Saudi Chartbook Feb 2012

8/10/2019 Saudi Chartbook Feb 2012

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bruary 2012 Saudi Chartbook

Real economy: Data for December show that the economy postedthe usual post-Eid al-Adha recovery. Guides to consumer spendingremained strong both in absolute and year-on-year terms. Cementsales were almost at their all-time high in December.

Bank deposits: Bank deposits jumped in line with the usual trend inDecember. Private sector deposits accounted for most of the gain.While demand deposits continued to grow rapidly, time depositsrecorded their first annual growth for over two years.

Bank lending: Bank lending to the private sector fell a little inDecember. This appears to be related to seasonal factors ratherthan a change in risk appetite. Bank lending growth in 2011 was thehighest since 2008.

Inflation: Year-on-year inflation was little changed for the fourthconsecutive month in December. Domestically-generated sources ofinflation continued to rise, offset by a modest fall in food price

inflation. Rental inflation was unchanged for the third month in a row.Trade: Imports and exports both declined during November,probably due to the Eid al-Adha holiday. Both were higher than inNovember 2010. Data from the ports show that volumes of importsand exports rebounded in December.

Oil: Oil prices have been fairly stable during January, with concernsaround Iranian supply offset by a weakening global economy. TheOil Minister recently said that the Kingdoms oil production could beincreased rapidly within a few days, if required.

Exchange rates: The euro has broken its fall against the dollar, but

with the European Central Bank expected to be more active insupporting the Eurozone at the same time as data from the USeconomy has remained strong, a further fall appears likely.

Stock market: The TASI maintained its upward trend duringJanuary, buoyed by strength in global markets, though itunderperformed many owing to some disappointment with fourthquarter results and heightening regional political tensions.

Sectoral performance: Thirteen of the 15 sectors were up throughJanuary 29. Performance was broadly in line with marketperceptions of fourth quarter results.

Fourth quarter results: Net income of listed companies totaledSR21.5 billion in the fourth quarter. As normal, the fourth quarter wasthe worst for the year, though it was petrochemicals, rather thanbanks, that pulled earnings down.

For comments and queries please contact theauthors:

Paul GambleHead of Research

[email protected]:

Gasim Abdulkarim Associate Director: [email protected]

or:

Brad Bourland, CFAChief Economist

[email protected]

Head office:Phone +966 1 279-1111Fax +966 1 279-1571P.O. Box 60677, Riyadh 11555Kingdom of Saudi Arabiawww.jadwa.com

Summary

1


2/14

Data for December show that the economy posted the usual post-Eidal-Adha recovery. Guides to consumer spending remained strongboth in absolute and year-on-year terms. Cement sales were almostat their all-time high in December.

Value of cash withdr awals f rom ATMs

Value of point of sale transactions

Cement sales

2

February 2012

Real economy

The value of cashwithdrawals from ATMsbounced in December afterthe Eid al-Adha holidayaffected November. Theywere up by 22 percent inyear-on-year terms, butcontinued to trend down inriyal terms...

...in contrast, the value ofpoint of sales transactionswas the highest since July.Year-on-year growth was42 percent.

Cement sales in Decemberwere very close to an all-time high.

20

25

30

35

40

45

50

55

60

Jan2008

Apr Jul Oct Jan2009

Apr Jul Oct Jan2010

Apr Jul Oct Jan2011

Apr Jul Oct

( S R b i l l i o n )

0

1000

2000

3000

4000

5000

60007000

8000

9000

10000

Jan2008

May Sep J an2009

May Sep Jan2010

May Sep J an2011

May Sep

( S R m

i l l i o n

)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jan2008

M ay Sep J an2009

May Sep J an2010

May Sep J an2011

May Sep

( m i l l i o n t o n s )


3/14

Bank deposits jumped in line with the usual trend in December.Private sector deposits (companies and individuals) accounted formost of the gain. While demand deposits continued to grow rapidly,time deposits recorded their first annual growth for over two years.

Deposits(year-on-year change)

Private sector share of demand deposits

Demand and time and savings deposit s(year-on-year change)

3

Bank deposits

Commercial bank deposits jumped by 2.8 percent inDecember, in line with theusual seasonal trend. Inyear-on-year terms, depositgrowth was up slightly.

The increase in depositsreflects end-year settlementof outstanding bills in theprivate sector.

The value of time andsavings deposits also roseand was up in year-on-yearterms for the first time sinceOctober 2009.

