mena weekly monitor (33) 17-08-2020 · 2020. 8. 17. · p.8 abu dhabi's senaat eyes npcc...

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1 Week 33 August 09 - August 15, 2020 AUGUST 09 - AUGUST 15, 2020 WEEK 33 Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected] CONTACTS RESEARCH Treasury & Capital Markets Bechara Serhal (961-1) 977421 [email protected] Nadine Akkawi (961-1) 977401 [email protected] Private Banking Toufic Aouad (961-1) 954922 toufi[email protected] Corporate Banking Khalil Debs (961-1) 977229 [email protected] Marwan Barakat (961-1) 977409 [email protected] Jamil Naayem (961-1) 977406 [email protected] Salma Saad Baba (961-1) 977346 [email protected] Fadi Kanso (961-1) 977470 [email protected] Farah Nahlawi (961-1) 959747 [email protected] Nivine Turyaki (961-1) 959615 [email protected] MENA MARKETS: WEEK OF AUGUST 09 - AUGUST 15, 2020 The MENA WEEKLY MONITOR Economy ___________________________________________________________________________ p.2 IATA SAYS MIDDLE EAST AVIATION AND RELATED INDUSTRIES’ JOB LOSSES COULD GROW TO 1.5 MILLION The International Air Transport Association (IATA) released new data showing the impact on the Middle East aviation industry and on economies caused by the shutdown of air traffic due to the COVID-19 pandemic has deepened over recent weeks. Also in this issue p.3 Kuwait closes 2019/2020 fiscal year with US$ 18 billion fiscal deficit p.3 Dubai’s non-oil sector expands in July for first time since COVID-19 p.4 Egypt’s Central Bank keeps interest rates stable despite retreating inflation and COVID-19 spillovers Surveys ___________________________________________________________________________ p.5 COVID-19 WILL BE A POSITIVE ACCELERANT OF THE TRANSFORMATION ALREADY UNDERWAY IN SAUDI ARABIA Most thought leaders and decision makers in Saudi Arabia anticipate that COVID-19 will be a positive accelerant of the transformation already underway in the Kingdom, according to a new report. Also in this issue p.5 Performance of hotels in Jeddah recovers slightly in July, as per STR p.6 Most UAE residents favor cashless economy, as per YouGov Corporate News ___________________________________________________________________________ p.7 ISKAN AND SEZAD TO BUILD INTEGRATED ACADEMIC CITY IN OMAN Iskan Oman Investment Company has joined hands with the Special Economic Zone Authority at Duqm (SEZAD) to develop an integrated academic city over a one million square meter area featuring higher education colleges. Also in this issue p.7 Saudi SVC signs investment deal with technology investment fund p.7 Masdar to buy 50% stake in EDF's US clean energy portfolio p.8 Abu Dhabi's Senaat eyes NPCC merger with NMDC p.8 Eagle Hills and Emaar Entertainment JV to bring world-class aquarium to Marassi Galleria Markets In Brief ___________________________________________________________________________ p.9 EQUITY PRICES UP WEEK-ON-WEEK, TWO-WAY FLOWS IN BOND MARKETS Activity in MENA equity markets remained skewed to the upside this week, as reflected by a 2.3% rise in the S&P Pan Arab Composite index, mainly tracking increases in global and emerging stock markets on optimism over the first Coronavirus vaccine, while also supported by extended oil price gains and some favorable market-specific and company-specific factors. In parallel, regional fixed income markets saw mixed price movements. Some papers registered price declines as news about the first Coronavirus vaccine and signs that US economy is recovering from the COVID-19 pandemic increased appetite for risk. Some other papers traced an upward trajectory, mainly supported by extended oil price gains.

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1Week 33 August 09 - August 15, 2020

AUGUST 09 - AUGUST 15, 2020

WEEK 33

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

CONTACTS

RESEARCH

Treasury & Capital Markets

Bechara Serhal

(961-1) 977421

[email protected]

Nadine Akkawi

(961-1) 977401

[email protected]

Private Banking

Toufic Aouad

(961-1) 954922

[email protected]

Corporate Banking

Khalil Debs

(961-1) 977229

[email protected]

Marwan Barakat

(961-1) 977409

[email protected]

Jamil Naayem

(961-1) 977406

[email protected]

Salma Saad Baba

(961-1) 977346

[email protected]

Fadi Kanso

(961-1) 977470

[email protected]

Farah Nahlawi

(961-1) 959747

[email protected]

Nivine Turyaki

(961-1) 959615

[email protected]

MENA MARKETS: WEEK OF AUGUST 09 - AUGUST 15, 2020

The MENA WEEKLY MONITOR

Economy___________________________________________________________________________p.2 IATA SAYS MIDDLE EAST AVIATION AND RELATED INDUSTRIES’ JOB LOSSES COULD GROW TO 1.5 MILLIONThe International Air Transport Association (IATA) released new data showing the impact on the Middle

East aviation industry and on economies caused by the shutdown of air traffic due to the COVID-19

pandemic has deepened over recent weeks.

