UK economy in financial markets as investors, who had four months, as it tries to stimulate
recover from a deep recession. Inflation previously been mindful of political risks, economic growth. The central bank’s
slid to all-time low. With the annual rate pared shorts on the currency…Although decision reflected growing concerns over
of inflation at 0.3%, there is no risk of the election result provided a short-term China’s economy as it struggles with its
persistent deflation in the country. boost to the currency, it may put pressure domestic problems, including a slumping
on GBP in the medium term…Our base property market and deflationary threat, a
GBP’s resiliency (and late April rally) in case is for GBP weakness over the next quarterly report by Dukascopy Bank says.
the face of an uncertainty election and couple of quarters with GBP-USD hitting China’s economy may slow this year as the
uneven data releases suggests a broader $1.52 in Q3. The prospect of a referendum country is facing the risk of deflation and
shift in sentiment, the Scotiabank report before the end of 2017 on EU membership sluggish demand undermines economic
says. Technically, the currency appears to could also become a medium term performance raising risks of job losses, the
have bottomed but has yet to establish a headwind to sterling.” report adds. The economy is projected to
trend. JPY: Within a Range grow between 6.9% and 7.1%. Consumer
The Japanese yen (JPY) appears to have inflation would also stay weak throughout
Business sentiment is elevated, with the found a narrow and comfortable trading this year. The CNY is expected to retain its
composite PMI close to 60. This confirms range between 118 and 122 per USD, strength against major currencies.
that the windfall from lower oil prices despite a disappointing domestic outlook,
is feeding through to businesses. While Scotiabank report says. The Japanese
this failed to boost Q1 GDP, we expect it

Source: FX Outlook, May 2015, Scotia bank; National Bank Financial Markets; Dukascopy Bank EURUESUDRUSD 66..23616.31USUDSCDNCYNY
6.26
1.40 6.226.22
1.40 6.176.17

1.30
1.30

1.20 1.20

1.10 1.10 6.136.13

1M.0a0y-101M.0a0y-10May-1M1 ay-11May-1M2ay-12 May-1M3ay-13 May-M14ay-14 MayM-1a5y-15 6.0M86a.0yM8-1a0y-10 AugA-u1g4-14 NoNvo-1v4-14 FeFbe-b1-515 MMaayy-1-155

123 12U3 SDJUPSYDJPY GBGPUBPSUDSD

115 115 1.681.68

107 107 1.581.58
99 99

91 91 1.481.48 MayM-1ay1-11 MaMy-a1y2-12 MaMya-1y3-13 MMaya-y1-414 MMaayy-1-155 37
83 83 1.3M81a.3yM8-1a0y-10
7M5ay-107M5ay-10May-11May-11May-1M2 ay-12 May-1M3ay-13 May-1M4ay-14 May-M15ay-15

June-July 2015 | www.wealth-monitor.com

ARABIAN BOURSES | TASI Technical Analysis

By:

Tadawul All Share Index (TASI) Consolidating Near 9900

SIGNIFICANT LEVELS FORECAST RREECCOOMMMMEENNDDAATTIIOONNSS::

The first resistance for this market is present Although the market remain directed Long term traders R3 1
near the previous high of April at 9900. towards our medium term target of R2 1
Further lays the upward channel level at 10500, we would like to see indicative Long from 9750 targeting 10800 R1 9
10500 which coincides with an important developments outside the current trading and 13500
Fibonacci daily target before reaching range. A move below 9550 will directly R3 5
towards long term target of 10800. To the increase bearish pressures and will result Medium term traders R2 4
downside the market have to challenge in a slide towards 9400-9350 zone while R1 4
the daily moving average at 9550. Below a surge above 9900 serves as a clear Buy above 9900 targeting 10500
this level we have projection area outlined indication of a hike in the direction of the and 11800 S1 4000
at 9550 with previous swing level marking awaited 10500. S2 3850
multiple tops at 9000. Short term traders S3 3600
COMMENTARY As long term investors remain long in this
What Happened? market from the areas around 9750 aiming Waiting for reversal signs before at- Buy ab
The Saudi index is floating above its daily to target 10800 later this year, Medium tempting new long positions and 54
moving average capped however by term players should still be waiting for
the intraday range of 9900-9550. Prices 9900 to give way before they reposition Mediu
stalled near this area as volume dropped and reinstate their longs once again.
in the past trading sessions but remains Buy abo
to be higher on bullish days and lower on On the other hand, Short term market and 505
bearish ones which supports the idea of an traders who are out of this market at current
upward directed trend as long as the index times should be aiming to reposition only
holds above 9550. after clear bullish reversal signs to ride the
next bullish wave.

