Saudi Economic Report - December 2016
Economic Research December 2016
Research Department ARC Research Team, Tel: 966 11 211 9370, [email protected]
Saudi Arabian Economy
Saudi economy – Liquidity improves further The overall liquidity situation, which started easing following the Government’s successful foray into international bond market, improved further during October. The improvement was seen in a number of broader areas such as money supply, driven by an increase in deposits, which also helped in lowering the loan-to-deposit ratio. Saudi three month interbank rate also dropped by 30 points from its peak in October to the levels that was seen in early May 2016. Our channel checks suggest that the premium which some banks used to pay over SAIBOR for bulk deposits have dropped from 120-150 bps to around 10-30 bps now, showing easing pressure on banks to accumulate deposits. Banks’ improved situation is also reflected in loan-to-deposit ratio dropping below the central bank limit of 90% after remaining above the limit for four months. Banks’ decision to defer personal loan repayments for October in view of the rescheduling of personal loans of Government employees after the cut in allowances also seemed to have helped the liquidity situation. Government’s decision to start releasing SAR100bn in delayed payments to contractors in early November is also expected to further support liquidity situation. As private sector credit growth remains weak (almost stagnant since May), the liquidity situation is unlikely to weaken towards the year end in view of the recent measures and the overall sentiment. Broader money supply (M3) grew in October (y-o-y) after falling for 8 months in a row as time and savings deposits grew 23.3% y-o-y. Banks’ claims on the private sector rose 6.3% y-o-y in October, from a 7.0% y-o-y increase in September. Meanwhile, deposits grew for the first time in 9 months in October, by 0.5% y-o-y. As a result, the loan-to-deposit ratio stood below 90%, after remaining above the 90% mark for four consecutive months. Saudi banking sector’s net profit slipped 1.9% y-o-y in the month of October, compared to the 5.5% decline witnessed in Q3 2016. Non-performing loans (% of total gross loans) for the sector rose to 1.3% at the end of Q3 2016, from 1.2% in Q2 2016. Liquidity situation in the Kingdom continued to improve as indicated by easing SAIBOR rates post the international bond sale of US$17.5bn and payments to contractors. Brent crude January futures dropped 0.8% MTD in November 2016 and near term prices will depend on the outcome of the OPEC meeting on Nov 30. OPEC pumped an extra 240,000 bpd in October, amounting to 33.64mbpd, mainly driven by a rise in Nigerian, Libyan and Iraqi oil production. The IMF has reiterated its forecast of a 13% budget deficit for Saudi Arabia in 2016. Further, the IMF expects the Kingdom’s 2017 budget deficit to contract to 9.5% of GDP due to higher income from oil coupled with the controlled government expenditure. POS transactions gained 1.4% y-o-y in October 2016, from a rise of 0.9% y-o-y in September, while ATM transactions rose by 0.7% y-o-y in October, as against a yearly fall of 5.5% in September, which could be attributable to Banks’ deferral of consumer loans payments for October. Saudi Arabia’s foreign reserve assets fell at the fastest pace in eight months (on a y-oy basis) despite the Kingdom’s international bond sale in October, suggesting that the government may have partially cleared its outstanding dues with its contractors by drawing its foreign assets. On the equity front, the TASI climbed 14.8% MTD in November 2016, versus an increase of 6.9% m-o-m in October 2016. Crude price outlook: The US Energy Information Administration (EIA), in its November 2016 report, estimated Brent crude oil prices to average around US$43/barrel in 2016 and US$51/barrel in 2017.
Disclosures Please refer to the important disclosures at the back of this report.
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Economic Research December 2016
Figure 1: Key macro indicators Variable Inflation Rate (2007=100) Average Oil Price (Arab Light) (US$/Barrel) Money Supply (M3) Total Banking Sector Claims
Nov-16
Oct-16
Sep-16
2015
2014
-
2.6%
3.0%
2.2%
2.7%
41.9
48.3
42.7
49.9
97.1
-
0.6%
-4.0%
2.6%
11.9%
-
13.8
14.5
10.5
11.3
Interbank Interest Rate (3 Month)
2.086
2.372
2.345
0.88
0.936
Repo Rate
2.00
2.00
2.00
2.00
2.00
0.5
0.5
0.5
0.5
0.25
Q2 2016*
Q1 2016*
2015*
2014* 3.6%
Reverse Repo Rate GDP Rate at Constant Prices (2010=100)
-
1.39%
1.54%
3.5%
Current Account to GDP Ratio (current prices)
-
-5.3%
-12.9%
-8.3%
9.8%
Total Imports (fob) to GDP Ratio (current prices)
-
19.7%
22.6%
24.0%
21.0%
Non-oil Exports to GDP Ratio (current prices)
-
7.3%
7.4%
7.6%
7.6%
Source: SAMA, * Provisional, Arab light and Interbank interest rate data are as on 29th November 2016
Figure 2: Saudi crude oil production trend – Crude oil output grew by 2.7% y-o-y in October 2016, compared to a rise of 2.9% y-o-y in September (September figures were revised higher).