Also in this issuep.3 Kuwait closes 2019/2020 fiscal year with US$ 18 billion fiscal deficit

p.3 Dubai’s non-oil sector expands in July for first time since COVID-19

p.4 Egypt’s Central Bank keeps interest rates stable despite retreating inflation and COVID-19

spillovers

Surveys___________________________________________________________________________p.5 COVID-19 WILL BE A POSITIVE ACCELERANT OF THE TRANSFORMATION ALREADY UNDERWAY IN SAUDI ARABIAMost thought leaders and decision makers in Saudi Arabia anticipate that COVID-19 will be a positive

accelerant of the transformation already underway in the Kingdom, according to a new report.

Also in this issuep.5 Performance of hotels in Jeddah recovers slightly in July, as per STR

p.6 Most UAE residents favor cashless economy, as per YouGov

Corporate News___________________________________________________________________________p.7 ISKAN AND SEZAD TO BUILD INTEGRATED ACADEMIC CITY IN OMANIskan Oman Investment Company has joined hands with the Special Economic Zone Authority at Duqm

(SEZAD) to develop an integrated academic city over a one million square meter area featuring higher

education colleges.

Also in this issuep.7 Saudi SVC signs investment deal with technology investment fund

p.7 Masdar to buy 50% stake in EDF's US clean energy portfolio

p.8 Abu Dhabi's Senaat eyes NPCC merger with NMDC

p.8 Eagle Hills and Emaar Entertainment JV to bring world-class aquarium to Marassi Galleria

Markets In Brief___________________________________________________________________________p.9 EQUITY PRICES UP WEEK-ON-WEEK, TWO-WAY FLOWS IN BOND MARKETSActivity in MENA equity markets remained skewed to the upside this week, as reflected by a 2.3% rise

in the S&P Pan Arab Composite index, mainly tracking increases in global and emerging stock markets

on optimism over the first Coronavirus vaccine, while also supported by extended oil price gains and

some favorable market-specific and company-specific factors. In parallel, regional fixed income markets

saw mixed price movements. Some papers registered price declines as news about the first Coronavirus

vaccine and signs that US economy is recovering from the COVID-19 pandemic increased appetite for risk.

Some other papers traced an upward trajectory, mainly supported by extended oil price gains.

2Week 33 August 09 - August 15, 2020

AUGUST 09 - AUGUST 15, 2020

WEEK 33

ECONOMY______________________________________________________________________________IATA SAYS MIDDLE EAST AVIATION AND RELATED INDUSTRIES’ JOB LOSSES COULD GROW TO 1.5 MILLION

The International Air Transport Association (IATA) released new data showing the impact on the Middle

East aviation industry and on economies caused by the shutdown of air traffic due to the COVID-19

pandemic has deepened over recent weeks.

Job losses in aviation and related industries could grow to 1.5 million, as per the IATA. That is more

than half of the region’s 2.4 million aviation-related employment and 300,000 more than the previous

estimate.

Full-year 2020 traffic is expected to plummet by 56% compared to 2019. The previous estimate was a

fall of 51%. GDP supported by aviation in the region could fall by up to US$ 85 billion, against a previous

estimate of US$ 66 billion, as per the IATA.

Middle East economies have been brought to their knees by COVID-19, added the IATA which argued that

without air connectivity being re-established, the socio-economic impact is getting worse.

Businesses that contribute substantially to the region’s GDP and provide thousands of jobs are at risk

without these vital connections. For the region’s economic recovery, it is imperative that the industry

restart safely as soon as possible, said the IATA’s Regional Vice President for Africa and the Middle East.

To minimize the impact on jobs and the broader Middle East economy, an accelerated recovery of air

transport across the region is paramount. This can be achieved through government action in two

priority areas: harmonizing the restart of air transport across the region and continued financial and

regulatory support.

TOTAL MARKET PERFORMANCE OF GLOBAL CARRIERS

Sources: IATA, Bank Audi's Group Research Department

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With regards to harmonizing the restart of air transport across the region, some countries in the Middle

East are opening their borders to regional and international air travel but inconsistent application of

biosafety measures along with unnecessary entry requirements are deterring passengers and suppressing

the resumption of air travel. Harmonizing the restart of aviation across the region is critical for economic

recovery. Governments need to implement the common global set of air transport biosecurity measures,

contained in the International Civil Aviation Organization’s CART Take-off Guidelines.