Trend Analysis R3 4500 Projection level Source: Tradepedia: Data as on May 26, 2015
The long term trend of this index remains R2 4250 Previous Top
clearly upward directed after it successfully R1 4175 Intraday pivot
completed a trend reversal pattern above
9750. Even though the market is correcting R3 10800 Long Term Target S1 9550 Previous Bottom
lower from its top of 9900 the medium R2 10500 Medium Term Target S2 9350 Previous Bottom
term movement continue to develop in a R1 9900 S3 9000 Daily eMA
sequence of higher daily tops and higher Previous Top
daily bottoms above the exponential
moving average and inside the upward
channel. Volume dropped in the last week
and this might be the reason behind the
stall in the velocity of the upward move.
Lately however, the short term movement

pisredpeavreLaltooiopnnigngfoterinritmas nctoernxatsdodleiidrreascttivioenaml omdoevien.

WtLroeitnnhgd,tfrhwoiesmpla9rc7ek5fe0or fttaocrlgsaeeritetiynagimn1o0tv8he0e0bsahcokrtabteorvme
tahned 919305000daily top before ruling out the

possibility of a deeper correction towards

38 9350.

Medium term traders *R-resistance; *S-support

Buy above 9900 targeting 10500Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

and 11800 www.wealth-monitor.com | June-July 2015

Medium term traders Medium term traders

Buy above 9900 targeting 10500 ARABIAN BOURSES | DFM TechBnuiycaablovAen4a73ly0stairsgeting 4850
and 11800
and 5050

By:

Short term traders R3 5000 Previous Top S1 4540 Recent Low Short term traders

Waiting for reversal signs before at- R2 4850 Projection level S2 4430 Retracement Level Waiting for bullish reversal signs
before attempting new long posi
DFM Lost its Momentum in a Slidetemptingnewlongpositions
R1 4700 Pivot point S3 4250 Previous Bottom

SIGNIFICANT LEVELS RECOMMENDATIONS:

Beyond the intraday pivot point of 4175 term Bullish movement in the direction of
lies the first resistance marked by the daily 4500. Although the index is trying to find
previous top of 4250. Above this zone the support to initiate a new Bullish wave, a
index should face further pressures at decisive dip below current levels will spark
the double Fibo level reflecting the 61.8 profit taking pressures and pave the way Long term traders
retracement of the 5400-3000 move. To for further declines towards 3870 and 3700.
Long from 4010 targeting
RR32wzthoheni44ced52h0o5ow00sfhn4os0uid0ld0ePPrrpaleoinerjvoesdivoctuitbdihsoeeenTloolarepwenvtertliamhceepmofirretsnatSSnts12twzoliinnn43gee805000aredpMvoaesndiRSttiaiewLuogtomnirenangicnoegleftmtevthtereehimlnsertmmlematvrroteakrvldeaeetdribsneeryassonhnoadtutle4dm25p0ttakttooe 4500 and 5250
R1pofred4ve1iof7eu5nssbeoatttoI3nmt8r5af0rdo.amyBepJliaovnowtuaitrywaenhdaSfvu3ertthhe3er6004riL4do5en0gthaRfenerotdrmbau4c9le7l7im0s50he0.nwttOalanervgveeethtliienngftl1hip0e8s0did0iree,ctfuiornthoerf
R3 M1e0d8iu0m0termLotrnagdTeersrm Target S1
R2 B1uy0a5bo0ve04250 tMargeedtiinugm Term Target S2
down the 3350 retracement level. cBaaennacdries1lh3a5ll0m0poomsiteinvetusmcenbaerilooswan4d0i0n0crewasiell R1 4945900an0d 4700 Previous Top S3
COMMENTARY
downward pressures leading to the
liquidation of all long positions.
What Happened? MsideSedhfoiourrtmttheretmetirtmrmaedbterresainsdgheoarunsldd remain on the
Dubai index have been moving lower from patiently wait Short term traders
the ever since it reached the resistance
zone near 4250 and reached back towards aBfcinonuovrdyrerac1eslb1ctemo8taiv0oree0nnr9ets9vb0eaer0nfsodtaarlreresgpiegtotrnisynsiitngiiogn1n0t5tihno0is0thpdisooumwrnarwtkhaeertdi.r Waiting for a bullish reversal signal
its daily exponential moving average near before initiating new long positions

the important level of 4000.

