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1Week 25 June 14 - June 20, 2020
JUNE 14 - JUNE 20, 2020
WEEK 25
Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected]
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MENA MARKETS: WEEK OF JUNE 14 - JUNE 20, 2020
The MENA WEEKLY MONITOR
Economy___________________________________________________________________________p.2 MENA REGION SEES FOUR IPOs RAISE US$ 814 MILLION IN Q1 2020, AS PER EYAccording to the latest EY report, the MENA region recorded an increase in IPO volume and value during Q1
2020, with four IPOs (including one REIT listing) raising total proceeds of US$ 814.2 million. This represents
a 14-fold increase when compared to the same period last year.
Also in this issuep.3 COVID-19 hits MENA economies hard during past few months, says Capital Economics
p.3 Jordan's economy to contract by 5% in 2020, given the global downturn caused by the
Coronavirus pandemic, says EIU
p.4 Foreign direct investment inflow into the UAE jumped by over 34% in 2019, says Unctad
Surveys___________________________________________________________________________p.5 DUBAI RANKS FIRST IN THE REGION IN 2020 COST OF LIVING SURVEY, AS PER MERCERDubai is the most expensive city in the Middle East for expatriates, according to Mercer’s 26th Annual
Cost of Living Survey 2020.
Also in this issuep.6 UAE is the third most attractive country target for cybercriminals, as per NordVPN
p.6 APICORP expects planned and committed investments in the MENA region to stand at
US$ 792 billion in the next five years
Corporate News___________________________________________________________________________p.7 SAUDI ARAMCO BUYS 70% OF SABIC FOR US$ 69.1 BILLIONSaudi Arabia's oil giant Aramco bought 2.1 billion shares or 70%, of Saudi Basic Industries Corp (SABIC) for
SR 259 billion (US$ 69.1 billion) in four special transactions.
Also in this issuep.7 Danube signs up SirajPower as new UAE solar partner
p.7 Palm Hills inks co-development deal for Egypt mixed-use project
p.8 Saudi Arabia's Amaala awards Triple Bay earthworks deal
p.8 Meraas to become part of Dubai Holding
p.8 HSBC readies US$ 558 million funding for Etihad Rail D contractors
p.8 DP World in deal to equip Jebel Ali port with AITVs fleet
Markets In Brief___________________________________________________________________________p.9 REGIONAL CAPITAL MARKETS REMAIN ON THE RISEMENA equity markets registered shy price rises this week, as reflected by a 0.6% increase in the S&P Pan
Arab Composite index, mainly supported by oil price gains amid major oil producers’ commitment to
lower output, and given some favorable market-specific and company-specific factors. In parallel, activity
in MENA fixed income markets remained skewed to the upside, as lingering US-China tensions and
growing fears of a second wave of Coronavirus infections revived global economic concerns, spurring
demand for safe-haven assets.
2Week 25 June 14 - June 20, 2020
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ECONOMY______________________________________________________________________________MENA REGION SEES FOUR IPOs RAISE US$ 814 MILLION IN Q1 2020, AS PER EY
According to the recently released EY MENA IPO Eye Report, the MENA region recorded an increase in
IPO volume and value during Q1 2020, with four IPOs (including one REIT listing) raising total proceeds of
US$ 814.2 million. This represents a 14-fold increase when compared to the US$ 57.6 million raised from
one IPO in the same period last year.
Global IPO exchange activity also continued to pick up in Q1 2020, with 235 IPOs raising US$ 28.5 billion
in IPO value during Q1 2020, compared to US$ 15.1 billion in the same quarter of the previous year, as
per EY.
An EY official stated that the year began with strong optimism and promise for the IPO market in the
MENA region. Following the interest in Saudi Aramco’s IPO, there was a marked increase in companies
pursuing listings on GCC stock exchanges.
The drop in economic growth and disruption across various industries caused by the COVID-19 pandemic,
as well as the decline in demand for oil, and reduction in oil prices, have forced potential issuers to rethink
timelines and delay their bourse debuts, which according to EY is a prudent move given the current
market scenario. Potential issuers nevertheless continue to seek new capital, in some cases driven by the
current market environment.