Figure 3: Crude oil prices trend – Crude oil prices (Brent January futures contract) lost 0.8% MTD in November, vis-à-vis a 4.2% m-o-m drop in October 2016. Oil prices were choppy in November as investors were watchful ahead of the key OPEC meeting on Nov. 30. 70
10.8
12.0%
10.6
10.0%
10.4
8.0%
65 60 55
10.2
6.0%
10.0
4.0%
9.8 2.0%
9.6
0.0%
9.4 9.2
-2.0%
9.0
-4.0%
8.8
-6.0%
Saudi Crude oil production
50 45 40 35 30 25 20
YoY growth
Brent
WTI
Arab Light th
Source: Bloomberg, Al Rajhi Capital
Source: Bloomberg, Al Rajhi Capital. Data up to 28 November 2016.
Figure 4: Non-oil export trend (y-o-y) – Non-oil exports declined by 27.6% y-o-y in September 2016, backed by a drop in plastics & rubbers and chemical products segments which constitute 58.7% of the total exports. YoY 70.0%
Figure 5: Non-oil import trend (y-o-y) – Non-oil imports dropped 35.9% y-o-y in September 2016, pulled down by machinery & electrical and transport equipment segment which account for 42.8% of the total imports. YoY 60.0%
60.0%
50.0%
50.0%
40.0%
40.0%
30.0%
30.0%
20.0%
20.0%
10.0%
10.0%
0.0%
0.0%
-10.0%
-10.0%
-20.0%
-20.0%
-30.0%
-30.0%
-40.0%
-40.0%
-50.0%
Non-oil Export
Source: GAS, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Non-oil Import
Source: GAS, Al Rajhi Capital
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Economic Research December 2016
Figure 6: Non-oil exports Commodities (SAR mn)
Jul-16
Aug-16
Sep-16
% y-o-y
% m-o-m
Plastics & Rubbers
4,445
5,123
3,359
-22.0%
-34.4%
Chemical Products
3,338
3,679
2,444
-44.3%
-33.6%
Ordinary Metals
989
1,231
730
-35.6%
-40.7%
Transport Equipments
663
1,104
1,065
-8.3%
-3.5%
2,384
3,335
2,282
-13.9%
-31.6%
11,819
14,472
9,880
-27.6%
-31.7%
Others Total Source: GAS, Al Rajhi Capital
Figure 7: Non-Oil Imports Commodities (SAR mn)
Jul-16
Aug-16
Sep-16
% y-o-y
% m-o-m
Machinery & Electricals
8,275
10,198
7,296
-41.0%
-28.5%
Transport Equipments
5,157
7,372
5,957
-34.5%
-19.2%
Ordinary Metals
3,529
4,118
2,913
-39.3%
-29.3%
Chemical Products
3,011
4,039
2,644
-32.4%
-34.5%
Others
13,508
16,068
12,143
-33.1%
-24.4%
Total
33,480
41,795
30,953
-35.9%
-25.9%
Source: GAS, Al Rajhi Capital
Figure 8: Money supply growth (y-o-y) – Broader money supply (M3) grew marginally in October after falling for 8 months in a row, to stand at SAR1,784bn, supported by several government measures to boost liquidity in the economy.