With regards to continued financial and regulatory support, the IATA’s Regional Vice President for Africa

and the Middle East said that the IATA is grateful to governments which have provided relief to aviation.

However, the situation is not getting better and governments need to continue applying financial and

regulatory relief measures. A regional priority is securing support in the form of wage subsidies and loans

as well as an extension of the waiver for the 80-20 use-it-or-lose-it slot rule, as per the IATA. This is needed

to provide critical relief to airlines in planning schedules amid unpredictable demand patterns. Saudi

Arabia has confirmed a waiver for its slot coordinated airports and the IATA hopes the UAE, Morocco and

Tunisia will do so soon. Airlines need to focus on meeting demand and not meeting slot rules that were

never meant to accommodate the sharp fluctuations of such a crisis, as per the same source.

_____________________________________________________________________________KUWAIT CLOSES 2019/2020 FISCAL YEAR WITH US$ 18 BILLION FISCAL DEFICIT

Kuwait, facing one of the worst economic crunches in the oil-exporting Gulf region, posted an actual

fiscal deficit of KWD 5.64 billion (the equivalent of US$ 18.44 billion) in the 2019/2020 fiscal year, it said

this week, a 69% increase year-on-year.

Total revenues fell by over 16% in the fiscal year that ended in March to KWD 17.22 billion, the finance

ministry said, while expenditure decreased by 3.2% to KWD 21.14 billion.

Kuwait is scrambling to boost State coffers badly hit by the coronavirus crisis and low crude prices,

according to Reuters.

Kuwait transfers 10% of total annual revenues to one of its sovereign funds, the Future Generations Fund.

In the 2019/2020 fiscal year, the transfer amounted to KWD 1.72 billion, meaning before the transfer the

deficit recorded for the year was KWD 3.92 billion, according to the Kuwaiti finance ministry.

The government plans to issue between KWD 4 billion and KWD 5 billion (the equivalent of US$ 13

billion to US$ 16 billion) in public debt by the end of the fiscal year ending March 2021 if the Parliament

approves a long-debated debt law, a government document seen by Reuters showed.

The law, which was formally submitted to Parliament last month, would allow it to borrow KWD 20 billion

(the equivalent of US$ 65 billion) over 30 years, as per the same source.

Legislators have been requesting more visibility from the State about use of the funds and repayment

mechanisms given the government's heavy reliance on oil income. Revenue from oil made up 89% of the

total in the 2019/2020 fiscal year, according to the finance ministry.

_____________________________________________________________________________DUBAI’S NON-OIL SECTOR EXPANDS IN JULY FOR FIRST TIME SINCE COVID-19

Dubai’s non-oil economy witnessed an expansion in July for the first time in five months, signaling the

start of post COVID-19 recovery, according to a recent report. The seasonally adjusted IHS Markit Dubai

Purchasing Managers' Index (PMI) rose to 51.7 in July 2020, compared to 50.0 in June of the same year.

The July PMI data for the Dubai non-oil private sector signaled the start of a post-COVID-19 recovery,

according to IHS Markit, with the headline reading of 51.7 pointing to the first month of improvement

since February, driven by stronger expansions of activity and new work.

According to the IHS Markit report, improved business conditions were largely driven by a solid increase

in new work received by companies in Dubai in July.

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WEEK 33

Consumer demand also continued to pick up as lockdown restrictions were loosened further. The

reopening of tourist destinations and the resumption of international flights helped firms generate

additional sales.

Companies responded by raising purchases solidly and at the fastest rate in seven months. However, this

came at a cost to cash flow. With margins tight and sales still at relatively weak levels, firms continued to

shed jobs in order to cut back on staffing costs. The rate of reduction did slow from June 2020 though,

according to IHS Markit.

The report also showed that Dubai businesses reported a robust expansion in output at the start of the

third quarter, with the rate of growth quicker than that seen in June and the best recorded this year.

Despite the non-oil economy gaining traction, businesses optimism of a rise in activity in the next 12

months weakened in July, according to IHS Markit.

According to firms, uncertainty around the length of a recovery from the COVID-19 crisis is growing.

Many businesses still expect to recover output by summer 2021, however disparity on this appeared to

widen, as per the same source.

_____________________________________________________________________________EGYPT’S CENTRAL BANK KEEPS INTEREST RATES STABLE DESPITE RETREATING INFLATION AND COVID-19 SPILLOVERS

The Monetary Policy Committee (MPC) this week decided to keep the Central Bank of Egypt’s (CBE)

overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 9.25%,

10.25%, and 9.75%, respectively. The discount rate was also kept unchanged at 9.75%.