The Saudi SE led IPO activity in the MENA region with two listings in Q1 2020 and net proceeds totaling
US$ 748.7 million, said EY. Dr. Sulaiman Al-Habib Medical Services Group raised US$ 700.9 million (main
market) by issuing 15% of its shares, while Sumou Real Estate Co. raised US$ 47.8 million (Nomu market)
by issuing 30% of its shares.
Saudi Aramco’s listing on its exchange has sent the Tadawul (already the Middle East’s largest bourse)
to ninth place globally in terms of market capitalization. A major development was the decision by the
Kingdom to downsize its 2020 budget due to the economic conditions caused by COVID-19 and falling
oil prices, said EY.
In Oman, Aman REIF, a REIT listing, floated 50% of its shares on the Muscat SE in a deal that raised US$
52.5 million in January 2020.
In Egypt, Emerald Real Estate Investments raised US$ 13.0 million in February 2020 by offering 28%
of its shares and was oversubscribed 134%. The Egyptian capital market was expecting as many as 14
companies to go public in 2020, however the market is experiencing delays in listing plans due to the
impact of COVID-19 on both local and global stock markets, according to the EY release.
The Bahrain Bourse adopted new listing rules and allowed a three-month grace period for companies
currently listed on the market to meet new requirements. Kuwait strengthened its capital markets with
the privatization of its stock exchange in December 2019 and the introduction of the BK Main 50 Index.
When Kuwait upgrades its equities to its main emerging markets index in 2020, it could trigger billions of
dollars in inflows from passive funds, said EY.
Another EY official stated that capital markets around the region have granted additional flexibility to
public companies during the COVID-19 crisis period. The IPO markets are not likely to quickly rebound
in Q2 or Q3 2020, but EY is aware of several companies that are preparing for offerings after this period.
Investor sentiment will continue to be cautious, given significant volatility in the markets and uncertainty
regarding future events including COVID-19 impact, oil pricing, and the US elections amongst other
things, concluded the EY release.
3Week 25 June 14 - June 20, 2020
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WEEK 25
_____________________________________________________________________________COVID-19 HITS MENA ECONOMIES HARD DURING PAST FEW MONTHS, SAYS CAPITAL ECONOMICS
According to a recent report by Capital Economics, COVID-19 has hit economies hard in the Middle East
and North Africa (MENA) during the past few months. Although lockdowns are being eased, economic
recovery is likely to be sluggish, as per the same source.
The main obstacle to the region’s banks is the rise in non-performing loans (NPLs), according to London-
based economic research consultancy Capital Economics. Measures to contain the virus have led to large
swathes of economies being shut down, leading to job losses, falls in income, and a greater incidence of
business failures.
A majority of businesses are expected to close within the next year, with those in the travel and tourism
sector expecting more acute pain in the coming months, as per the Dubai Chamber of Commerce.
Authorities across the region have taken steps in recent months to mitigate the risk that the current
economic downturn triggers balance sheet strains. Central banks in the Gulf and Jordan have lowered
interest rates in line with the FED, while in Egypt, Morocco, and Tunisia have cut rates too. Most
governments have directed local banks to give debt payment holidays to customers, according to the
same source.
In the Gulf countries at least, NPL ratios are generally low and banking sectors are well positioned to
withstand a jump in bad loans. In Saudi Arabia and Kuwait, for instance, the report estimates that NPL
ratios would have to increase from just under 2% at present to 13%-18%.
Vulnerabilities in the UAE’s banking sector do not appear to be as large as they were prior to the 2009
global financial crisis. But a period of weak economic growth has led to a steady rise in the NPL ratio in
the past couple of years, as per Capital Economics.
_____________________________________________________________________________JORDAN'S ECONOMY TO CONTRACT BY 5% IN 2020, GIVEN THE GLOBAL DOWNTURN CAUSED BY THE CORONAVIRUS PANDEMIC, SAYS EIU
Jordan's real GDP would contract by 5% in 2020, given the global downturn caused by the Coronavirus
pandemic, which is disrupting trade and global supply chains and has brought tourism to a complete
halt, and the impact of domestic restrictions on economic activity, as per a recent report by the Economist
Intelligence Unit (EIU).
