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Saudi cabinet imposes 2.5% yearly fee on undeveloped land (Reuters)

The fee is on undeveloped land within city limits intended for residential or commercial use. It will be imposed as a percentage of the land's value, reflecting the recommendation of the kingdom's advisory Shura Council. The government has been considering for years whether to use taxes to push owners into developing or selling unused land to help stem a housing crisis.

UAE GDP to grow 3% this year, to reconsider investments (Reuters)

The government is still continuing with its spending, though they will rationalize any unnecessary investments, said Mubarak Rashid al-Mansouri, the Central Bank governor. The central bank had said in July the government expected to trim state spending by 4.2% this year in response to reduced revenue because of the lower oil price.

Saudi Arabia to issue SR20bn of bonds to banks next week (Reuters)

As per NCB, despite effects of Iran deal & oil plunge, positive internal dynamics are largely due to expansionary policies. By 2Q15, KSA drew c$60bn from its $732bn reserves this year, covering c42% of budget deficit. For 1st time in 8y, it is expected to issue local bonds of $30.7bn in 2H15 to cover 1/3 of deficit. It has low debt/GDP ratio of 1.6% & massive foreign reserves.

SME loan impairments to surge between Dh5bn to Dh7bn (Gulf News)

UAE banking sector is expected to face a big surge in possible defaults from SMEs this year, said Al Ghurair, Chairman of UAE Banks Federation. SMEs, supported by liberal bank funding in post-financial crisis years, are faced with excess leverage & a difficult business environment which are resulting in delays &/or defaults in loan repayments.

Egypt’s investor confidence at highest point, El Sisi (OBG)

Key partnerships sealed at Egypt Economic Dvlpt Conf. restored economic stability & projects like Suez Canal are proofs of milestones that bring a wider & more diverse range of investors to Egypt for its megaprojects. >half of the initial agreements valued at $66.4bn signed at the EEDC are being implemented, incl. $21bn in exploration deals with intl oil companies.

S&P cuts Oman credit rating as budget deficit widens (Reuters)

S&P projects a period of sustained low oil prices will impair fiscal & external balances more than expected. It lowered the long-term local & foreign currency ratings to BBB+ from A-, keeping a negative outlook, citing risks over next 2 years. There is insufficient strength to offset the concentration of the economy in hydrocarbons & the resulting volatility.

Algeria sees energy earnings, reserves dropping sharply in 2016 (Reuters)

Algeria's energy earnings are forecast to fall to $26.4bn next year while foreign exchange reserves will dip to $121bn after low oil prices cut into the economy. The country, a major gas supplier to Europe, has already said energy earnings will fall by 50% this year to about $34b. Oil and gas sales make up 95% of its exports and account for 60% of the country's budget.

Lebanon needs $6.2bn for infra-structure (Daily Star)

The needs for infrastructure construction are to be executed with help of the private sector under the public-private-partnership program, said secretary-general of the Higher Privatization Council. These are in the fields of electricity, water, transport and jails. These projects would create a GDP growth of 4.4% & secure 216,000 jobs.

Iraq seeking $6bn from IMF, World Bank adviser (Zawya)

The gvmt may issue local bonds next year to help finance its budget deficit. It is expected to begin discussions with the World Bank & IMF in November to secure $6bn. Interest rate should not exceed 2%, with a long-term repayment period. In July, IMF approved $1.2bn emergency loan to help Iraq, cope with oil price drop & military offensive against Islamic State.

Saudi Arabia to start privatizing airports in 2016 (Gulf News)

KSA will begin privatizing its airports & related services in 1Q16 as the gvmt looks to diversify its income amid declining oil prices. King Khalid Intl Airport will be privatized as Riyadh Airports Co, followed by the air navigation sector as Air Navigation Services Co, & by the info. techno. sector as Saudi Co for Aviation Information Systems.