Figure 9: Deposits break-up – Time & saving deposits grew in October as savings by private sector increased, while demand deposits declined at a slower pace helped by a rise in government sector deposits. SAR bn 1,200
25.0% 20.0%
1,000
15.0% 800
10.0% 5.0%
600
0.0%
400
-5.0% 200
-10.0% -15.0%
0
M1
M2
M3
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Time and Saving Deposits
Demand Deposits
Source: SAMA, Al Rajhi Capital
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Economic Research December 2016
Figure 10: Credit and deposit growth – Total credit growth for private sector slowed down; meanwhile deposits rose for the first time in nine months. YoY 20.0%
Figure 11: Loans to deposits – The loan-to-deposit ratio dropped to 89.1% in October 2016, after remaining above the 90% mark for four consecutive months. 92% 90%
15.0%
88% 86%
10.0% 84% 82%
5.0%
80% 0.0%
78% 76%
-5.0%
74% -10.0%
72%
Deposits
Credit
Loans to Deposit ratio
Source: SAMA, Al Rajhi Capital
Source: SAMA, Al Rajhi Capital
Figure 12 Non performing loans
Figure 13 Net Profit for Banks
3.0
SAR mn 4,500
2.0
4,000
1.0
3,500
0.0 3,000 -1.0 2,500
-2.0 -3.0
2,000
-4.0
1,500
-5.0
1,000
-6.0
500
-7.0 Net Non- perf orming loans to capital Nonperf orming loans to total gross loans
Source: SAMA, Al Rajhi Capital
Source: SAMA, Al Rajhi Capital
Figure 14: Foreign reserves – Declined by SAR 41bn from September to SAR 2,039bn (~US$543.6bn) in October despite the international bond sale, suggesting the government might have utilized the reserves to clear its outstanding dues. SAR bn
3,000
20.0%
Figure 15: Major components of foreign assets – Foreign deposits abroad registered a monthly fall for the fifth consecutive month in October, while the investments in foreign securities rose on a m-o-m basis after briefly falling in September. SAR bn 2,500
15.0%
2,500
10.0% 2,000
2,000
5.0% 1,500
1,500
0.0% -5.0%
1,000
1,000
-10.0% 500
500
-15.0%
0
-20.0%
Foreign Reserves Assets
YoY
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0
Foreign Currency & Deposits Abroad
Investment in Foreign Assets
Source: SAMA, Al Rajhi Capital
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Economic Research December 2016
Figure 16: Inflation trend (y-o-y) – The general index of cost of living rose at the slowest rate, since December 2015, by 2.6% y-o-y in October 2016.
Figure 17: Inflation drivers (y-o-y) – The inflation in food & beverages segment dropped for the fourth consecutive month, by 2.1% y-o-y in October 2016 (-1.3% y-o-y in September 2016).
5.0%
14.0%
4.5%
12.0%
4.0%
10.0%
3.5%
8.0%
3.0%
6.0%
2.5%
4.0%
2.0%
2.0%
1.5%
0.0%
1.0%
-2.0%
0.5%
-4.0%
0.0%
General Index
Source: GAS, Al Rajhi Capital
Food And Beverages
Furnishings, Household
Transport
Housing, Water, Electricity, Gas
Source: GAS, Al Rajhi Capital
Figure 18: Tadawul index performance
Figure 19: TASI one year historic 12-month forward P/E chart
Index
Million
7000
500
15.0x
450
6800
400
14.0x
6600 350 6400
13.0x
300
6200
250
12.0x
200
6000
11.0x 150
5800 100 5600
10.0x
50
5400
0
9.0x 8.0x
Volume RHS
TASI
Source: Bloomberg, Al Rajhi Capital, Data from 31st October 2016 to 28th November 2016.
Figure 20: Top 5 Sectors MoM
Source: Bloomberg, Al Rajhi Capital. Data up to 28th November 2016.
Figure 21: Bottom 5 sectors MoM
70.0%
14.0%
60.0%
12.0%
50.0%
10.0%
40.0%
8.0%
30.0%
6.0%
20.0%
4.0%
10.0% 2.0% 0.0% 0.0%
st
th
st
th
Source: Tadawul, Al Rajhi Capital, Returns calculated from 31 October to 28 November 2016. Source: Tadawul, Al Rajhi Capital, Returns calculated from 31 October to 28 November 2016.
Disclosures Please refer to the important disclosures at the back of this report.
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Economic Research December 2016
Figure 22: Top 5 Gainers for the month of November Name Monthly Return Market Cap (SAR bn) Avg Volume (mn) Sector Saudi Research & Marketing Group
71.4%
2.6
1.3
Media and Publishing
Saudi Printing & Packaging Co
52.6%
1.1
3.4
Media and Publishing
Saudi Transport and Investment Co
45.3%
1.2
0.9
Transport
Fawaz Abdulaziz Al Hokair & Co
41.1%
6.9
2.1
Retail
Saudi Ceramic Co
35.5%
1.6
0.4
Building and Construction
Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn. Data calculated from 31st October to 28th November 2016.