The economic implications of the coronavirus outbreak would pose significant challenges to the
government. Although the authorities would continue to respond with a range of fiscal and monetary
stimulus measures, the economy is forecast to slip into deep recession in 2020, and the country's fiscal
deficit and public debt will increase sharply, according to the Economist Intelligence Unit.
Limited government assistance to low-income groups will provide some support in 2020-21, but private
consumption will nevertheless be severely depressed. Despite the authorities' efforts to prop up the
economy with Coronavirus-related mitigation strategies, sluggish global demand would hold back the
recovery in exports and inward investment, as per the report.
Following a sharp contraction in 2020, construction sector growth would pick up gradually in 2021-24,
accelerating as consumer demand and incomes recover in 2022-24. However, the scope of the recovery
would be weighed down by the weakness of the public finances, which will continue to restrict some
capital investment, while spending cuts would also limit private consumption growth.
As a result, the recovery would largely depend on how successful the authorities are in securing funding
from multilateral agencies for major infrastructure projects. Nevertheless, growth in the energy and
services sectors, including tourism, is likely to gather momentum from 2022, as per the EIU.
4Week 25 June 14 - June 20, 2020
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Tourism, in particular, will take time to recover, with a global recession and some ongoing travel
restrictions limiting activity throughout 2020 and into 2021. After contracting sharply in 2020, export
volumes will pick up in 2021 with an improvement in external conditions, mainly in the US. Export
volumes will increase again in 2022 as demand recovers in line with higher oil prices in the Gulf Arab
states, as per the EIU. Moreover, Jordan’s real GDP growth would average 2.4% a year in 2022-24 as the
global economy and domestic demand recover from the impact of the Coronavirus.
In 2020, the Coronavirus outbreak will drive down domestic energy and transport costs significantly,
although international food prices will increase, as per the report. This, combined with the severe
weakening of domestic demand, would drive down inflation to just 0.1% in 2020, far below the first-
quarter average of 1.9%. Higher international food prices and a moderate rise in oil prices in 2021 will
increase inflation to an average of 0.6% that year.
Although an increase in export capacity has driven up earnings from exports of chemicals and raw
phosphate in recent years, lower international prices and a significant fall in global demand will lead to a
sharp contraction in goods export earnings in 2020, according to the EIU.
Textile exports, which are Jordan's biggest export to the US, will contract sharply in 2020 because of
plunging demand driven by the Coronavirus pandemic and supply-chain disruptions. This will be offset
by a contracting import bill in 2020, and import spending will remain subdued in 2021 because of still-
low oil prices, before picking up in 2022-24 as international prices rise and domestic demand increases
more strongly.
Last but not least, Jordan’s current-account deficit would widen to 7.4% of GDP in 2020, before easing to
an average of 3.9% of GDP in 2021-24, as services exports in particular pick up in response to rising global
demand. Foreign aid and concessional borrowing (from 2022 onwards) would finance the shortfalls.
______________________________________________________________________________FOREIGN DIRECT INVESTMENT INFLOW INTO THE UAE JUMPED BY OVER 34% IN 2019, SAYS UNCTAD
Foreign direct investment (FDI) inflow into the UAE jumped by over 34% to US$ 14 billion in 2019 as
compared to US$ 10.4 billion in the previous year following major investments by US private equity firms
in Abu Dhabi's energy sector, as per the World Investment Report released by UN Conference on Trade
and Development (Unctad).
The UAE surpassed Turkey to become the largest recipient of foreign investment last year in the Middle
East and also accounted for half of total investment that flowed into the region in 2019, according to
Unctad.
The large increase in FDI to UAE was largely due to major investments made to Abu Dhabi National
Oil Company (Adnoc) assets. The US-based asset managers BlackRock and KKR Global Infrastructure
acquired a 40% stake in Adnoc's pipeline assets for about US$ 4 billion. Italy's Eni SpA also acquired a
20% stake in Abu Dhabi Oil Refining Company for more than US$ 3 billion.