Trend Analysis Short term traders R3 5000 Previous Top S1
As we know by now the long term trend R2 4850 Projection level S2
remains to be upward bias after the Waiting for reversal signs before at- R1 4700 Pivot point S3
successive close above 4000 reflected a tempting new long positions
clear cut away from the range mode which
Source: Tradepedia: Data as on May 26, 2015 was capping the index since early 2015.
Moving to the medium term movement
one can clearly notice that this market lost
its momentum and is currently holding
at the last line of defense represented by
the daily exponential moving average
slightly below 4000. Bearish pressures are
escalating as the short term trend has been
moving lower by the day in a sequence of
lower intraday tops and bottoms below
the hourly moving average backed by the
MACD which is currently flowing below the
equilibrium level. This mode is warning of a
deeper move lower if 4000 gives way.

FORECAST R3 4500 Projection level S1 4000 Swing level 39
Although the move above 4180 serves R2 4250 Previous Top S2 3850 Retracement level
as an early indication of renewed bullish R1 4175 Intraday pivot S3 3600 Retracement level
pressures toward the previous top, a
further rally above 4250 would be needed
to confirm a resumption of the medium

*R-resistance; *S-support

Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

June-July 2015 | www.wealth-monitor.com

ARABIAN BOURSES | TADASI ITTeecchhnnicicaal lAAnnaalylyssisis

By:

Abu Dhabi Exchange General Index (ADI) Losing its Steam

SIGNIFICANT LEVELS FORECAST RREECCOOMMMMEENNDDAATTIIOONNSS::

Discounting the current short term Long term traders
If once again below the 4540 level, ADX developments, future developments
L5oo0m0n9g75t0ertamrwrmdgeetaitatrlirilalrnaykfgdcaeee1bcd0mreo8sta0eatt0oncmt4h4lea3alv0ltee.nl4Lgo2oef5w0twhereaitRRshl4i23e2ttshh5e0et11h-004l6ea7185s3.tp0080r00%leinmvFeiooibvuMLooeosfendgiuTwOi4mne5uirl4mTlrm0eeTroscmxhamoprongTeoreaftnsitr-retgtmueemrtstmhaetfSShood21ursitcsrheilccal99aott53imboo55rnrie00snagokdfbebetneaaPPeccrrrxitkeestvvhabiiwooweuuallaassovvcBBweekoo. ttttoomm Buy above 4730 targeting 5000
defense. To tshtaertuinpgsidferotRmhe1tinhde9e9xi0m0wpiollrftaacPnerteviotsuouswrTgaoerpdasb4o4v5e04a6n8Sd03lionwd9eic0ra0nte0esarth4a3t0D0tahiwleyhebiMlueAllas and 5450
resistances
trmlaedvueeltrlispolef 4700 representing a cluster of Medium term traders
m term Tops/Bottoms. Above this level the took over control again and signals the
resumption of the uptrend in the direction Buy above 4730 targeting 4850
ve 9900 targemtinagrk1e0t50w0ill shoot towards the projection of 4730 and higher at 4850. and 5050
00 zone of 4850 before reaching near the tops No trade is in play for the medium term
around 5000. traders that should stay on the side at the Short term traders

Short termCOtMraMdeErNs TARY current period and patiently wait for clearer Waiting for bullish reversal signs
R3 5000 PreviotmruyasirnTkogepttodaetvteelmoSpp1mt aenn4yt5sfr4ae0bshovloen4Rge7pc3eo0nstibtLieoofnwosre. before attempting new long positions
g for reversalWsihgnats Hbeafpopreenaet-d? whRRaes21sabw44e78et05nh00e lionsdinePPgxirvoojetcarptenoivoSiennhertlosyeaervtleptloeanrtmtetrhmSSne32ssaetrhkeal44ett24vwp53elil00alslyrefeorfslresPRcahretneotfvryuaaitolcdibuegmsuukBleeelioensitphnttoLemvel
ng new long tAphobseuitiuonpDswhaarbdi market
lately as
dropping beneath its 55 days exponential this downward correction before trying to
moving average and forming a lower top attempt an early reposition.
on the daily chart.