Figure 23: Top 5 Losers for the month of November Name Monthly Return Market Cap (SAR bn) Avg Volume (mn) Sector National Commercial Bank
-2.3%
85.6
1.4
Banks & Financial Services
National Medical Care Co
3.5%
3.0
0.2
Retail
Mouwasat Medical Services Co
5.2%
6.8
0.1
Retail
Saudi Arabian Mining Co
5.4%
47.8
1.7
Industrial Investment
Alinma Bank
5.6%
21.3
25.1
Banks & Financial Services
Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn. Data calculated from 31st October to 28th November 2016.
Figure 24: Point-of-sale transactions (POS) trend – Point-of-sale (POS) transactions rose, on a yearly basis, for the second consecutive month in October 2016. 50%
SAR bn 80.0
50%
40%
70.0
40%
30%
60.0
30%
20%
50.0
20%
10%
40.0
10%
0%
30.0
0%
-10%
20.0
-10%
-20%
10.0
-20%
SAR bn 20.0 18.0
Figure 25: ATM cash withdrawals trend – ATM cash withdrawals rebounded in October after a brief yearly drop in September 2016.
16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 -
-30%
POS
-
-30%
YoY
Source: SAMA, Al Rajhi Capital
Figure 26: Emirates NBD Saudi PMI Index
ATM Cash withdrawals
YoY
Source: SAMA, Al Rajhi Capital
Figure 27: Consumer spending trend (POS and ATM cash Withdrawals)
64
SAR bn 80.0
62
70.0
60
60.0
58
50.0 40.0
56 30.0 54 52 50
20.0 10.0 -
48
POS
Source Bloomberg, Al Rajhi Capital. Data for November not released yet.
Disclosures Please refer to the important disclosures at the back of this report.
ATM Cash withdrawals
Source: SAMA, Al Rajhi Capital
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Economic Research December 2016
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Disclosures Please refer to the important disclosures at the back of this report.
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Economic Research December 2016
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Disclosures Please refer to the important disclosures at the back of this report.
8
Research Department ARC Research Team, Tel: 966 11 211 9370, [email protected]
Saudi Arabian Economy
Saudi economy – Liquidity improves further The overall liquidity situation, which started easing following the Government’s successful foray into international bond market, improved further during October. The improvement was seen in a number of broader areas such as money supply, driven by an increase in deposits, which also helped in lowering the loan-to-deposit ratio. Saudi three month interbank rate also dropped by 30 points from its peak in October to the levels that was seen in early May 2016. Our channel checks suggest that the premium which some banks used to pay over SAIBOR for bulk deposits have dropped from 120-150 bps to around 10-30 bps now, showing easing pressure on banks to accumulate deposits. Banks’ improved situation is also reflected in loan-to-deposit ratio dropping below the central bank limit of 90% after remaining above the limit for four months. Banks’ decision to defer personal loan repayments for October in view of the rescheduling of personal loans of Government employees after the cut in allowances also seemed to have helped the liquidity situation. Government’s decision to start releasing SAR100bn in delayed payments to contractors in early November is also expected to further support liquidity situation. As private sector credit growth remains weak (almost stagnant since May), the liquidity situation is unlikely to weaken towards the year end in view of the recent measures and the overall sentiment. Broader money supply (M3) grew in October (y-o-y) after falling for 8 months in a row as time and savings deposits grew 23.3% y-o-y. Banks’ claims on the private sector rose 6.3% y-o-y in October, from a 7.0% y-o-y increase in September. Meanwhile, deposits grew for the first time in 9 months in October, by 0.5% y-o-y. As a result, the loan-to-deposit ratio stood below 90%, after remaining above the 90% mark for four consecutive months. Saudi banking sector’s net profit slipped 1.9% y-o-y in the month of October, compared to the 5.5% decline witnessed in Q3 2016. Non-performing loans (% of total gross loans) for the sector rose to 1.3% at the end of Q3 2016, from 1.2% in Q2 2016. Liquidity situation in the Kingdom continued to improve as indicated by easing SAIBOR rates post the international bond sale of US$17.5bn and payments to contractors. Brent crude January futures dropped 0.8% MTD in November 2016 and near term prices will depend on the outcome of the OPEC meeting on Nov 30. OPEC pumped an extra 240,000 bpd in October, amounting to 33.64mbpd, mainly driven by a rise in Nigerian, Libyan and Iraqi oil production. The IMF has reiterated its forecast of a 13% budget deficit for Saudi Arabia in 2016. Further, the IMF expects the Kingdom’s 2017 budget deficit to contract to 9.5% of GDP due to higher income from oil coupled with the controlled government expenditure. POS transactions gained 1.4% y-o-y in October 2016, from a rise of 0.9% y-o-y in September, while ATM transactions rose by 0.7% y-o-y in October, as against a yearly fall of 5.5% in September, which could be attributable to Banks’ deferral of consumer loans payments for October. Saudi Arabia’s foreign reserve assets fell at the fastest pace in eight months (on a y-oy basis) despite the Kingdom’s international bond sale in October, suggesting that the government may have partially cleared its outstanding dues with its contractors by drawing its foreign assets. On the equity front, the TASI climbed 14.8% MTD in November 2016, versus an increase of 6.9% m-o-m in October 2016. Crude price outlook: The US Energy Information Administration (EIA), in its November 2016 report, estimated Brent crude oil prices to average around US$43/barrel in 2016 and US$51/barrel in 2017.