Abu Dhabi has supported FDI inflows to the UAE for the past few years with its streamlined procedures
and capacity in facilitating megadeals. In 2019, the emirate further strengthened its commitment to
foreign investment by launching the Abu Dhabi Investment Office under the Ghadan 21 programme, a
broad-based initiative to enhance the commercial ecosystem, including by cultivating an attractive and
diversified environment for FDI, Unctad said.
5Week 25 June 14 - June 20, 2020
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WEEK 25
SURVEYS_____________________________________________________________________________DUBAI RANKS FIRST IN THE REGION IN 2020 COST OF LIVING SURVEY, AS PER MERCER
Dubai is the most expensive city in the Middle East for expatriates, according to Mercer’s 26th Annual
Cost of Living Survey 2020.
The survey, which ranks 209 expat destinations based on the cost of essentials, including housing, food
and transportation, among others, named the emirate as the 23rd costliest city in the world.
The city’s global ranking, however, dropped from 21st in last year’s survey, mainly due to the decline in
the cost of real estate.
Riyadh, which landed the 31st spot in the global ranking, emerged as the second-costliest city in the
region, followed by Abu Dhabi (39) and Beirut (45). Tunis however took over the last position globally
(209).
Since the beginning of 2019, a continuous deflation was witnessed across Dubai and Abu Dhabi primarily
driven by the slump in the real estate sector, which has made expatriate accommodation cheaper
reaching back at the levels of 2013/2014, as per Mercer.
This deflation reflects the drop in ranking of both Dubai and Abu Dhabi making them cheaper than years
before, as per the same source.
House prices and rents in the UAE have been on a decline in recent years due to a glut in housing supply.
According to ValuStrat’s latest price index, residential capital values dropped by 11.5 percent in May
compared to the same period last year.
Overall, Hong Kong retained its spot as the most expensive city in Asia and around the world. The
financial hub is followed by Ashgabat, Tokyo, Zurich and Singapore, according to Mercer.
REGIONAL COST OF LIVING RANKINGS FOR EXPATRIATES
Sources: Mercer Institute, Bank Audi's Group Research Department
6Week 25 June 14 - June 20, 2020
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_____________________________________________________________________________UAE IS THE THIRD MOST ATTRACTIVE COUNTRY TARGET FOR CYBERCRIMINALS, AS PER NORDVPN
UAE residents, along with people in other countries such as Sweden, Norway and the US, are the most
attractive targets for cybercriminals due to high per capita income and people spending more time
online since the outbreak of the COVID-19 Coronavirus. Although these developed countries are better
prepared to tackle cybersecurity threats, the residents are more exposed to cybercriminals because
digital banking has increased in the past few months due to the pandemic and residents are spending
more time on the social media.
According to the Cyber Risk Index released by NordVPN, the UAE is the third most attractive target for
cybercriminals after Iceland and Sweden. Other countries whose residents are most exposed to include
Norway, US, Singapore, Ireland, New Zealand, Denmark and UK. Cybercriminals don't look for victims,
they look for opportunities - much like pickpockets in crowded places. The more time you spend on the
web, the more services you use there, the more money you spend online, the higher the possibility you'll
run into a cybercriminal, as per a digital privacy expert at NordVPN. Cybercriminals spin a vast web of
traps and hope to catch oblivious victims. That's why they often focus on citizens of developed countries
as the gain can be higher.
In April, a national fraud awareness campaign was launched by the UAE Banks Federation, Central Bank,
Abu Dhabi Police and Dubai Police to educate and protect residents from financial cybercrime and fraud,
particularly in the light of the increased use of digital banking services during the COVID-19 pandemic.
According to Internet World Stats, the number of internet users in the UAE reached 9.53 million at the
end of March 2020, with 96.4% penetration. It is one of the highest internet penetration rate in the world.
The number of Facebook users totaled 8.73 million by February 2020, with 88.3% penetration. The UAE
boasts per capita income of US$ 69,434 as compared to US$ 54,626 of Sweden, US$ 64,600 of Hong Kong
and US$ 58,340 of the Netherlands.