Annual headline urban inflation declined to 4.2% in July 2020 from 5.6% in June 2020, the lowest rate

recorded since November 2019, as per CBE releases. The decline was due to continued muted inflationary

pressures and supported by favorable base effects. Monthly headline urban inflation recorded 0.4%

in July 2020 compared to 1.8% in July 2019, which incorporated the impact of the implemented fiscal

consolidation measures to reach cost recovery for fuel products in 2019. The July 2020 monthly headline

urban inflation continued to reflect higher non-food prices and lower food prices for the third consecutive

month. In the meantime, annual core inflation declined to 0.7% in July 2020 from 1.0% in June 2020, the

lowest rate on record.

Preliminary data show that real GDP growth for FY 19/20 recorded 3.8% compared to 5.6% in the

first half of the fiscal year. This reflects the impact of the COVID-19 outbreak and the accompanying

containment measures. Nevertheless, the contribution of the public sector to growth increased in 2020

Q1, particularly in the petroleum manufacturing sector, which supported economic activity during this

period. Meanwhile, a number of leading indicators started showing signs of recovery in June and July

2020, in tandem with the easing of the containment measures. The unemployment rate recorded 9.2% in

April 2020, compared to 7.7% and 8.0% in 2020 Q1 and 2019 Q4, respectively, as per the CBE.

Globally, economic activity remained weak despite some recovery associated with some ease of the

COVID-19 related lockdown measures, which partly supported the recent increase of international

oil prices. Meanwhile, global financial conditions continued to improve, supported mainly by policy

measures despite the ongoing uncertainty, added the CBE.

Annual headline inflation rate is expected by the CBE to remain below the inflation target’s mid-point

of 9.0% on average during 2020 Q4. Yet with the ongoing high level of global uncertainty, and given the

preemptive measures taken by the Central Bank of Egypt, including the reduction of 300 basis points

during the unscheduled MPC meeting on March 16, 2020, the MPC decided to keep key policy rates

unchanged.

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SURVEYS_____________________________________________________________________________COVID-19 WILL BE A POSITIVE ACCELERANT OF THE TRANSFORMATION ALREADY UNDERWAY IN SAUDI ARABIA

Most thought leaders and decision makers in Saudi Arabia anticipate that COVID-19 will be a positive

accelerant of the transformation already underway in the Kingdom, according to a new report. The

survey commissioned by independent Saudi think tank Al Aghar Group in partnership with global

management consultancy Kearney focused specifically on the social impact of the COVID-19 crisis on the

Kingdom through 2025.

Respondents believe that COVID-19 is accelerating the advent of the “future of work” in the Kingdom

and more than 65% see this as fundamentally positive. 66% see the anticipated increased participation

in the platform-enabled gig economy as positive.

69% see the growing need for the retraining of employees as positive, spurring national adaption to

the new normal. However, the survey also revealed some concerns regarding the security of formal

employment and self-employment, with 37% seeing the effect of the crisis as negative.

Most survey respondents (70%) expect education in the Kingdom to undergo a positive transformation

with the adoption of new, innovative, and inclusive modes of learning.74% of respondents expect the

Kingdom’s education sector to have an improved and more inclusive educational landscape with a

significant increase in the use of technologies and digital resources with a strong prevalence of online

education. 64% of respondents even anticipate a change in the type of skills that are prioritized in

schools and universities to match the emerging market demands.

78% of the respondents believe that the impact of the pandemic on the healthcare in the Kingdom

through 2025 will be highly beneficial. In particular, the respondents anticipate positive shifts in

both national consciousness regarding the importance of health and wellbeing (86%) and increasing

investment in preventative public health (81%).

About 58% of respondents believe there will be a wide adoption of telemedicine services in the Kingdom

in the near future, as patients gain greater comfort and confidence in this method of consultation with

their health providers. Most respondents believe the health crisis has accelerated the process of digital

transformation in the country, particularly in the finance and retail sectors. Also, 75% of respondents see

the anticipated wider prevalence of e-commerce as positive, and 89% see as positive increasing use of

cashless payments for face to face transactions by 2025.

Seven out of ten respondents expect an increase in consumption of online entertainment (streaming

services, online gaming). 60% of respondents expect reduced citizen spending. Interestingly, sentiment

regarding this change is balanced reflecting the tradeoffs between the virtues of increased discipline in

personal finance and the painful consequences for firms as a result of reduced demand.