Disclosures Please refer to the important disclosures at the back of this report.
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Economic Research December 2016
Figure 1: Key macro indicators Variable Inflation Rate (2007=100) Average Oil Price (Arab Light) (US$/Barrel) Money Supply (M3) Total Banking Sector Claims
Nov-16
Oct-16
Sep-16
2015
2014
-
2.6%
3.0%
2.2%
2.7%
41.9
48.3
42.7
49.9
97.1
-
0.6%
-4.0%
2.6%
11.9%
-
13.8
14.5
10.5
11.3
Interbank Interest Rate (3 Month)
2.086
2.372
2.345
0.88
0.936
Repo Rate
2.00
2.00
2.00
2.00
2.00
0.5
0.5
0.5
0.5
0.25
Q2 2016*
Q1 2016*
2015*
2014* 3.6%
Reverse Repo Rate GDP Rate at Constant Prices (2010=100)
-
1.39%
1.54%
3.5%
Current Account to GDP Ratio (current prices)
-
-5.3%
-12.9%
-8.3%
9.8%
Total Imports (fob) to GDP Ratio (current prices)
-
19.7%
22.6%
24.0%
21.0%
Non-oil Exports to GDP Ratio (current prices)
-
7.3%
7.4%
7.6%
7.6%
Source: SAMA, * Provisional, Arab light and Interbank interest rate data are as on 29th November 2016
Figure 2: Saudi crude oil production trend – Crude oil output grew by 2.7% y-o-y in October 2016, compared to a rise of 2.9% y-o-y in September (September figures were revised higher).
Figure 3: Crude oil prices trend – Crude oil prices (Brent January futures contract) lost 0.8% MTD in November, vis-à-vis a 4.2% m-o-m drop in October 2016. Oil prices were choppy in November as investors were watchful ahead of the key OPEC meeting on Nov. 30. 70
10.8
12.0%
10.6
10.0%
10.4
8.0%
65 60 55
10.2
6.0%
10.0
4.0%
9.8 2.0%
9.6
0.0%
9.4 9.2
-2.0%
9.0
-4.0%
8.8
-6.0%
Saudi Crude oil production
50 45 40 35 30 25 20
YoY growth
Brent
WTI
Arab Light th
Source: Bloomberg, Al Rajhi Capital
Source: Bloomberg, Al Rajhi Capital. Data up to 28 November 2016.