KSA spent SR112bn on telecom & IT in 2014 (Arab News)

KSA leads the GCC in terms of spending on telecom and IT, as per Communications & Info Techno Commission (CITC). Telecom services stood at 65% of spend, hardware 23%, IT 8% & software services 4%. Total investments reached SR17.83bn: ready-made & advanced software 47%, (SR8.39bn), telecom devices 27% and IT hardware 26%.

SMEs key drivers of the UAE economy (Minister of Economy)

SMEs are key drivers of UAE economy, accounting for >94% of total number of operating companies. 73% are engaged in wholesale & retail trade, 16% in services, & 11% in manufacturing. SMEs currently contribute >60% of UAE’s GDP and are projected to raise their share to 70% within the next 6 years in line with the National Agenda of UAE Vision 2021.

Issue 07 | December 2015

MENA online travel market to double to $35bn in next 2y (Arabian Travel)

According to Euromonitor, 60% of airline reservations & ticketing was made online in 2014 by Dubai based travelers, driven largely by a younger tech-smart generation for whom online and mobile technology is the preferred booking channel. Regionally, 46% of airline tickets in UAE are booked online, followed by Kuwait 34%, KSA 23%, Lebanon 18% & Egypt 12%.

Renewable energy investments in Jordan worth >JD1bn (Jordan Times)

Renewable energy is one of the most attractive & rapidly growing sectors in terms of attracting investments, said Jordan Investment Commission President. Investor appetite to channel money into solar and wind energy projects is growing. The ecosystem for renewable energy projects is promising as Jordan has >300 sunny days a year.

Personal luxury goods market flatlines in MENA as tourism decreases (Bain)

After a few years of hyper growth, MENA personal luxury goods market plateaued in ‘15. Deceleration is mostly driven by reduction of tourism spend mainly in UAE, while domestic market remains strong. Jewelry continued to outperform other goods. Going forward, the market is to show new signs of life driven by mall openings, but growth will be much slower.

MENA healthcare spend to reach $144bn by 2020 (Oman Daily Observer)

Healthcare spending in MENA is witnessed big development over the last 10 years, according to Al Masah Capital. Crossing $95.8bn in ‘13, gvmt spending in healthcare across the region tripled from just c$30.4bn in ‘03. GCC, at c52% of MENA, spent $49.8bn in ‘13 versus $15.5 bn in ’03. Healthcare emerged as one of the most promising sectors in MENA.

Egypt to offer 10 PPP projects worth $12 billion (Egypt)

Investors will be offered 49% ownership with land in the 10 projects - two tourism projects worth $7bn & 8 industrial projects worth $5bn - on public-private partnership (PPP) basis. The $3bn Ajiba project will see the hilly area transform into a tourism spot while the $4bn Rommel tourism project will see the construction of hotels and restaurants.

10,000 jobs await teachers in nursery schools in KSA (Arab News)

Ministry of Education said 1,500 schools opened in the past 5 years, with an avg of 300 kindergartens annually. This brings the total to 1,793 schools across KSA. The ministry seeks to increase the number of children & create jobs for women who specialized in the field. It also prepared manuals for KG schools, & issued 2 guidelines, incl regulatory procedures.

Saudi builder Binladin to cut about 15,000 jobs (Reuters)

Chief executive Alex Thursby said the UAE banking system as a whole lost $15bn in government deposits from September 2014 to September 2015. The outflow highlights the impact of current low oil prices on government finances. Most banks in the region grapple with margin pressures & liquidity issues as the oil producing states face a squeeze on budgets.

Warburg Pincus, General Atlantic buy stake in UAE payments firm (Reuters)

The 2 US PE firms bought 49% in UAE-based Network International from Abraaj. The deal is a rare example of Western PE capital being injected into MENA, attracted by the gradual transition from cash to electronic transactions. No disclosure on price paid was made. The firm is present in >40 countries and is 51% owned by Emirates NBD.