NordVPN said Northern Europe is the most dangerous region when it comes to individual cyber risks,
while North America is a close second. In both regions, more than 9 out of 10 people use the internet, 8
out of 10 shop online, and 7 out of 10 use Facebook. This leads to increased exposure to cyber threats.
According to Cyber Risk Index, residents of low-income countries like India, Nigeria, Iraq, Indonesia, South
Africa, China, Thailand, Philippines, Iran and Ukraine have the lowest cyber risk.
_____________________________________________________________________________APICORP EXPECTS PLANNED AND COMMITTED INVESTMENTS IN THE MENA REGION TO STAND AT US$ 792 BILLION IN THE NEXT FIVE YEARS
The Arab Petroleum Investments Corporation, APICORP, a multilateral development financial institution,
estimates that planned and committed investments in the MENA region will exceed US$ 792 billion over
the next five years (2020–2024). According to APICORP’s MENA Energy Investment Outlook 2020-2024,
the amount marks a US$ 173 million decline from the US$ 965 billion in last year’s five-year outlook. The
overall decline in the investment outlook — mostly in planned investments — is largely attributed to the
2020 triple crisis: the COVID-19-related health crisis, oil crisis and a looming financial crisis. Despite these
difficult circumstances, however, the GCC region’s committed investments increased by 2.3% compared
to a 6% overall decrease in the MENA region as a whole, indicating a higher project execution rate in the
GCC.
The impact of COVID-19 is already deeper and longer-lasting than past downturns. Indeed, the nature of
this triple crisis and the profound restructuring in oil and gas will hit energy investments for a potentially
long period of time, sowing the seeds of supply crunches and price volatility, as per APICORP’s CEO.
Therefore, a W-shaped recovery is expected for the MENA region. Furthermore, despite the positive
effects of digitization and automation on efficiencies across the value chains, many fundamental
questions remain that will negatively affect investments.
International collaboration between the private and public sector will, therefore, be critical to counter
the expected shortfalls in investment, and APICORP will continue to play a lead support role in this regard
as a trusted financial partner to the region’s energy sector, as per the same source.
7Week 25 June 14 - June 20, 2020
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CORPORATE NEWS_____________________________________________________________________________SAUDI ARAMCO BUYS 70% OF SABIC FOR US$ 69.1 BILLION
Saudi Arabia's oil giant Aramco bought 2.1 billion shares or 70%, of Saudi Basic Industries Corp (SABIC)
for SR 259 billion (US$ 69.1 billion) in four special transactions.
Aramco signed a deal last year with Saudi Arabia’s sovereign wealth fund, the Public Investment Fund
(PIF), to get its majority shareholding in the petrochemicals company.
The payment for SABIC will be funded in part by four bonds issued by Aramco to the PIF, as per Reuters.
_____________________________________________________________________________DANUBE SIGNS UP SIRAJPOWER AS NEW UAE SOLAR PARTNER
SirajPower, UAE’s distributed solar energy provider, has been appointed by leading Dubai developer
Danube as its new solar partner for its projects in the emirates.
The group commissioned SirajPower to take over the financing, operation, and maintenance of its 1MWp
solar power plant spread across Jafza and Dubai TechnoPark.
The solar system will cover 13,000 square meters of roof area and is expected to generate 1.7 GWh of
annual energy production, said a statement from SirajPower.
The project will also help displace over 1,200 tons of carbon dioxide emission per annum, corresponding
to more than 150 million smartphones being charged, as per a statement.
SirajPower previously reported that commercial and industrial businesses will look into reducing their
operating costs and limiting their cash expenses to be able to resume their business and brave the
financial crisis ahead.
Since the beginning of 2020, SirajPower has considerably expanded its footprint in the residential sector
whilst steadily further strengthening its presence in the commercial and industrial sectors, as per the
company’s CEO.
As a result, to date, SirajPower holds the largest solar energy portfolio in the region with over 50 MWp
already under operation, as per the same source.
_____________________________________________________________________________PALM HILLS INKS CO-DEVELOPMENT DEAL FOR EGYPT MIXED-USE PROJECT
Egypt-based Palm Hills Developments said it signed a co-development agreement for a mixed-use
community project, being built at a cost of LE 3.5 billion (US$ 215 million) in Ain Sokhna region on a
revenue sharing basis with Al Shorouk for Touristic Developments.