By 2025, 78% of respondents expect that Covid-19 will lead to a significant and welcome (83%) step

change in government preparedness for future crises. 68% of respondents anticipate a significant impact

on government information-sharing and 75% look forward to this increased transparency. 65% anticipate

a moderate, but positive change in the willingness of citizens to contribute towards government efforts.

_____________________________________________________________________________PERFORMANCE OF HOTELS IN JEDDAH RECOVERS SLIGHTLY IN JULY, AS PER STR

Hotels in Jeddah, Saudi Arabia are seeing some green shoots after posting their lowest occupancy levels

during the lockdown period, the latest figures showed.

Hoteliers in the Kingdom’s port city reported that occupancy rates hit 32.1% in July 2020, an improvement

from April’s record lows, as coronavirus restrictions have eased, according to the preliminary data

released by STR, which does hospitality industry benchmarking around the globe.

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The Coronavirus pandemic severely impacted the hospitality sector, particularly when governments

imposed lockdowns to contain the spread of the virus. In many markets around the world, several hotels

were empty while others opted to permanently shut down. In Jeddah, occupancy levels averaged just

21.9% in April, down by 57.9% compared with the same period in 2019.

Saudi Arabia had imposed some of the strictest lockdowns In March in a bid to curb coronavirus infections.

In May, it joined other Gulf States in gradually loosening mobility restrictions and reopening businesses.

Hoteliers started to see some improvement in June, according to STR, and the trend continued In July,

when the average daily rate (ADR) hit SR 769.4, the highest for any month in the market since October

2019, while the revenue per available room (RevPAR) averaged SR 247.2, the highest since February 2020.

Jeddah’s hotel industry reported improved by low performance levels during July 2020, STR said in a

report. Each of Jeddah’s three performance metrics were up from June, it added.

However, last month’s occupancy level was still lower by 57.9% compared with July 2019. The ADR during

the period, which stood at SR 769.4, was also down by 36.8% compared with last year, while the RevPAR

( SR 247.2) dropped by 73.4% from last year, as per STR.

_____________________________________________________________________________MOST UAE RESIDENTS FAVOR CASHLESS ECONOMY, AS PER YOUGOV

A large majority of UAE residents (63%) consider it very or fairly positive if their country became cashless,

according to a new survey held by international Internet-based market research and data analytics firm

YouGov.

Men are more likely than women to hold this view (67% vs 55%). Preference for electronic payment is

also higher among high-income households (earning AED 25,000+ (US$ 6,800+) monthly) than the rest

at 76%.

In general, ever since the Coronavirus pandemic engulfed the country, people seem to prefer going

cashless and slightly more than half (52%) claimed to have paid in cash less often since the outbreak.

Respondents within the income group of AED 10,001- AED 20,000 were more likely to say this than the

rest of the income group members.

However, a small proportion (17%) have paid in cash more often since the outbreak with high-income

individuals (AED 25,000+) more likely than others to have done so.

The availability of cash has not been affected amidst the crisis and residents have access to cash both

from free ATMS ( with 85% saying they find it very or fairly easy to access cash from here) as well as from

an ATM that charges a fee for a transaction (68% saying this).

In their day-to-day lives, cash is mostly used to make payments for very or fairly cheap items in physical

stores, while cards (debit or credit) are used to make expensive (fairly or very expensive) purchases. Very

few are using digital modes of payment for any of these purchases.

When it comes to making purchases in shops, a higher number of respondents consider it important

to be able to make payments through credit or debit cards (79%), compared to cash (56%) or digital

means like Apple Pay, Samsung Pay etc. (58%). Contactless payment, either through cards (86%) or digital

wallets (69%), appears to be more important to high-income members (AED 25,000+) than the rest of the

population.

However, when it comes to personal services such as getting transportation, haircut, hiring a window

cleaner, seven in ten prefer making payments in cash (70%). Perhaps despite the ongoing COVID-19

situation, residents may not always have a choice of making these payments in any other form.

The data indicate a large proportion of residents (67%) consider it important to have the option of paying

with a card for these services, regardless of the circumstances. Comparatively, fewer favor digital modes

of payment (56%) and it seems the use of this medium is less popular among residents than the other

forms of payment, according to YouGov.

7Week 33 August 09 - August 15, 2020

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CORPORATE NEWS_____________________________________________________________________________ISKAN AND SEZAD TO BUILD INTEGRATED ACADEMIC CITY IN OMAN

Iskan Oman Investment Company has joined hands with the Special Economic Zone Authority at Duqm

(SEZAD) to develop an integrated academic city over a one million square meter area featuring higher

education colleges.