February 2012

90

91

92

93

94

95

96

97

Jan2009

Apr Jul Oct Jan2010

Apr Jul Oct Jan2011

Apr Jul Oct

( p e r c e n

t )

-20

-10

0

10

20

30

40

Jan2008 Apr Jul Oct Jan2009 Apr Jul Oct Jan2010 Apr Jul Oct Jan2011 Apr Jul Oct

( p e r c e n

t )

D emand d ep os it s Time and s aving s d ep os its

0

5

10

15

20

25

30

Jan 2008 Jul Jan 2009 Jul Jan 2010 Jul Jan 2011 Jul

( p e r c e n

t )


4/14

Bank lending to the private sector fell a little in December. Thisappears related to seasonal factors rather than a change in riskappetite. Bank lending growth in 2011 was the highest since 2008,with medium- and long-term lending accounting for a greater share.

Bank lending to the private sector

Annual growth in bank lending to the private sector

Breakdown of bank lending by maturity(proportion of the total)

4

Bank lending

Bank lending to the privatesector slipped by 0.1percent in December.Lending also fell in theprevious three Decembers,so this is likely to be aseasonal move and weexpect growth to resume inJanuary.

Annual growth in banklending was 10.6 percent in2011, the strongest since2008.

Short-term lending hasconsistently fallen as aproportion of the total. Atend-2011 it was at 57percent, compared to 64percent at end-2008. Thismeans companies arebetter placed to deal withany disruption to bankfunding than they were atthe 2008 financial crisis.

February 2012

-20

-10

0

10

20

30

40

-2

-1

0

1

2

3

4

Jan2008

May Sep Jan2009

May Sep Jan2010

May Sep Jan2011

May Sep

( p e r c e n

t )

( p e r c e n

t )

Mo nth-on-mo nth Year-o n-year - RHS

-5

0

5

10

15

20

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30

35

40

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

( p e r c e n

t )

0

10

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60

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80

90

100

2005 2006 2007 2008 2009 2010 2011

( p e r c e n

t )

Over 3 years 1-3 years Less than 1 year


5/14

With lending to the public and private sectors falling and deposits jumping, bank excess reserves at SAMA hit a near all-time high. Thebanks therefore have plenty of ability to step up lending and supportgrowth in the private sector during 2012.

Change in bank c redit outst anding to key sectors in 2011

Bank holdings of Treasury bills

Loan-to-deposit ratio

5

Bank lending

Manufacturing received thelargest share of newlending in 2011. In thefourth quarter constructionposted the highest growth.Over the second half of theyear; lending to theconstruction sector rose by42 percent.

There was a further fall inlending to the public sector,as the government loweredTreasury bill issuance,which suggests amoderation of concernsabout inflation.

With deposits rising andloans falling, the privatesector loan-to-deposit ratiofell to 77.8 percent. Excessbank reserves at SAMA

jumped to near an all-timehigh of SR97 billion.

February 2012

70

72

74

76

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80

82

84

86

88

90

92

Jan2008

Apr Jul Oct Jan2009

Apr Jul Oct Jan2010

Apr Jul Oct Jan2011

Apr Jul Oct

( p e r c e n

t )

0

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40

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120

140

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Jan2009

Apr Jul Oct Jan2010

Apr Jul Oct Jan2011

Apr Jul Oct

( S R b i l l i o n )

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

Manufacturing Construction Transport &comms.

Commerce Others

( S R m

i l l i o n

)


6/14

Year-on-year inflation was little changed for the fourth consecutivemonth in December. Domestically-generated sources of inflationcontinued to rise, offset by a modest fall in food price inflation. Rentalinflation was unchanged for the third month in a row.

Inflation(year-on-year change)

Inflation(year-on-year change)

Food price inflation

(year-on-year change)

6

Inflation

Year-on-year inflationinched up to 5.3 percent inDecember from 5.2 percentin November.

Domestically-generatedsources of inflation continueto rise, with clothing andfootwear inflation hitting a30-year high.

Food price inflation slowedin line with the global trend.