Trend Analysis
The long term trend formed a higher
bottom on the weekly chart and is
arettveemrspLaltoinpngagttettroenrmtchoamtt rpwaleidltleesrwsaitchsigthneificbainast
R3 10800 Long Term Target LonSg1term9t5ra5d0ers Previous Bottom Bu
Lasmconiodnedmedg1wpifu3larem5oyt0mse0tmley9ra7mn5bn0muetlorlaiwvsreghiteihstisansibtggiolnl1vsd0eoe8fv0ef04alo7ti3pg0iun.egnTienhaear R2 10500 Medium Term TargetLongSf2rom 409130 t5ar0geting Previous Bottom an
4500
Me
R1 99004250
Buy
4175 and
BMuPIPttidtIenynnhhurritoepdreeartjnvatphbeihMiduuocieoentatupAvhmiylgsoaepCehnTpceiDi9brokigtlrv9epeehfofov0lolrteoirfea0rcrmlwtncuitlgntaseiegtramthogrrweenerateftrirdftiemtSSSlanhhenemg312oecdirttve1isesnsis0ndheg4335gqot6800crbru005a0htayid000lavitebreetarhrrrscaimeutgesmephrtRRSirrosleeeawiitucnttnniiecrrlendddaassg.cceelemmveeelnntt level Previous Top 4500Sa3nd 52950000 Daily eMA
level Wa
Medium term traders bef
anwcdoh1mi1cph8l0ei0stiopnrevoafiliangbethareiswheraekvneersssalafptaetrttehrne Source: Tradepedia: Data as on May 26, 2015
Buy above 4250 targeting
4450 and 4700

below the intraday bottom of 4615. What
adds to our concern is that this movement
c4o7r3r0ecrtSaelhdlyomarnotdrteeMtrAhmaCnDt6rd1aip.8dp%eedrosfinthneeg4a2t5iv0e- Short term traders
Wteeayriertiictnolegrayfr.obGrurivellevisnehrsrteahvleesiargsbnaolsvpbeae,tfttoerarrendsearrtes-flsehcotuinldg R3 5000
R2 4850 Previous Top Waiting fSor1a bull4ish5r4ev0ersal signRalecent Low
Projection leveblefore S2initiating n4e4w3lo0ng positioRnsetracement Level
telamrgpetrinpgonsietiwveloimngplpicoastiitoionnssand paving the R1 4700 S3 4250 Previous Bottom
40 way for a resumption in the march toward Pivot point
4700 area before accumulating new
positions.
*R-resistance; *S-support

Any opinions, news, research, analysis, prices, or other information contained in these reports or any other material provided by Tradepedia LLC. is provided as general market commentary and does not
constitute investment advice or a solicitation to buy or sell. This info does not take into account your personal circumstances so please do not trade or invest based solely on this information.

www.wealth-monitor.com | June-July 2015

ARABIAN BOURSES

By:

Markets In Numbers

Volume Shockers Buzzing Stocks

Stocks that went up/down massively in volume terms Stocks that saw the highest rise/fall in % change of price
during the month

S ym bo l 1 M o nt h 1 M o nt h S ym bo l

IFA .DFM 29.53% -24.50% UPP

NIND.DFM 28.71% DFM -21.74% GGICO

S ym bo l V o lum e % C hg V o lum e % C hg S ym bo l GULFA 19.00% -19.73% ARTC

DU 5190.29% DFM -47.16% GGICO ADSB 92.68% -30.36% ESHRAQ
TAKAFUL-EM 3761.49% -41.11% ARTC NCTH
EMIRATESNBD 1794.33% -36.51% UPP DRIVE 17.45% Abu Dhabi -28.06% NMDC

TKFL 14.91% -23.19%

ASLAK 961.44% -95.15% HERFY FOODS
BSFR ARNB
880.09% TASI -86.78% Jazira Takaful SLTCO 37.79% -47.44% SHAKER
AMANA INSURANCE SABBTKFL 21.61% -17.05% ANB Insurance
652.99% -85.34% EIC AL-AHLIA 19.96% TASI -14.01% SOLIDARITY
ADSB RAKCC
AGTHIA 1560.14% -96.77% ADNH

NBAD 761.60% Abu Dhabi -96.43% MERS QGMD 33.43% -11.18% DBIS
UDCD IHGS 26.70% -9.71% GISS
QNBK 432.24% -90.89% QIBK QATI 25.39% Qatar -7.39% MARK
GWCS
1154.42% Qatar -86.74%
BRES 449.58% -80.09%
351.87% -68.37%

Index Watch (YT D)