The project, which is spread over a 487,200 square meters area, is located on the Red Sea along Suez
Zaafrana road with direct access from Galala highway, around 75 minutes away from capital Cairo, said a
statement from Palm Hills Developments.
As per the co-development deal, Palm Hills will be responsible for all work related to construction,
development, infrastructure, marketing and sales activities.
The two companies have finalized the project’s master plan, which will offer standalone units, town
houses, senior and junior chalets as well as serviced apartments, in addition to hospitality and recreational
components plus commercial facilities, it stated.
To be developed in five phases, the mixed-use development boasts 1,201 residential units with a total
built-up area of up 163,655 square meters and a 1.5 kms long beachfront.
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______________________________________________________________________________SAUDI ARABIA'S AMAALA AWARDS TRIPLE BAY EARTHWORKS DEAL
Amaala, the ultra-luxury destination located along Saudi Arabia’s northwestern coast, signed up
Binyah, a key real estate infrastructure company in the Kingdom, to carry out the excavation, backfilling,
and earthworks required to achieve the formation levels and grading of Phase One of the Triple Bay
masterplan.
Binyah is being joined onsite by Saudi Arabian Parsons (Parsons), the construction supervisor. The
digitally enabled solutions provider is taking on the role of engineer, supervising the execution of works
currently underway across Phase I of Triple Bay.
______________________________________________________________________________MERAAS TO BECOME PART OF DUBAI HOLDING
Meraas, Dubai’s premier developer and operator of lifestyle destinations, will now become part of Dubai
Holding, a global investment holding company.
Meraas will join forces with Dubai Holding, the investment arm of the Dubai government, in an effort to
sustain and advance growth through a unified and integrated vision that builds on gains, spurs efforts
and boosts Dubai's global competitiveness, as per a statement.
Meraas has launched several projects in multiple sectors including real estate, retail, hospitality, food and
beverage, leisure and entertainment and healthcare. These include City Walk, Bluewaters Island, Jumeira
Bay, Pearl Jumeira, La Mer, and Dubai Harbour.
______________________________________________________________________________HSBC READIES US$ 558 MILLION FUNDING FOR ETIHAD RAIL D CONTRACTORS
HSBC structured and financed a US$ 558 million working capital package for the contractors who
successfully tendered for the civil works and construction contract for Package D of Stage Two of Etihad
Rail’s national railway network.
An unincorporated joint venture between China Railway Construction Corporation (CRCC) and the UAE’s
National Projects and Construction (NPC) company was awarded the contract by Etihad Rail in December
last year.
With the working capital facilities now in place, construction on the railway line has begun.
Etihad Rail Package D involves the construction of a 145 kms railway line connecting the ports of Fujairah
and Khorfakkan to the pan-Emirates network at the Dubai border with Sharjah, opening up connections
to Dubai, Abu Dhabi, and the UAE border with Saudi Arabia.
The bank received a competitive pitch to provide the CRCC-NPC joint venture with a comprehensive US$
558 million package of guarantees, trade, supply chain and receivables, finance cash management, and
foreign exchange solutions to enable them to successfully complete the railway.
______________________________________________________________________________DP WORLD IN DEAL TO EQUIP JEBEL ALI PORT WITH AITVs FLEET
DP World, UAE Region and the autonomous vehicle, robotics and AI specialist DGWorld have entered into
a contractual agreement to equip Jebel Ali Port with a fleet of Autonomous Internal Terminal Vehicles
(AITVs), including all related integrations in the existing operation processes and infrastructures.
As per the deal, DGWorld will deliver and integrate its autonomous technology at the existing ITV fleet
in multiple phases, with the goal to further increase the overall efficiency of the terminal and reduce the
overall size of the currently used fleet, at the same time.