Kuwait's Agility plans $1bn fundraising to support expansion (Reuters)

The largest Gulf Arab transport logistics company plans to raise $1bn to fund future growth. The company is focusing on diversifying its business across emerging markets as low oil prices risk delaying some projects in MENA. Agility is already present in around 100 countries & plans further expansion within ASEAN, the GCC and Africa.

NCB Capital funds buy majority stake in major Saudi publisher (Reuters)

2 funds owned by NCB Capital bought >50% of Saudi Research & Marketing Group, publisher of newspaper Asharq al-Awsat & one of MENA's largest media firms. The off-market transactions were disclosed just hours after an announcement from Kingdom Holding, owned by Prince Alwaleed bin Talal, of plans to sell its 29.9% stake in SRMG for $223.3 mn.

EGA Launches Syndication For $4.9bn Term Facilities

Emirates Global Aluminium, one of the world's leading aluminium producers, announced the launch of the syndication of 7y corporate facilities, structured with a 3y grace & 30% balloon payment on maturity. Proceeds will refinance existing project finance debt facilities which were secured in 2007 and 2012 by one of its operating assets, Emirates Aluminium.

Dolphin Energy seals $863 mn loan

The Abu Dhabi gvmt-controlled venture that produces & transports natural gas to UAE & Oman secured a 15-year loan from banks. Pricing details were not given. Mubadala owns 51% of Dolphin while Total & Occidental Petroleum each hold 24.5%. In May, banking sources said Dolphin planned to raise a $1bn loan & had invited banks to pitch for a role advising it.

IFC invests in Souq, Supports E-Commerce in MENA (IFC)

IFC is investing $27mn in Souq, the largest e-commerce platform in MENA. will help Souq diversify its offerings & enhance its logistics & payment infrastr., helping it reach more customers and support local suppliers. The expansion is expected to generate over 1,700 direct high-skilled jobs in logistics, IT services, and marketing over the next five years.

First Gulf Bank cut close to 100 jobs last week (Reuters)

FGB, 3rd largest UAE bank by assets, cut close to 100 jobs, in the latest sign of Gulf banks adjusting to deteriorating market conditions. Economic growth in GCC has been stalling due to lower oil prices & cuts in state spending, which is being felt in the local banking system incl. through squeezed liquidity from reduced deposits & rising default rates among SMEs.

Oman completes $4.5 bln contract talks for plastics complex (Reuters)

The Liwa Plastics Project, being built in Oman's northern port city of Sohar, is a big part of the effort to diversify the economy away from hydrocarbons. It is designed to enable Oman to produce polyethylene for the 1st time, & to increase its output of polypropylene. Oman Oil Refineries & Petroleum Industries Co is expected to sign the contracts & financing deals by year-end.

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NEWSLETTERM E N A M O N T H L Y

Country name

Index name

Market cap.

(in bn)

Index performance

Value 1-month 3-month 1-year

GCC (sum) $887 -2.4% -5.9% -17% KSA TDW MAIN IDX/d $439 7,293.79 -1.6% -3.8% -16% Abu Dhabi ADX MAIN INDEX $111 4,172.74 -2.0% -5.7% -9% Dubai DFM MAIN INDEX $66 3,204.28 -8.5% -12.5% -25% Qatar QE MAIN 20 IDX/d $147 10,535.05 -13.0% -12.7% -21% Kuwait KW MAIN INDEX $83 5,803.34 0.5% -0.3% -14% Oman MSM MAIN 30 ID/d $22 5,557.73 -6.4% -5.5% - 20% Bahrain BB ALL SHARE IDX $20 1,2224.67 -1.4% -5.1% - 14%

U.S. S&P 500 INDEX/d - 2,080.41 0.1% 5.5% 1% U.S. NASDAQ COMPOSI/d - 5,108.67 1.1% 7.0% 7% U.S. DJ INDU AVERAG/d - 17,719.92 0.3% 7.2% -1%