Key Events to Watch For TASI C hange
1443.17

Date Currency Data ADI DFMGI Source: Tradepedia: Data as on May 26, 2015
June 1 C N Y 86.16 285.52 QE
June 3 EUR M anufacturing P M I
June 5 USD EC B P ress C o nference 142.48
J une 10 G B P N o n-F arm Emplo yment C hange
J une 11 US D M anufacturing P ro ductio n m/ m -59.63
J une 17 US D Unemplo yment C laims BASI -226.08
J une 18 US D F OM C Statement
J une 22 US D Unemplo yment C laims KSE
J une 23 C N Y Existing H o me Sales
J une 23 E UR H SB C F lash M anufacturing P M I TASI % C hange
J une 30 G B P German F lash M anufacturing P M I 17.32%
J une 30 C A D C urrent A cco unt
GDP m/m DFMGI
7.57%

ADI QE 41
1.90% 1.16%

-4.18% -3.46%
BASI KSE

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TAKING STOCK | REITs

InvesttRhinEegIT Way

Globally, Real Estate Investment Trusts have emerged as an alternative way to invest in properties and to
fetch moderate to high returns over a long-term. However, investing in REITs is not completely free from risk
If you’re skittish about putting your money
into the real estate because of its illiquid professionally managed property fund that gaining traction in the region.
nature and because of the fluctuations in invests in income-producing real estate thus Last year saw the first listing of a Real
providing stable rental income or profits
Estate Investment Trust (REIT) on an
the property prices, Real Estate Investment from the property sale, and distributing exchange in the GCC, when in April trading
Trusts (REITs) give you an alternative way to this as dividends to investors. A REIT may began in Emirates REIT on NASDAQ Dubai
invest in professionally managed portfolio or may not be listed and traded on a stock following its IPO. Emirates REIT invests in
of real estate, without assuming direct exchange. However, whether, publicly Sharia’a-compliant real estate assets and is
investment risk. traded or non-traded, REITs are subject to incorporated in the DIFC, where NASDAQ
REITs have started attracting investors in strict regulations. Dubai is located. Sharia’a-compliant REITs
droves in recent months. Investors with a Investing in REITs don’t come without any are getting popular in the region. Islamic
long-term investment objective have also risks though and its return is subject to the REITs originated first in the South-East Asia.
turned their eye on REITS. There has been value of the property and its demand and Malaysia was the first country globally
a steady and sustained growth in number supply. The fund manager managing the to issue guidelines for Islamic REITS, and
of real estate investment trusts and volume REIT fund has to constantly work towards Singapore was the country where the first
across regions. Low ticket size of investment, improving the property/ies yields and Islamic REIT was listed.
convenience of entry and exit through a returning dividends to the shareholders. For the last several years, countries in the
stock exchange, regularity of income and Secondly, returns on REITs depend a lot GCC regions have introduced Islamic REITs
capital gains attract retail investors to invest on the overall real estate market in which in their respective financial markets. Kuwait,
in REITS and this number is growing, of late. the REIT operates and is susceptible to for instance, launched in 2008 an Islamic
fluctuations in property costs and lease REIT namely Al Mahrab Tower REIT. Bahrain
How REITs Are Structured rates. followed suit with the launch of Inovest
A REIT is similar to a mutual fund or collective REIT in 2009, Qatar with Regency REIT, in
investment schemes. A REIT can be defined REITs in the Gulf 2009 and the UAE joined the group with the
as a fund that is into buying/selling, In the GCC however, REITs still remain a launch of Emirates REITs in 2011.
developing and managing, properties fledgling alternative asset class. Saudi In a nutshell, REIT fundamentals in
ranging from housing developments, Arabia, the largest capital market in the the UAE and the region are strong as the
42 office buildings, shopping malls, or even Middle East, does not have listed REITs, demand for commercial real estate is

a skyscraper. A REIT gives investors the though Bahrain and UAE have legislations high. However, compared to international
opportunity to invest in real estate not governing REITs. However, REITs, especially markets, REITs in this part of the world are
directly, but by pooling their money into a Sharia’a-compliant REITs, have started still in the early stage of development.

www.wealth-monitor.com | June-July 2015

BLUE CHIP | Bitcoin

Bitby Bit
Does the cryptocurrency that started with a bang a few years back
hold a long-term promise, or is it just a speculative bubble?