Iskan Oman Investment Company is one of the leading companies in the Sultanate with interests in key

sectors such as education, real estate and infrastructure, and also has a diversified base of shareholders

from Oman and Kuwait.

The master planning of the area, which will also include commercial, residential and hospitality zones,

was completed by Iskan Investment and approved by Sezad.

As part of the first phase of the development, Iskan Oman Investment Company has entered into a sub-

usufruct agreement with Middle East Education Venture (MEEV) to develop a portion of land for setting

up a higher education college in SEZAD area.

The new college will be the core of the university city project that Iskan Oman Investment Company is

planning to establish in a phased manner in the Special Economic Zone at Duqm. It will launch its first

program in the academic year 2021-2022.

The higher education college is the second investment for Iskan Oman Investment Company at SEZD as

it developed previously a healthcare facility that has been operational since 2017.

_____________________________________________________________________________SAUDI SVC SIGNS INVESTMENT DEAL WITH TECHNOLOGY INVESTMENT FUND

The Saudi Venture Capital Company (SVC) signed an investment contract with the venture capital (VC)

fund Merak Technology Investment Fund, licensed by the Capital Market Authority (CMA), to encourage

the establishment of VC funds that invest in startups during their various stages of growth.

This investment will stimulate capital financing to small and medium-sized enterprises (SMEs) and

entrepreneurs, enhance investment channels in startups, and benefit from local capabilities, with the

aim of generating profits to investors and strategic returns that serve the growth of the Saudi economy.

The collaboration comes as part of the VC initiative launched by the General Authority for Small and

Medium Enterprises (Monsha’at) to support and promote the spread of private and venture capital

funds, boost the financing environment for entrepreneurs in the Kingdom, close current financing gaps

for startups, while increasing investment opportunities in SMEs and further contributing to the success

of startups and the continuity of their growth.

_____________________________________________________________________________MASDAR TO BUY 50% STAKE IN EDF'S US CLEAN ENERGY PORTFOLIO

Masdar, one of the world’s leading clean energy developers and a unit of Mubadala Investment Company,

has announced its second strategic investment in the US in a deal with EDF Renewables North America

that will see it acquire a 50% stake in a 1.6-gigawatt (GW) clean-energy portfolio.

As per the deal, Masdar will buy a 50% interest in three utility-scale wind farms in Nebraska and Texas

totaling 815 MW, and five photovoltaic (PV) solar projects in California – two of which include battery

energy storage systems – totaling 689 MW of solar and 75 MW of lithium-ion battery energy storage.

The 243 MW Coyote wind project is located in Scurry County, Texas; the 273 MW Las Majadas wind

project is in Willacy County, Texas; and the 300 MW Milligan 1 wind project is in Saline County, Nebraska.

8Week 33 August 09 - August 15, 2020

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All three wind projects are currently under construction and expected to begin commercial operations

in the fourth quarter of 2020.

In Riverside County, California, the Desert Harvest 1 and Desert Harvest 2 PV projects total 213 MW of

solar and 35 MW / 140 MWh of battery storage. Also in Riverside County are the 173 MW Maverick 1 and

136 MW Maverick 4 solar PV projects.

According to Masdar, these four projects are also under construction and slated for commercial

operations in the fourth quarter of 2020.

The final project in the portfolio is Big Beau, a 166 MW solar PV and 40 MW/160 MWh battery energy

storage project, which is in Kern County and will reach commercial operation in 2021. All solar projects

utilize horizontal single-axis tracking technology.

Power from the diversified portfolio projects will be sold under long-term contracts to a variety of off

takers, including utilities, hedge providers and community choice aggregators (CCAs), it stated.

In total, the eight projects have created more than 2,000 jobs in the country’s clean energy sector, and

will displace more than 3 million metric tons of carbon dioxide annually.

______________________________________________________________________________ABU DHABI'S SENAAT EYES NPCC MERGER WITH NMDC

Abu Dhabi's General Holding Corporation (Senaat) along with other minority shareholders of National

Petroleum Construction Company submitted an offer to the board of National Marine Dredging Company,

one of the regional leaders in dredging and marine construction, seeking merger of NPCC with NMDC.

The combined group would be one of the largest integrated oil and gas and marine services EPC players

in the region.

The offer sets out the principal terms and conditions by which Senaat, a part of ADQ, one of the region’s

largest holding companies, and other minority shareholders of NPCC would transfer NPCC to NMDC.

The proposed transaction would create a new national and regional integrated EPC giant with an

established footprint in key markets within MENA and South Asia regions.