Europe STXE 600 PR/d - 386.05 2.7% 6.2% 11% France CAC 40 INDEX/d - 4,957.31 1.2% 6.5% 13% Germany XETRA DAX PF/d - 101,374.01 4.9% 10.9% 14% Spain IBEX 35 INDEX/d - 10,433.90 0.3% 1.2% -4% Holland AEX-Index/d - 469.88 1.6% 5.5% 10% Italy FTSE MIB/d - 22,835.84 1.2% 3.5% 14% Russia RTS INDEX - 837.06 0.2% 1.6% - 13% Belgium BEL20/d - 3,761.77 4.5% 8.6% 14% Greece AT COM SHR PR /d - 637.74 -9.5% 1.7% - 34% Portugal PSI 20 INDEX/d - 5,367.27 2.2% 1.7% 3%

Asia Japan NIKKEI 225 INDEX - 20,012.40 3.5% 4.5% 13% China SSE COMPOSITE/d - 3,457.73 1.9% 7.5% 28% Kong Kong HANG SENG INDE/d - 22,381.35 -2.8% 1.5% -8% Australia ALL ORDINARIES - 5,312.62 -1.3% -0.1% -2% Korea KOSPI - 2,023.93 -1.8% 2.6% 1% India S&P SENSEX/d - 26,169.41 -1.9% - 0.5% -9% Singapore SET Index - 1,357.01 -2.5% - 1.6% -15%

Latin America Brazil BVSP BOVESPA I/d - 45,156.66 -1.6% -3.2% -18% Argentina BUSE MERVAL IN/d - 12,972.14 4.1% 17.6% 32%

GCC Credit Curves for Investment Grade Corporate Bonds - US$ Denominated

Price to Earning Ratios (last-12-month)

Price to Book Ratios (last interim)

Dubai excels over Shanghai, Madrid in innovation (PwC, Dubai Chamber)

Dubai Innovation Index results highlight the gvmt's leading role in supporting innovation. Dubai ranks 16th among world's 28 leading innovation-driven cities, & 11th for its efficiency in innovation outputs. The index is the first-of-its-kind in the world focusing on emerging cities. Medical care, media, marketing, IT, retail & industry are the most innovative sectors.

Challenging time for IPOs due to economic, political concerns (PwC)

Although the trend in recent years has been lower activity during Q3, this year there were no IPOs in Q3. Looking at the activity in the same quarter in 2014, there were 2 offerings raising $1.6bn, largely driven by $1.5bn from Emaar Malls while 4 IPOs raising $1.1bn in Q2 ‘15. As we enter final quarter, minimal or no activity amongst GCC corporates is expected.

Broadening the taxable basis across the GCC and MENA (EY)

To increase the scope of income tax laws, GCC is pursuing tax determinations with significantly broader interpretations of activities or actions that constitute doing business in-country. New concepts like Virtual Service Permanent Establishment and dependent agents are being used in KSA & Kuwait to determine taxable presence or taxable activities.

48% in UAE not protected in death & serious illness (Friends Provident)

40% of surveyed do not have life or critical illness cover, costs being a major reason. A further 20% said it is not required & the remainder said were unfamiliar with the concept or had other reasons. The concept of such plans is well understood by those who purchased them, with 80% aiming to protect their family's future. 14% bought insurance as cover for a loan or mortgage.

67% in UAE still opt to rent a property rather than buy (compareit4me)

However, 76% would like to buy, but listed factors like house price, among reasons not to. 54% of residents still opt for rental over ownership because they are unsure as to how long they will remain in the region. 36% stated house prices as the reason they choose to rent over buying, with 12.4% giving the requirement of a 25% deposit when purchasing a property.

GCC family businesses to face funding & credit rating constraints (Moody’s)

Ownership restrictions, corporate governance limitations & a lack of geographical or cash flow diversification are key credit risk challenges faced by GCC family businesses. For most, the focus of activities in 1 country or the region brings with it concentration risks. Despite their financial strength, this leaves them vulnerable to external shocks.

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