The bitcoin is in news again! The first system more secure, saving consumers in December 2013, and hovering around 43
came in April-end, when Stockholm- and businesses significant inconvenience $320 as recently as mid-December 2014.
based XBT Provider was about to and expense, Hileman adds.
launch the first Bitcoin-based security on Further, as per estimates, while there are
Nasdaq Stockholm. The second came in But perhaps the most exciting 21 million Bitcoins in the world, not all of
May when New York State granted first innovation offered by Bitcoin is the them are in circulation. As of May this year,
banking license to bitcoin exchange itBit. “blockchain” – peer-to-peer software that the total number of Bitcoins in circulation
keeps a record of all transactions and a globally was close to 15 million, up about 1
Bitcoin, the virtual “currency” was tally of who owns what. The blockchain million coins from a year earlier.
launched in January 2009 as an alternative essentially serves the“ledger”function that
to legal currencies and ever since then, banks do today, but at a fraction of the cost And last but not the least, regulators the
its circulation is growing. Bitcoin was the to consumers and businesses. Powered by world over are watching the increasing use
brainchild of a computer programmer an open-source algorithm and maintained of virtual currencies such as the bitcoin as,
using the pseudonym Satoshi Nakamoto. by anyone who chooses to download the some say, it has the potential to facilitate
Bitcoin is unique in many respects. For one, free software, Bitcoin marks a return to money laundering.
its transactions occur without validation a community-based approach to money
from a third party and there is no central and banking, with financial services more Going forward, bitcoin is expected to
authority that controls Bitcoin. Further, the closely connected to the people who use keep gaining traction, but there are a lot
bitcoin system is private and no traditional them, he maintains. of factors that would play a pivotal role in
financial institutions are involved in the adoption of this decentralized digital
transactions. Bitcoin and its ecosystem are still currency on a mass basis.
maturing, and only time will tell if current
Garrick Hileman, an economic historian price levels reflect a speculative bubble.
at the London School of Economics and the But the innovations pioneered by Bitcoin
founder of MacroDigest.com, and perhaps can – and therefore should – play a
the most notable person in academia transformative role in building a safer, less
doing research on virtual currencies and expensive, and more effective financial
Bitcoin, says, “Bitcoin is so innovative, in system, Hileman concludes. While bitcoins
fact, that beyond breaking the conventions have most ardent supporters worldwide,
of currency, it has even transcended they have got various opponents too. And
partisan ideologies. With the innovations this is not without reason. Notwithstanding
pioneered by Bitcoin, the fees, delays, and some positive sides, one of the inherent
other inefficiencies that serve to line the risks associated with bitcoins is that their
pockets of those in the financial-services values have experienced wild swings.
industry can largely be eliminated.” Bitcoin, While in mid- January 2015, a single Bitcoin
with its capacity for anonymity, could was valued at around $220, it was less than
certainly help to make the global financial $20 in January 2013, shooting up to $1,100

June-July 2015 | www.wealth-monitor.com

MARKETS REWIND | IPO

InPtuheblic Eye

Here’s why going public via an IPO has historically been the most preferred
way for a private firm to raise capital and get listed on a stock exchange

During the past two decades, more collective endeavours
than 30,000 firms have gone public rather than by individuals.
in more than 90 countries. For many
private firms owners, going public has long The Coming of IPOs
been the desired path not only to raise The growing importance of joint stock
additional capital, but also to enhance
company’s profile and other associated companies as a form of business enterprise
benefits. So what makes a company seek coincided with the development of stock
public listing? Let’s take a quick look back markets which in turn, made the company
at history to understand the interesting form more popular by enhancing the
journey of Initial Public Offerings (IPOs). transferability of shares. Here came the
It was the 16th and 17th centuries when need to raise money by going public and
foreign trade expanded to newly discovered list shares on a stock exchange.
parts of the world and trade monopolies
were granted by Royal Charter of Europe’s According to Investopedia, the Dutch East
monarchies to those who directly helped India Company (properly called the VOC),
the cause of the that was formed in 1602 by a royal charter
All Time Largest Global IPOs government granting a 20-year monopoly on trade with
in establishing the East Indies and sovereign rights in any
Company Name O er Date Exchange Deal Size colonies or newly discovered territories, issued the
world’s first IPO and, therefore, became the
(US$MM) first public company to issue stock.