As per the proposal, Senaat and other minority shareholders of NPCC will transfer the entire issued share

capital of NPCC to NMDC. In consideration for the issued share capital transfer, NMDC would issue to

Senaat and other minority shareholders of NPCC a convertible instrument, convertible into 575,000,000

ordinary shares in the combined group upon closing of the transaction.

______________________________________________________________________________EAGLE HILLS AND EMAAR ENTERTAINMENT JV TO BRING WORLD-CLASS AQUARIUM TO MARASSI GALLERIA

Eagle Hills, a real estate investment and development company, announced the formation of a joint

venture with Emaar Entertainment to bring an aquarium and underwater zoo to Marassi Galleria, the

shopping mall located at the heart of the Marassi Al Bahrain Development in Bahrain.

Upon its completion, Marassi Aquarium and Underwater Zoo will be an edutainment zone within the

Marassi Galleria. The new addition will span across 26,900 square feet. The state-of-the-art aquarium will

have a capacity to hold 360,000 liters of water and over 200 species of fish.

Operated by Emaar Entertainment, Marassi Aquarium and Underwater Zoo will comprise four different

ecological zones.

9Week 33 August 09 - August 15, 2020

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EQUITY MARKETS INDICATORS (AUGUST 09 TILL AUGUST 15, 2020)

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

CAPITAL MARKETS____________________________________________________________________________EQUITY MARKETS: WEEKLY PRICE GAINS IN MENA EQUITY MARKETS

Activity in MENA equity markets remained skewed to the upside this week, as reflected by a 2.3%

rise in the S&P Pan Arab Composite index, mainly tracking increases in global and emerging stock

markets on optimism over the first Coronavirus vaccine, while also supported by extended oil price

gains and some favorable market-specific and company-specific factors.

The heavyweight Saudi Tadawul registered price rises of 2.9% week-on-week, mainly supported by

some favorable market-specific and company-specific factors and due to extended oil price gains

(+0.9%) on optimism over oil demand recovery. Saudi Aramco’s CEO said that he sees oil demand

recovering in Asia as economies gradually open up after the easing of Coronavirus lockdowns. Saudi

Aramco, whose market capitalization represents circa 78% of total Saudi market capitalization,

registered price rises of 1.7% to reach SR 33.50. Saudi Aramco announced dividend distribution of

US$ 18.75 billion for the second quarter of 2020, up from US$ 13.4 billion during the same period of

2019. SABIC’s share price increased by 1.1% to SR 88.80. Saudi Kayan Petrochemical Company’s share

price surged by 5.9% to SR 8.61. Also, Jarir Marketing Company’s share price jumped by 9.0% to SR

169.0. The company’s Board of Directors proposed the distribution of dividends at a rate of SR 1.70

per share for the second quarter of 2020 versus a payout of SR 1.40 during the same period of 2019.

The UAE equity markets saw price increases of 0.6% week-on-week, mainly helped by oil price gains

and some favorable market-specific and company-specific factors. The Central Bank of the UAE said

that it is temporarily relaxing two key requirements to improve liquidity and funding needs of banks

to encourage them to lend more to businesses under the COVID-19 economic stimulus plan. Also,

Dubai’s non-oil economy expanded for the first time in five months in July 2020, which marks the

start of a post-Coronavirus recovery. In Dubai, Emirates NBD’s share price jumped by 4.3% to AED

9.75. Emirates NBD restored its digital banking services across all channels after a three-day disruption

caused by a system upgrade. DIB’s share price increased by 1.0% to AED 3.89. Emaar Properties’ share

price closed 3.0% higher at AED 2.78.

In Abu Dhabi, Aldar Properties’ share price jumped by 4.0% over the week to AED 1.83. Aldar

Properties posted net profits of AED 484 million during the second quarter of 2020 versus net profits

of AED 476 million a year earlier. International Holdings’ share price surged by 6.9% to AED 36.20. The

10Week 33 August 09 - August 15, 2020

AUGUST 09 - AUGUST 15, 2020

WEEK 33

aquaculture firm reported net profits of AED 814 million during the first half of 2020 as compared

to net profits of AED 11 million a year earlier. ADNOC’s share price closed 1.0% higher at AED 3.18.

RAKBANK’s share price went up by 1.7% to AED 3.52.

The Qatar Exchange posted a 1.5% rise in prices week-on-week, mainly helped by oil price gains and

some favorable company-specific factors. Industries Qatar’s share price jumped by 9.3% to QR 8.80.

Gulf International Services’ share price rose by 2.0% to QR 1.718. GIS announced net profits of QR 54

million during the first half of 2020, up by 84% year-on-year. Al Meera’s share price increased by 2.7%

to QR 20.0. Al Meera posted net profits of QR 107 million during the first half of 2020, versus net profits

of SR 95 million a year earlier.