9Week 25 June 14 - June 20, 2020
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EQUITY MARKETS INDICATORS (JUNE 14 TILL JUNE 20, 2020)
Sources: S&P, Bloomberg, Bank Audi's Group Research Department
CAPITAL MARKETS____________________________________________________________________________EQUITY MARKETS: SHY WEEKLY PRICE GAINS IN MENA EQUITIES
MENA equity markets registered shy price rises this week, as reflected by a 0.6% increase in the S&P
Pan Arab Composite index, mainly supported by oil price gains amid major oil producers’ commitment
to lower output, and given some favorable market-specific and company-specific factors.
The heavyweight Saudi Tadawul was marked by heavy trading volumes this week. The total turnover
increased more than ten folds relative to the previous week following Saudi Aramco’s acquisition of
a 70% stake in SABIC for US$ 69.1 billion. As far as prices are concerned, the Saudi Tadawul registered
shy price increases of 0.5% week-on-week, mainly helped by some favorable company-specific factors
and on rising oil prices (+8.9% week-on-week) after major producers at an OPEC-led meeting of the
Joint Ministerial Monitoring Committee stressed the importance of full compliance with pledged
production cuts and made moves to ensure that certain countries make up for failing to fully meet
their reduction targets last month.
Petrochemicals giant Saudi Aramco, whose market capitalization represents circa 79% of the total
Saudi market capitalization, posted a 2.3% weekly rise in its share price to close at SR 33.10. Saudi
Aramco completed the acquisition of a 70% stake in SABIC and extended the payment period by
three years to 2028. SABIC’s share price closed 2.5% higher at SR 91.20. Petrochem’s share price surged
by 5.2% to SR 25.30. Advanced Petrochemical Company’s share price jumped by 4.0% to SR 52.50.
Also, Mouwasat’s share price increased by 2.6% to SR 89.50. Mouwasat posted 2020 first quarter net
profits of SR 108 million, up by 1% relative to the same period of the previous year. Northern Cement’s
share price went up by 2.6% to SR 9.73. The company announced 2020 first quarter net profits of SR
28 million, up by 78% year-on-year.
The UAE equity markets registered small price gains of 0.6% week-on-week, mainly on improved
sentiment after Abu Dhabi started easing movement restrictions, and due to rising oil prices and
some favorable company-specific factors. In Abu Dhabi, ADCB’s share price went up by 3.2% to AED
5.16. Etisalat’s share price closed 2.9% higher at AED 16.84. Aldar Properties’ share price grew by 3.5%
to AED 1.79. Mubadala Investment Company is weighing the sale of a mall and other real estate assets
to Aldar Properties.
10Week 25 June 14 - June 20, 2020
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In Dubai, Aramex’ share price improved by 1.8% over the week to AED 3.45. Aramex launched Aramex
SMART, a delivery, payment and returns solution for e-tailers, to boost e-commerce in the region.
Commercial Bank of Dubai’s share price surged by 3.4% to AED 3.60. The bank raised its foreign
ownership limit to 40% on June 14, 2020. Dubai Islamic Bank’s share price closed 2.1% higher at AED
3.97. Deyaar Development’s share price increased by 1.0% to AED 0.292.
The Qatar Exchange posted a 1.1% rise in prices week-on-week, mainly helped by rising oil prices and
on improved sentiment after Qatar began lifting Coronavirus-related restrictions under a four-phase
plan that started on June 15, 2020. 31 out of 47 listed stocks registered price gains, while 14 stocks
posted price falls and two stocks saw no price change week-on-week. QNB’s share price went up by
1.1% to QR 17.90. QIB’s share price edged up 0.6% to QR 16.45. Nakilat’s share price closed 2.4% higher
at QR 2.550. Barwa Real Estate’s share price increased by 2.4% to QR 3.02.
The Egyptian Exchange registered a 0.4% rise in prices week-on-week, mainly on improved sentiment
after the Ministry of Finance announced draft amendments to the VAT law to stimulate investments,
and as weakening Egyptian pound following a policy response to the Coronavirus pandemic prompted
some market players to add Egyptian stocks to their holdings. Commercial International Bank’s share
price went up by 0.7% to LE 67.96. EFG Hermes’s share price rose by 1.6% to LE 12.36. Juhayna Food
Industries’ share price increased by 0.7% to LE 7.19. Palm Hills Development’s share price closed 0.7%
higher at LE 1.161.