Alibaba Group Holding 09/18/2014 NYSE $21,767 discovering new An initial public offering, or IPO, refers to
ABC Bank trading routes. the issuance of shares for the first time by a
ICBC Bank 07/07/2010 Hong Kong / Shanghai $19,228 The emergence company to the general public. The process
10/20/2006 Hong Kong / Shanghai $19,092 of the joint of issuance of IPO has undergone radical

NTT Mobile 10/22/1998 Tokyo Stock Exchange $18,099 stock company

Visa 03/18/2008 NYSE $17,864 during the period changes with clearly laid-down conditions
by the securities regulators of each country.
AIA 10/21/2010 Hong Kong $17,816 Source: Renaissance Capital was a natural Initially, the issuance process was confined
11/01/1999 NYSE $16,452 progression, as it to the respective companies but today it
44 ENEL SpA 05/17/2012 NASDAQ $16,007 became apparent largely is left to an underwriter or group of
Facebook 11/17/2010 NYSE $15,774 that the risks underwriters to make offers and sales of the
02/09/1987 Tokyo Stock Exchange $15,301 involved could stock to the public.
General Motors best be borne by

Nippon Tel

www.wealth-monitor.com | June-July 2015

WHAT’S HOT

CoMmakeinbgaa ck

Oil looks up; EM equities cheaper; Russian hedge
funds surge on oil, rouble gains

Source: IEA; World Bank; Renaissance Capital; BofA Merrill Lynch; HFR The price trends in the oil futures 45
markets points to hardening of crude
oil prices and prices of far-month
contracts are slowly rebounding, as the
market is expecting improved global
demand and receding geopolitical risks in
oil-producing countries. Gasoline prices in
the US are forecast to rise throughout the
summer and may show a decline during
winter months due to lukewarm demand.
The likelihood of WTI price hitting $40
per barrel in the next 12 months and the
likelihood of Brent falling below $50 per
barrel is very remote, given the robust
economic performance in oil- consuming
Eurozone and China.

Equally, the rise in WTI and Brent oil
prices above $80 is no longer considered
a distant possibility. Q3 may witness an
upward trend in oil prices due to buoyancy
in Eurozone and China. Data released by
World Bank reveals that Euro zone GDP
expanded 0.4% quarter over quarter in

June-July 2015 | www.wealth-monitor.com

WHAT’S HOT

rely on the sinister QE policies of central
bankers. A new blow looms as the Fed
prepares its assault on vulnerable markets,
threatening turmoil as far as the galaxy’s
Consensus 2015 and 2016 EPS growth forecasts, MSCI EM and FM frontier. But all is not lost.”

16% FM EM “As we head towards the first rate hikes
14% from the Fed (the market is currently
anticipating a first move at the 16 December
meeting), we can certainly expect there to be
12% bouts of volatility. Our base case is that the

10% early stages of rates increasing need not be
EM destructive, particularly coming at a time
If someone wan8% where many EM currencies have already sold Source: Bloomberg, Renaissance Capital
sell a private com6%
down. Previous EM collapses have tended to
come at relatively high levels of US rates and/
4% or the Fed being seen as behind the curve as
inflation breached 3%,”it adds.

2% EM looks cheap relative to developed
markets (DM) now, in terms of both P/E ratios
0% 2016E and exchange rates, it says, cautioning that
2015E
unless youEM should certainly be cognisant of the Fed: it have

is no coincidence that the major EM selloffs in
1994 (33%), 1997 (59%), 2000 (54%) and 2008
Q1 2015, bettering the 0.3% growth in Q4 A net 33% still take this position, although (66%) all took place after a period of Fed rate
2014, primarily through economic growth this is now down as much as 30% points hikes.
in France, Spain and Italy and offsetting from March’s very strong reading. A net 18%
Germany’s weak performance. Eurozone make Japan their top pick for the coming “In 2004, EMs suffered a sharp sell-off
industrial production rose 1.8% in March, year. This is a slight decline from last month. before the first Fed hike (with a 20% decline in
after February’s 1.9% increase, led by EM Assets Attractive, but… a little over a month); 2013 saw the so-called
production increases in the energy sector. The very low global interest rates coupled ‘taper tantrum’ (which saw a 17% decline).
China’s industrial production expanded with the slower than expected normalisation Another such sell-off is entirely possible as the
5.9% year on year in April. of US monetary policy, stabilisation in oil Fed moves towards tightening later this year.”
prices and moderation in capital outflows
As per estimates by International Energy from emerging markets (EM) have led to a A report by IIF also cautions that after a
Agency (IEA) for the month of May, global robust increase in emerging market asset slow start to the year, private capital inflows
oil demand growth is projected at 1.1 mb/d valuation since March 2015. The stock market to EMs are projected to subside to $981
for this year up from 0.7 mb/d in 2014. The billion this year, which would be the weakest
forecast is unchanged since last month as outcome since the global financial crisis.