February 2012

0

2

4

6

8

10

12

Jan2007

May Sep Jan2008

May Sep Jan2009

May Sep Jan2010

May Sep Jan2011

May Sep

( p e r c e n

t )

-2

0

2

4

6

8

10

12

14

Jan2009

Ap r Jul Oct Jan2010

Ap r Jul Oct Jan2011

Ap r Jul Oct

( p e r c e n

t )

Educat ion and entertainment Clothing and footwear Home furniture

-40

-30

-20

-10

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60

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6

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Jan2006

J ul J an2007

J ul J an2008

J ul J an2009

J ul J an2010

J ul J an2011

Jul

( p e r c e n

t )

( p e r c e n

t )

Saudi food price inflation Global food price inflation (FAO index; RHS)


7/14

Imports and exports both declined during November, probably due tothe Eid al-Adha holiday. Both were higher than in November 2010.Data from the ports show that volumes of imports and exportsrebounded in December.

Non-oil exports

Imports(year-on-year change)

Volume of trade through the Kingdoms ports

7

Trade

Non-oil exports fell to athree-month low inNovember because of theEid-al Adha holiday. In year -on-year terms they wereup by 13 percent.

Imports were just positive inyear-on-year terms.

Data from the ports showthat volumes of imports andexports rebounded inDecember.

February 2012

0

1

2

3

4

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7

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9

10

Jan2008

Apr Jul Oct Jan2009

Apr Jul Oct Jan2010

Apr Jul Oct Jan2011

Apr Jul Oct

( m i l l i o n

t o n s

)

Imports Exports

-30

-20

-10

0

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40

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Jan2007

M ay S ep J an2008

M ay S ep J an2009

M ay S ep J an2010

M ay S ep J an2011

May Sep

( p e r c e n

t )

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Jan2008

May Sep Jan2009

May Sep Jan2010

May Sep Jan2011

May Sep

( $ m i l l i o n )


8/14

Oil prices have been fairly stable during January, with concernsaround Iranian supply offset by a weakening global economy. TheOil Minister recently said that the Kingdoms oil production could beincreased rapidly within a few days, if required.

Oil prices

Saudi oil produc tion

Global oil demand(International Energy Agency data)

8

Oil

Oil prices have been fairlystable during January, withconcerns around Iraniansupply offset by aweakening global economy.

The Kingdom has steppedup oil production in the pastfew months and the OilMinister recently indicatedthat it could reach 11.4 to11.8 million barrels per daywithin a few days, ifneeded.

The International Energy Agency has cut its forecastfor global oil demandgrowth in 2012 to 1.1 millionbarrels per day from 1.3million barrels per day inDecember (and 1.6 millionbarrels per day in August).

February 2012

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130

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12

( $ p e r b a r r e l )

Brent crude WTI

7,500

8,000

8,500

9,000

9,500

10,000

10,500

J a n - 0

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M a y - 0

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S e p - 0

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M a y - 0

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M a y - 1

0

S e p - 1

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J a n - 1

1

M a y - 1

1

S e p - 1

1

( t h o u s a n d b a r r e l s p e r d a y )

-1500

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2003 2004 2005 2006 2007 2008 2009 2010 2011 2012f

( t h o u s a n

d b a r r e

l s p e r

d a y

)


9/14

The euro has broken its fall against the dollar, but with the EuropeanCentral Bank expected to be more active in supporting the Eurozoneat the same time as data from the US economy has remained strong,a further fall appears likely.

Dollar/euro

Chinese yuan/dollar

Syrian pound/dollar

9

Exchange rates

The euro has strengthenedagainst the dollar over thepast week, though thisappears to be a correctionafter a sustained period ofdecline that pulled it to a 14-month low in mid-January.

The Chinese yuan hasresumed its appreciationagainst the dollar after thenew year holiday.

The Syrian governmentdevalued the pound againin January. This makesimports from the Kingdommore expensive for Syriancustomers, who are alsosuffering from a shortage offoreign exchange.

February 2012

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60

1/1/2010 5/1/2010 9/1/2010 1/ 1/ 2011 5/1/2011 9/ 1/ 2011 1/1/2012

1.17

1.22

1.27

1.32

1.37

1.42

1.47

1.52

1/1/10 4/1/10 7/1/10 10/1/10 1/1/11 4/1/11 7/1/11 10/1/11 1/1/12

6.2

6.3

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6.9

1/ 1/ 2010 5/ 1/ 2010 9/ 1/ 2010 1/ 1/ 2011 5/ 1/ 2011 9/ 1/ 2011 1/ 1/ 2012


10/14

10

February 2012

The TASI maintained its upward trend during January, buoyed bystrength in global markets, though it underperformed many owing tosome disappointment with fourth quarter results and heightening

regional political tensions. Volumes hit a two-and-a-half year high.

Comparative stock market performance(monthly performance to January 29th)

Stock market

The TASI climbed by 2.1percent to end January 29that a seven-month high...