Figure 4: Non-oil export trend (y-o-y) – Non-oil exports declined by 27.6% y-o-y in September 2016, backed by a drop in plastics & rubbers and chemical products segments which constitute 58.7% of the total exports. YoY 70.0%
Figure 5: Non-oil import trend (y-o-y) – Non-oil imports dropped 35.9% y-o-y in September 2016, pulled down by machinery & electrical and transport equipment segment which account for 42.8% of the total imports. YoY 60.0%
60.0%
50.0%
50.0%
40.0%
40.0%
30.0%
30.0%
20.0%
20.0%
10.0%
10.0%
0.0%
0.0%
-10.0%
-10.0%
-20.0%
-20.0%
-30.0%
-30.0%
-40.0%
-40.0%
-50.0%
Non-oil Export
Source: GAS, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Non-oil Import
Source: GAS, Al Rajhi Capital
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Economic Research December 2016
Figure 6: Non-oil exports Commodities (SAR mn)
Jul-16
Aug-16
Sep-16
% y-o-y
% m-o-m
Plastics & Rubbers
4,445
5,123
3,359
-22.0%
-34.4%
Chemical Products
3,338
3,679
2,444
-44.3%
-33.6%
Ordinary Metals
989
1,231
730
-35.6%
-40.7%
Transport Equipments
663
1,104
1,065
-8.3%
-3.5%
2,384
3,335
2,282
-13.9%
-31.6%
11,819
14,472
9,880
-27.6%
-31.7%
Others Total Source: GAS, Al Rajhi Capital
Figure 7: Non-Oil Imports Commodities (SAR mn)
Jul-16
Aug-16
Sep-16
% y-o-y
% m-o-m
Machinery & Electricals
8,275
10,198
7,296
-41.0%
-28.5%
Transport Equipments
5,157
7,372
5,957
-34.5%
-19.2%
Ordinary Metals
3,529
4,118
2,913
-39.3%
-29.3%
Chemical Products
3,011
4,039
2,644
-32.4%
-34.5%
Others
13,508
16,068
12,143
-33.1%
-24.4%
Total
33,480
41,795
30,953
-35.9%
-25.9%
Source: GAS, Al Rajhi Capital
Figure 8: Money supply growth (y-o-y) – Broader money supply (M3) grew marginally in October after falling for 8 months in a row, to stand at SAR1,784bn, supported by several government measures to boost liquidity in the economy.
Figure 9: Deposits break-up – Time & saving deposits grew in October as savings by private sector increased, while demand deposits declined at a slower pace helped by a rise in government sector deposits. SAR bn 1,200
25.0% 20.0%
1,000
15.0% 800
10.0% 5.0%
600
0.0%
400
-5.0% 200
-10.0% -15.0%
0
M1
M2
M3
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Time and Saving Deposits
Demand Deposits
Source: SAMA, Al Rajhi Capital
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Economic Research December 2016
Figure 10: Credit and deposit growth – Total credit growth for private sector slowed down; meanwhile deposits rose for the first time in nine months. YoY 20.0%
Figure 11: Loans to deposits – The loan-to-deposit ratio dropped to 89.1% in October 2016, after remaining above the 90% mark for four consecutive months. 92% 90%
15.0%
88% 86%
10.0% 84% 82%
5.0%
80% 0.0%
78% 76%
-5.0%
74% -10.0%
72%
Deposits
Credit
Loans to Deposit ratio
Source: SAMA, Al Rajhi Capital
Source: SAMA, Al Rajhi Capital
Figure 12 Non performing loans
Figure 13 Net Profit for Banks
3.0
SAR mn 4,500
2.0
4,000
1.0
3,500
0.0 3,000 -1.0 2,500
-2.0 -3.0
2,000
-4.0
1,500
-5.0
1,000
-6.0
500
-7.0 Net Non- perf orming loans to capital Nonperf orming loans to total gross loans
Source: SAMA, Al Rajhi Capital
Source: SAMA, Al Rajhi Capital
Figure 14: Foreign reserves – Declined by SAR 41bn from September to SAR 2,039bn (~US$543.6bn) in October despite the international bond sale, suggesting the government might have utilized the reserves to clear its outstanding dues. SAR bn
3,000
20.0%
Figure 15: Major components of foreign assets – Foreign deposits abroad registered a monthly fall for the fifth consecutive month in October, while the investments in foreign securities rose on a m-o-m basis after briefly falling in September. SAR bn 2,500
15.0%
2,500
10.0% 2,000
2,000
5.0% 1,500
1,500
0.0% -5.0%
1,000
1,000
-10.0% 500
500
-15.0%
0
-20.0%
Foreign Reserves Assets
YoY
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0
Foreign Currency & Deposits Abroad
Investment in Foreign Assets
Source: SAMA, Al Rajhi Capital
4
Economic Research December 2016
Figure 16: Inflation trend (y-o-y) – The general index of cost of living rose at the slowest rate, since December 2015, by 2.6% y-o-y in October 2016.
Figure 17: Inflation drivers (y-o-y) – The inflation in food & beverages segment dropped for the fourth consecutive month, by 2.1% y-o-y in October 2016 (-1.3% y-o-y in September 2016).