an improving economic outlook for Europe indices of China and India showed a sharp Hedge Funds Lead
and a cold winter lift projections of OECD increase. Bond portfolio inflows to emerging Volatile emerging markets hedge funds have
demand but offset reduced expectations for markets are quite healthy in April and will returned to lead industry performance on the
the FSU, the Middle East and Latin America. continue to rise, reflecting demand for high strong recovery of the Russian Rouble, higher
yield debts. The emerging markets are poised oil prices, lowering of interest rates by the
The US Energy Information for an upturn in Q3.
Administration (EIA) in its short-term energy
outlook released in May forecasts that Brent According to the BofA Merrill Lynch Fund Chinese Central Bank, and a surge in trading
crude oil prices will average $61/b in 2015 Manager Survey for May, fund managers are volume on the Shanghai-Hong Kong Stock
and $70/b in 2016. less negative on emerging markets. Only a Connect program. As a result of these, hedge
net 6% are now underweight, compared to funds investing in Russia and China posted
European, Japan Equities Pick Up April’s net 18%. Intention to own emerging strong gains in recent months. Despite
According to the BofA Merrill Lynch Fund markets stocks over the next year has risen volatility to conclude 2014, total hedge fund
Manager Survey for May, in contrast to similarly. capital invested in Emerging Markets hedge
their reduced conviction towards US However, Renaissance Capital in its report, funds increased to nearly $190 billion in
equities, investors remain positive on ‘Frontier and emerging markets Reform Q1, with performance-based contributions
both Europe and Japan – both economies awakens’ says, “It is a dark time for emerging concentrated in Russia and Equity Hedge
where quantitative easing continues. A markets. Reform has been extinguished in strategies, according to the latest HFR
46 respective net 49% 42% of fund managers Greece and flickers faintly in South Africa and Emerging Markets Hedge Fund Industry

are overweight the two markets. Europe Turkey. In Russia, Vladimir Putin, convinced Report, released by HFR, the indexation,
also remains the market most would like to that outside forces are seeking to destabilise analysis and research firm of the global
overweight from a 12-month perspective. his federation, plots his next move. Investors hedge fund industry.

www.wealth-monitor.com | June-July 2015

GLOBAL VIEW | Caution Prevails

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WHAT’S NOT

Be&twTereonugPhesaks

US stocks underweight; global risk aversion to bonds continues

Bonds Weaken demand in China. The largest decline is
There is an aggressive sell-off in
government bond markets globally, expected for iron ore due to new low-cost
sending yields up. According to the BofA mining capacity mainly in Australia. The
Merrill Lynch Fund Manager Survey for probability of gold prices falling below
May, there is a strong rise in assessment of $900 a troy ounce increased due to lack-
bonds as the asset class most vulnerable lustre demand from gold-consuming
to volatility in 2015 – up to 56%. Bond countries especially China and India
underweights have also increased. based on weekly trends.

The IMF in its ‘Commodity Price

Less Appetite for US Equities Outlook & Risks’ report for May notes,

Global investors have less appetite for “For metals, the risk of copper prices
higher risk exposures, particularly in the falling below $2 a pound continued to
US, the BofA survey finds. While a net ease sliding to 4% from 8% in April, while
47% of respondents remain overweight
equities, this is down 7% points month- the probability of prices increasing above
on-month. Appetite for US stocks has $3.50 a pound increased to 10% from 5%
declined to a net 19% underweight, in owing to supply disruptions.”

contrast to strong overweights across Agri: Mixed Outlook
Q1. Confidence in corporate profitability The outlook for agricultural commodity
has also fallen, with only 75 of investors prices in Q3 is mixed with rice, wheat,
viewing the US as the region with the corn and coffee prices increasing on
most favorable earnings outlook. supply concerns, but soybean and

Natural Gas Face Headwinds soybean meal prices slightly declining

Natural gas prices are expected to due to the expectation of large harvest. Source: BofA Merrill Lynch; World Bank; IMF
decline significantly in Q3 this year given The likelihood of soybean meal
that many gas contracts are tied to oil prices rising above $400 a short ton
prices. All main non-energy price indices
48 are also expected to fall this year. The US remained broadly unchanged at 5%. The
natural gas prices are expected to follow likelihood of per-bushel soybean prices
a zig-zag pattern with a rise in the coming below $7 and above $12 both remained
winter followed by a decline thereafter, unchanged at 8%. The likelihood of per
in line with the seasonal demand. bushel corn prices below $3 increased to

17% from 14 percent in April, while prices

Flat Metals above $5 decreased to 6% from 10%,
Metals prices are projected to decline in
Q3 due to capacity increases and slowing reflecting improved supply outlooks,
www.wealth-monitor.com | June-July 2015
according to IMF.