...nonetheless, itunderperformed manyglobal and regional marketsdue to disappointment oversome fourth quarter resultsand rising tensionsurrounding Iran.

At an daily average ofSR6.6 billion, turnoverreached levels not seensince June 2009.

0

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Jan-10 Mar-10 May-10 Jun-10 Aug-10 Oct-10 Dec-10 Jan-11 Mar-11 May-11 Jun-11

( S R m

i l l i o n

)

5200

5400

5600

5800

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6400

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Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12

( S R m

i l l i o n

)

Daily tu rnover

0

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10

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25

30

Saudi Arabia U.S. U.K. Germany Japan China Brazil Dubai Egypt MSCI EM

( p e r c e n

t )

TASI


11/14

11

February 2012

Thirteen of the 15 sectors were up through January 29. Performancewas broadly in line with market perceptions of fourth quarter results.Three of the smaller sectorstransport, multi-investment andinsurancerecorded double-digit gains.

Performance by sector(rebased; December 31, 2011 = 100)

Best performing sectors(rebased; December 31, 2011 = 100)

Worst performing sectors

(rebased; December 31, 2011 = 100)

Sectoral performance

Three of the smaller sectorshave recorded double-digitgains so far in January. Thelargest sector,petrochemicals has beenthe worst performer.

Transport and insuranceposted the fastest quarterlyprofit growth in the fourthquarter. Multi-investmentbenefitted from theimprovement in globalmarkets over the pastmonth; sectoral profitsslipped.

Disappointment about somefourth quarter results hitpetrochemical andconstruction companies.

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T r a n s p o r t

M u

l t i i n v .

I n s u r a n c e

T e l e c o m s

M e

d i a & p u

b .

R e a

l e s t a

t e

A g r i . &

f o o

d

H o

t e l s

C e m e n

t

I n d u s t r i a

l i n v .

B a n

k s

R e

t a i l

B l d g . &

c o n s .

E n e r g y

P e

t c h e m s

( p e r c e n

t )

95

100

105

110

115

120

31/12/2011 3/1/2012 8/1/2012 11/1/2012 16/1/2012 21/1/2012 24/1/2012 29/1/2012

Transport Multi-invest Insurance

95

100

105

31/12/2011 3/1/2012 8/1/2012 11/1/2012 16/1/2012 21/1/2012 24/1/2012 29/1/2012

Bldg. & cons. Energy Petchems


12/14

12

February 2012

Net income of listed companies totaled SR21.5 billion in the fourthquarter. As normal, the fourth quarter was the worst for the year,though it was petrochemicals, rather than banks, that pulled earningsdown. Year-on-year earnings growth remained in double-digits.

Net income of list ed companies

Net income by sector(year-on-year change)

Net income by sector(quarter-on-quarter change)

Fourth quarter results

Total net income was up by10.5 percent year-on-year,but down by 17.4 percentquarter-on-quarter.

Agriculture and food postedthe strongest results in year -on-year terms.(Note thatbuilding and construction isadjusted for one companythat did not report for thefourth quarter.)

Bank provisioning usuallydrives down earnings in thefourth quarter, but this yearbank earnings were downonly slightly on the thirdquarter. Instead,petrochemicals were themain source of the decline. -150

-100

-50

0

50

100

150

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I n s u r a n c e

T r a n s p o r t

M e d i a

I n d

. i n v e s

t

T e l e c o m s

C e m e n

t

R e a

l e s

t a t e

A g r i . &

f o o

d

H o t e l s

B a n

k s

M u

l t i - i n v e s

t

P e

t c h e

m s

R e

t a i l

B l d g . &

c o n s .

E n e

r g y

( p e r c e n

t )

-25

-15

-5

5

15

25

35

Q42005

Q22006

Q42006

Q22007

Q42007

Q22008

Q42008

Q22009

Q42009

Q22010

Q42010

Q22011

Q42011

( S R b i l l i o n

)