5.0%
14.0%
4.5%
12.0%
4.0%
10.0%
3.5%
8.0%
3.0%
6.0%
2.5%
4.0%
2.0%
2.0%
1.5%
0.0%
1.0%
-2.0%
0.5%
-4.0%
0.0%
General Index
Source: GAS, Al Rajhi Capital
Food And Beverages
Furnishings, Household
Transport
Housing, Water, Electricity, Gas
Source: GAS, Al Rajhi Capital
Figure 18: Tadawul index performance
Figure 19: TASI one year historic 12-month forward P/E chart
Index
Million
7000
500
15.0x
450
6800
400
14.0x
6600 350 6400
13.0x
300
6200
250
12.0x
200
6000
11.0x 150
5800 100 5600
10.0x
50
5400
0
9.0x 8.0x
Volume RHS
TASI
Source: Bloomberg, Al Rajhi Capital, Data from 31st October 2016 to 28th November 2016.
Figure 20: Top 5 Sectors MoM
Source: Bloomberg, Al Rajhi Capital. Data up to 28th November 2016.
Figure 21: Bottom 5 sectors MoM
70.0%
14.0%
60.0%
12.0%
50.0%
10.0%
40.0%
8.0%
30.0%
6.0%
20.0%
4.0%
10.0% 2.0% 0.0% 0.0%
st
th
st
th
Source: Tadawul, Al Rajhi Capital, Returns calculated from 31 October to 28 November 2016. Source: Tadawul, Al Rajhi Capital, Returns calculated from 31 October to 28 November 2016.
Disclosures Please refer to the important disclosures at the back of this report.
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Economic Research December 2016
Figure 22: Top 5 Gainers for the month of November Name Monthly Return Market Cap (SAR bn) Avg Volume (mn) Sector Saudi Research & Marketing Group
71.4%
2.6
1.3
Media and Publishing
Saudi Printing & Packaging Co
52.6%
1.1
3.4
Media and Publishing
Saudi Transport and Investment Co
45.3%
1.2
0.9
Transport
Fawaz Abdulaziz Al Hokair & Co
41.1%
6.9
2.1
Retail
Saudi Ceramic Co
35.5%
1.6
0.4
Building and Construction
Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn. Data calculated from 31st October to 28th November 2016.
Figure 23: Top 5 Losers for the month of November Name Monthly Return Market Cap (SAR bn) Avg Volume (mn) Sector National Commercial Bank
-2.3%
85.6
1.4
Banks & Financial Services
National Medical Care Co
3.5%
3.0
0.2
Retail
Mouwasat Medical Services Co
5.2%
6.8
0.1
Retail
Saudi Arabian Mining Co
5.4%
47.8
1.7
Industrial Investment
Alinma Bank
5.6%
21.3
25.1
Banks & Financial Services
Source: Bloomberg, Al Rajhi Capital, Companies with market cap more than SAR 1bn. Data calculated from 31st October to 28th November 2016.
Figure 24: Point-of-sale transactions (POS) trend – Point-of-sale (POS) transactions rose, on a yearly basis, for the second consecutive month in October 2016. 50%
SAR bn 80.0
50%
40%
70.0
40%
30%
60.0
30%
20%
50.0
20%
10%
40.0
10%
0%
30.0
0%
-10%
20.0
-10%
-20%
10.0
-20%
SAR bn 20.0 18.0
Figure 25: ATM cash withdrawals trend – ATM cash withdrawals rebounded in October after a brief yearly drop in September 2016.
16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 -
-30%
POS
-
-30%
YoY
Source: SAMA, Al Rajhi Capital
Figure 26: Emirates NBD Saudi PMI Index
ATM Cash withdrawals
YoY
Source: SAMA, Al Rajhi Capital
Figure 27: Consumer spending trend (POS and ATM cash Withdrawals)
64
SAR bn 80.0
62
70.0
60
60.0
58
50.0 40.0
56 30.0 54 52 50
20.0 10.0 -
48
POS
Source Bloomberg, Al Rajhi Capital. Data for November not released yet.
Disclosures Please refer to the important disclosures at the back of this report.
ATM Cash withdrawals
Source: SAMA, Al Rajhi Capital
6
Economic Research December 2016
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Disclosures Please refer to the important disclosures at the back of this report.
7
Economic Research December 2016
Disclaimer and additional disclosures for Economic Research Disclaimer This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction.
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