_____________________________________________________________________________FIXED INCOME MARKETS: ACTIVITY IN MENA BOND MARKETS MOSTLY SKEWED TO THE UPSIDE
Activity in MENA fixed income markets remained skewed to the upside this week, as lingering US-
China tensions and growing fears of a second wave of Coronavirus infections revived global economic
concerns, spurring demand for safe-haven assets.
In the Abu Dhabi credit space, sovereigns maturing in 2024 and 2029 posted price gains of 0.25 pt
and 0.50 pt respectively week-on-week. Prices of Mubadala’24 improved by 0.41 pt. ADNOC’29 closed
up by 0.51 pt. Taqa’26 was up by 0.52 pt. As to papers issued by financial institutions, ADCB’23 traded
up by 0.41 pt. Prices of First Gulf Bank’24 expanded by 0.14 pt. Regarding new issues, First Abu Dhabi
Bank issued Chinese Yuan 1.4 billion five-year Formosa bonds at 3.5%. The bond sale attracted orders
of more than Chine Yan 1.6 billion from 32 orders.
In the Dubai credit space, sovereigns maturing in 2029 recorded price declines of 0.51 pt this week.
Prices of Emaar’26 rose by 0.47 pt. DP World’30 was up by 0.49 pt. Emirates Airline’28 saw price gains
of 0.49 pt. Majid Al Futtaim’29 closed up by 1.08 pt. Elsewhere in the UAE, Sharjah Islamic Bank raised
US$ 500 million from the sale of a five-year Sukuk at a profit rate of 2.85% per annum.
In the Saudi credit space, sovereigns maturing in 2025 and 2030 registered price improvements of
0.75 pt and 2.50 pts respectively week-on-week. Saudi Aramco’24 closed up by 0.45 pt. Prices of
STC’29 increased by 0.53 pt. Regarding plans for new issues, Islamic Development Bank mandated
Citi, Credit Agricole, Emirates NBD Capital, Gulf International Bank, HSBC, the Islamic Corporation
for the Development of the Private Sector, Natixis, Société Générale and Standard Chartered as joint
lead managers and bookrunners for a five-year Regulation S Senior Unsecured US$ benchmark Sukuk
issuance. The proceeds of the Sukuk issuance would be allocated to assist IsDB member countries in
tackling the aftermath of the COVID-19 pandemic.
In the Qatari credit space, sovereigns maturing in 2024 and 2029 registered price increases of 0.25
pt and 1.38 pt respectively week-on-week. Prices of Ooredoo’25 improved by 0.43 pt. As to papers
issued by financial institutions, Commercial Bank of Qatar’23 was up by 0.51 pt. QIB’24 posted price
improvements of 0.12 pt. QNB’24 traded up by 0.50 pt.
11Week 25 June 14 - June 20, 2020
JUNE 14 - JUNE 20, 2020
WEEK 25
MIDDLE EAST 5Y CDS SPREADS V/S INTL BENCHMARKS
Sources: Bloomberg, Bank Audi's Group Research Department
Z-SPREAD BASED AUDI MENA BOND INDEX V/S INTERNATIONAL BENCHMARKS
Sources: Bloomberg, JP Morgan, Bank Audi's Group Research Department
In the Bahraini credit space, sovereigns maturing in 2023, 2025 and 2029 saw price expansions of 0.19
pt, 0.38 pt and 1.38 pt respectively week-on-week. Prices of NOGA’24 went up by 0.31 pt. In the Omani
credit space, sovereigns maturing in 2023, 2025 and 2029 registered price improvements of 0.90 pt,
1.63 pt and 1.13 pt respectively. Prices of Omantel’26 rose by 0.88 pt.
On the overall, MENA bond markets saw mostly upward price movements this week, as a fresh
Coronavirus outbreak in China and increases in cases elsewhere fueled concerns over a second wave
of infections that would threaten a nascent economic recovery, flocking demand for safety.
12Week 25 June 14 - June 20, 2020
JUNE 14 - JUNE 20, 2020
WEEK 25
SOVEREIGN RATINGS & FX RATES
Sources: Bloomberg, Bank Audi's Group Research Department
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