-60-40-20

0204060

80100120140160

A g r i c u

l t u r e

& f o o

d

I n d u s

t r i a l i n v e s

t m e n

t

E n e r g y

& u

t i l i t i e s

I n s u r a n c e

T r a n s p o r t

R e a

l e s

t a t e d e v e

l o p m e n

t

C e m e n

t

M e

d i a & p u

b l i s h i n g

H o

t e l & t o u r i s m

T e

l e c o m m u n

i c a

t i o n

B a n

k s

& f i n a n c

i a l s e r v

i c e s

R e

t a i l

P e

t r o c

h e m

i c a

l s

M u

l t i i n v e s

t m e n

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B u

i l d i n g

& c o n s

t r u c

t i o n

( p e r c e n

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13/14

13

February 2012

Key data

2005 2006 2007 2008 2009 2010 2011E 2012F 2013FNominal GDP

(SR billion) 1182.5 1335.6 1442.6 1786.1 1412.6 1690.5 2163.1 2065.3 2136.2($ billion) 315.3 356.2 384.7 476.3 376.7 450.8 576.8 550.7 569.6(% change) 26.0 12.9 8.0 23.8 -20.9 19.7 28.0 -4.5 3.4

Real GDP (% change)Oil 6.2 -0.8 -3.6 4.2 -7.8 2.4 4.3 -3.8 2.8Non-oil private sector 5.8 6.1 5.5 4.6 2.7 5.3 8.3 5.8 5.5Government 4.0 3.1 3.0 3.7 5.2 5.9 6.7 6.2 6.2Total 5.6 3.2 2.0 4.2 0.1 4.6 6.8 3.3 4.9

Oil indicators (average)WTI ($/b) 56.6 66.0 72.3 99.7 62.0 79.5 94.8 86.0 84.0Saudi ($/b) 49.5 60.5 68.1 93.4 60.5 77.7 105.0 92.0 86.5Production (million b/d) 9.4 9.2 8.8 9.2 8.2 8.2 9.3 8.8 9.0

Budgetary indicators (SR billi on)Government revenue 564 674 643 1101 510 742 1110 824 784Government expenditure 346 393 466 520 596 645 804 733 770Budget balance 218 280 177 581 -87 97 306 91 14(% GDP) 18.4 21.0 12.2 32.5 -6.1 5.7 14.1 4.4 0.7Domestic debt 475 366 267 237 225 167 136 115 100

(% GDP) 40.2 27.4 18.5 13.3 15.9 9.9 6.3 5.6 4.7

Monetary indicators (average)Inflation (% change) 0.7 2.3 4.1 9.9 5.1 5.3 5.0 4.7 4.3SAMA base lending rate (%, yearend) 4.75 5.20 5.50 2.50 2.00 2.00 2.00 2.00 2.00

External trade indicators ($ billion)Oil export revenues 161.6 188.2 205.3 281.0 163.1 214.9 302.4 227.8 200.0Total export revenues 180.4 210.9 233.1 313.4 192.2 251.0 343.2 271.0 248.5Imports 53.8 63.0 81.5 100.6 86.4 96.7 98.7 110.5 123.8

Trade balance 126.6 147.8 151.6 212.7 105.8 154.3 244.5 160.5 124.7Current account balance 90.0 98.9 93.3 132.3 21.0 67.0 159.5 80.6 41.5(% GDP) 28.5 27.8 24.3 27.8 5.6 14.9 27.6 14.6 7.3Official foreign assets 195.5 273.4 359.8 502.0 474.2 520.3 634.8 694.2 726.3

Social and demographicindicatorsPopulation (million) 23.4 24.1 24.8 25.5 26.3 27.1 27.9 28.8 29.7Unemployment (male, 15+, %) 11.5 12.0 11.0 9.8 10.5 10.2 11.0 10.5 9.4GDP per capita ($) 13503 14806 15523 18651 14311 16612 20651 19122 19190

Sources: Jadwa estimates for 2011 and forecasts for 2012 and 2013. Saudi Arabian Monetary Agency for GDP, monetary andexternal trade indicators. Ministry of Finance for budgetary indicators. Central Department of Statistics and Jadwa estimates foroil, social and demographic indicators.


14/14

Disclaimer of LiabilityUnless otherwise stated, all information contained in this document (the Publication)shall not be reproduced, in whole or in part, without the specific written permission ofJadwa Investment.

The data contained in this Research is sourced from Reuters, Bloomberg, Tadawuland national statistical sources unless otherwise stated.

Jadwa Investment makes its best effort to ensure that the content in the Publication isaccurate and up to date at all times. Jadwa Investment makes no warranty,representation or undertaking whether expressed or implied, nor does it assume any

legal liability, whether direct or indirect, or responsibility for the accuracy,completeness, or usefulness of any information that contain in the Publication. It isnot the intention of the Publication to be used or deemed as recommendation, optionor advice for any action (s) that may take place in future.

14

February 2012

Documents

Saudi Chartbook Feb 2012