MENA MORNING ROUND-UP WEDNESDAY 02 JANUARY 2013

Egypt Morsi sees currency stabilising "within days" IMF says welcomes Egypt's effort to safeguard reserves Egypt November passenger car sales grow 23% Y-o-Y but flat M-o-M; Hyundai

maintains top market share position

Ministry of Housing looking to allow developers with halted projects to share land ownership with other parties

Saudi Arabia Petro Rabigh shutdown expected to last 20 days Tasnee, SAIC JV to reduce paid-in capital by c79%

UAE Dubai aims to shrink size of budget deficit by 18% in 2013 Expats who bounce cheques may no longer risk prison in UAE

Qatar Qtel to acquire 15% stake in Tunisiana for USD360 million

Oman Oman boosts 2013 spending plans

Jordan Government lowers fuel prices

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Cabinet endorses 2013 draft budget law

Egypt Morsi sees currency stabilising "within days" Egypt's pound fell to a record low on Monday as the president signaled his government

would allow it to depreciate slowly for several more days to stop a drain on foreign reserves that has driven the economy into crisis since the fall of Hosni Mubarak. "The market will return to stability," Morsi told Arab journalists on Sunday evening, the state news agency MENA reported. The pound's fall "does not worry or scare us, and within days matters will balance out," he said. The EGP had weakened to a record low on Sunday at a new dollar auction brought in by the central bank. It fell further at a second auction on Monday, last trading at EGP6.37 to the dollar on the interbank market. The drop means the central bank has allowed the pound to slide almost 3% over the last two days after limiting its decline to only 6% since the uprising that removed Mubarak from power almost two years ago. (Reuters)

IMF says welcomes Egypt's effort to safeguard reserves The International Monetary Fund (IMF) said on Monday it welcomed steps that Egypt has taken to stop a drain on its international reserves, which had let the Egyptian pound hit record lows. "We welcome the measures taken by the Central Bank of Egypt to ensure that the country will continue to maintain a level of international reserves that can support its international trade and payments," an IMF spokeswoman said. "IMF staff is in close contact with the authorities and we remain strongly committed to supporting Egypt." (Reuters)

Egypt November passenger car sales grow 23% Y-o-Y but flat M-o-M; Hyundai

maintains top market share position

Egypt passenger car (PC) sales were 13,279 vehicles in November 2012, growing 23%

Y-o-Y and inching down 0.7% M-o-M. This comes 26% ahead of our forecast for the month. November sales showed growth higher than both 2011 and 2012 YTD averages. In November, Hyundai - the main revenue contributor for GB Auto (AUTO.CA) - held a 24% market share, lower than the 29.3% YTD average on the back of supply constraints from Hyundai Motor Corporation in Korea. Additionally, 353 taxis were sold under the governments taxi replacement programme in November 2012, all of which were Hyundai Vernas. [GB Auto Disclosure, Egyptian Automotive Marketing Information Council (AMIC)]. www. efghermes.com

GB Auto: EGP27.76 as of 31 December 2012, Rating: Neutral, FV: EGP29.50 per share, MCap: USD564 million, AUTO EY /AUTO.CA

Ministry of Housing looking to allow developers with halted projects to share land ownership with other parties The Ministry of Housing, Utilities and Urban Planning (Ministry of Housing) is looking to allow developers with halted projects to share land ownership with other parties, Al Borsa reported. The current legal framework does not allow developers who purchased land from the ministry of housing to bring in other partners after the contract is drafted. The ministry is currently looking to allow land plot owners to share land ownership, provided that the new partners share does not exceed 49% so that the projects original owner retains 51% of the project. (Al Borsa)

Saudi Arabia Petro Rabigh shutdown expected to last 20 days Rabigh Refining and Petrochemical Company (Petro Rabigh) [2380.SE] has announced that its petrochemical complex is expected to remain shut down for c20 days in order to complete necessary maintenance work. Operations at the complex were halted on 29 December, 2012 as a cut in power and steam supply forced the company to shut down all its facilities. According to the companys statement, the shutdown is not expected to have a material impact on the companys financial results. (Tadawul)

Tasnee, SAIC JV to reduce paid-in capital by c79% National Industrialization Company (Tasnee) [2060.SE] and Saudi Advanced Industries Co (SAIC) [2120.SE] have announced that they have decided to reduce the paid-in capital of their joint venture (JV) project, Tasnee and Advanced Polyols and Derivatives Co., by 78.6% from SAR140 million to SAR30 million. The partners, who own 50% each in the project, had previously announced that the project would produce c 120,000 tonnes per year (tpy) of polyether polyols when it becomes operational in 4Q2013. (Tadawul)

UAE Dubai aims to shrink size of budget deficit by 18% in 2013 Dubai has released a 2013 budget plan that would raise spending moderately while

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cutting the size of its deficit by 18%, aiming to balance boosting economic growth with fixing state finances after its 2009-10 debt crisis. Authorities could have eliminated the deficit entirely, but decided instead to increase state spending in order to fund welfare and infrastructure projects, Abdulrahman al-Saleh, director-general of the department of finance, said on Monday. Revenue is projected at AED32.6 billion, up 7.8% from the 2012 budget plan. Tax revenues are expected to jump 15% because of a strong economy; allocations to revenue from government enterprises are being cut to allow for more reinvestment in the economy. State spending is expected to rise 6% in 2013 to AED34.1 billion. The government said 39% of its spending would go towards salaries and wages, partly because it would create a further 1,600 jobs for local citizens. The budget deficit is to total AED1.5 billion. Government said its 2013 plan included an operating budget surplus, excluding one-off items, of AED204 million. (Reuters)