The Egyptian Exchange registered a 1.5% increase in prices week-on-week, mainly supported by

some favorable market-specific and company-specific factors. The IMF Executive Board approved a

12-month stand-by arrangement for Egypt at a total value of US$ 5.2 billion to help the country cope

with challenges posed by the COVID-19 pandemic.

A closer look at individual stocks shows that Telecom Egypt’s share price increased by 1.2% week-on-

week to LE 13.17. The company announced 2020 second quarter net profits of LE 746 million versus

net profits of LE 512 million a year earlier. Ghabbour Auto’s share price increased by 0.8% to LE 2.50.

The firm announced 2020 second quarter net profits of LE 116 million versus a net loss of LE 19 million

during the same period of 2019. Commercial International Bank’s share price closed 0.7% higher at

LE 64.49. Orascom Investment Holding’s share price surged by 6.7% to LE 0.507. Orascom Investment

Holding Company’s BOD approved splitting the company into to the current Orascom Investment

Holding Company and the new Orascom Financial Holding Company, a move that would attract more

foreign and domestic investments and upgrade the financial position of the two companies, as per

the company’s officials. Talaat Moustafa Group’s share price went up by 5.3% to LE 6.39. Palm Hills

Development’s share price closed 6.5% higher at LE 1.51.

_____________________________________________________________________________FIXED INCOME MARKETS: TWO-WAY FLOWS IN MENA BOND MARKETS THIS WEEK

MENA fixed income markets saw mixed price movements this week. Some papers registered price

declines as news about the first Coronavirus vaccine and signs that US economy is recovering from

the COVID-19 pandemic increased appetite for risk. Some other papers traced an upward trajectory

mainly supported by extended oil price gains.

In the Abu Dhabi credit space, sovereigns maturing in 2024 and 2029 recorded price contractions of

0.34 pt and 1.20 pt week-on-week. Prices of Taqa’26 declined by 0.36 pt. Mubadala’24 closed up by

0.20 pt. ADIB Perpetual (offering a coupon of 7.125%) was up by 0.17 pt.

In the Bahrain credit space, sovereigns maturing in 2023 and 2029 posted price increases of 0.82 pt

each week-on-week. Prices of NOGA’24 improved by 1.30 pt. Fitch Ratings downgraded Bahrain's long-

term foreign currency Issuer Default Rating to “B+” from “BB-”, with “stable” outlook. The downgrade

reflects the combined impact of lower oil prices and the Coronavirus pandemic on Bahrain, which

is causing marked increases in the budget deficit and government debt, pressure on already low FX

reserves and sharp GDP contraction.

In the Egyptian credit space, US dollar-denominated sovereigns maturing in 2023, 2025, 2030 and

2040 saw price expansions of 0.15 pt, 0.92 pt, 0.19 pt and 0.95 pt respectively this week. Prices of Euro-

denominated sovereigns maturing in 2025 and 2030 increased by 0.20 pt and 0.63 pt respectively.

In the Kuwaiti credit space, sovereigns maturing in 2027 were down by 0.63 pt week-on-week. Prices

of KIPCO’27 traded up by 1.30 pt. The Kuwaiti Parliament’s finance and economic panel turned down

a draft bill that might have allowed the government to borrow at home and abroad.

11Week 33 August 09 - August 15, 2020

AUGUST 09 - AUGUST 15, 2020

WEEK 33

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 Saudi credit space, sovereigns maturing in 2025 and 2030 saw price decreases of 0.66 pt and

1.98 pt respectively week-on-week. Saudi Aramco’24 was down by 0.27 pt. Prices of STC’29 declined

by 0.15 pt. SECO’24 posted price contractions of 0.22 pt. Regarding bond issues in the GCC, Moody’s

said that Gulf sovereign borrowers are expected to raise a total of US$ 34 billion through Islamic bonds

this year, up from US$ 25 billion in 2019, signaling that the biggest rise would come from Saudi Arabia,

whose Sukuk issuance is expected to grow by roughly US$ 8 billion in 2020, to US$ 27 billion.

All in all, regional bond markets saw two-way flows this week, as optimism over the first COVID-19

vaccine reduced appetite for safe-haven assets, while extended oil price gains kept MENA debt papers

on investors’ radar screens.

12Week 33 August 09 - August 15, 2020

AUGUST 09 - AUGUST 15, 2020

WEEK 33

SOVEREIGN RATINGS & FX RATES

Sources: Bloomberg, Bank Audi's Group Research Department

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