Expats who bounce cheques may no longer risk prison in UAE Newspapers printed contradictory reports on Tuesday on whether the UAE was ending prison terms for foreign nationals living in the Gulf Arab state who write bad cheques. The UAE's penalties for defaulting on cheques were relaxed for Emirati citizens in October after a royal decree, but the threat of jail for the country's large expat population remains. The National quoted Ali Khalfan Al Dhaheri, head of the legal affairs department at the Ministry of Presidential Affairs as saying that the courts have stopped as of last month accepting collateral cheques presented as a criminal tool against expatriate debt defaulters. However, Gulf News then quoted deputy minister of Presidential Affairs Ahmad Jumaa Al Zaabi as denying the report, saying that there is no relaxation or debt waiver for expatriates. The UAE has no bankruptcy laws to protect debtors and many have called for the decriminalisation of bounced cheques. New legislation aimed at simplifying the process of bankruptcy and allowing failing companies to restructure is expected in 2013. (Reuters)

Qatar Qtel to acquire 15% stake in Tunisiana for USD360 million Qatar Telecom [QTEL.QA] has reached an agreement with the Tunisian government to acquire a further 15% stake in Tunisiana for a total consideration of USD360 million. National Mobile Telecommunications Co., a unit of Qatar Telecom, currently holds 75% in Tunisiana. The Tunisian government will retain a 10% holding in Tunisiana with a view to a public offering in the future. (Bloomberg)

Qtel : QAR104.00 as of 31 December 2012, Rating: Buy, FV: QAR143.36 per share, MCap:

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USD9,152 million, QTEL QD / QTEL.QA

Oman Oman boosts 2013 spending plans Oman's 2013 budget raised spending nearly 30% over its 2012 plan to OMR12.9

billion on Tuesday. Spending on education, health, housing and social welfare has been boosted by 22% for this year's plan, Finance Minister Darwish al-Balushi said in a statement carried by state media. He said last year's actual spending was around OMR13 billion, 30% higher than planned, due to new projects. He did not give estimated actual figures for 2012 revenue, which was budgeted at OMR8.8 billion. Although the 2013 plan envisages income of OMR11.2 billion, actual revenue is likely to be higher because the budget is based on a conservative oil price of USD85 per barrel, with average output of 930,000 barrels a day. Omani Finance Ministry figures showed the country had run a surplus of USD7.3 billion from January to October. We estimate Omans fiscal balance at 6.7% of GDP for 2012, and 3.3% of GDP for 2013. (Reuters, EFG Hermes estimates)

Jordan Government lowers fuel prices The Ministry of Industry and Trade on Monday lowered the prices of several fuel products, based on recommendations made by the fuel pricing committee. The price of cooking gas cylinders remained unchanged at JOD10, as the government continues to subsidise this commodity, the Jordan News Agency, Petra, reported. Under a decision by Trade Minister Hatem Halawani, prices of 90- and 95-octane gas were lowered 2.5% and 4.4% respectively. Halawani stressed the government's commitment to reflecting international gas prices on the local prices, via monthly reviews by the fuel pricing committee. (The JordanTimes)

Cabinet endorses 2013 draft budget law The Cabinet on Monday endorsed the 2013 budget draft law. In a statement carried by the Jordan News Agency, Petra, Minister of Finance Suleiman Hafez said that of the total budget figure, JOD6.2 billion is allocated for current expenses while the remaining JOD1.2 billion is allocated for capital expenses. Under the envisaged budget, public revenues are expected to reach around JOD6.1 billion, of which foreign grants represent JOD850 million, the minister said. Subsequently, the budget deficit is calculated to reach around JOD1.310 billion or 5.4% of GDP. The projected deficit figure before calculating the grants, Hafez said, stands at around JOD2.2 billion, or 8.9% of

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GDP. The 2013 deficit figure will go down to JD383 million if the National Electric Power Companys losses are not computed, Hafez said. Through its estimated revenues and expenditure for 2013-15, the government continues to adopt policies and measures to control operational expenses, the minister pointed out.

The budgeted deficit is slightly higher than our forecast of JOD1.6 billion (6.7% of GDP), with the difference stemming largely from our earlier expectations of lower grants. The government did not yet state its GDP growth estimate for us to assess the governments further budget assumptions. In any case, we expect the deficit to shrink in 2013 Y-o-Y after the near fuel subsidy elimination the government approved late in 2012. Revenue growth will remain largely stable, reflecting a weak economic environment, while capital expenditures will benefit from grants from the GCC countries. (The Jordan Times and Mohamed Abu Basha)

EFG Hermes Research Earnings Preview for 4Q2012 (View full report)
MENA Strategy 02 January 2013 EFG Hermes Research Team

4Q12 MENA earnings to rise 22% y-o-y But earnings falling 6% q-o-q as margins are squeezed Base effects mean sharp y-o-y earnings growth for Egypt and UAE

Agenda Saudi Arabia Sat 12 Jan >> Mobily EGM to vote on 10% proposed bonus shares
[Note EFG Hermes is not responsible for the accuracy of news items taken from other media.]

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