MENA-2

THURSDAY MORNING ROUND-UP

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Egypt

Inflation decelerates to 11.8% Y-o-Y in May on lower food prices First court hearing in the case of Ibrahim Soliman and Magdi Raskh set for 27 August 2011 OTs Wind Canada allowed to continue operating by court Ministry of Housing completes preliminary urban development plan for Egypt

Saudi Arabia Kuwait

Saudi cement sales rise 10% Y-o-Y Negotiations for the sale of the stake in Zain Saudi Arabia ongoing, Badr al Kharafi says

Agenda

Egypt Thu 23 June >> Talaat Moustafa Group (TMG) ex-div date for 50.3 million bonus shares Saudi Arabia Sat 25 June >> Zain Saudi Arabia AGM Wed 29 June >> Dar Al Arkan AGM and EGM

Egypt News

Inflation decelerates to 11.8% Y-o-Y in May on lower food prices Egypts urban consumer prices decelerated to 11.8% Y-o-Y in May, down from 12.1% Y-o-Y in April, driven by monthly declines in food prices, according to data released by CAPMAS. The figure is higher than our forecast of 12.6% Y-o-Y and Reuters median estimate of 12.5% Y-o-Y due to lower-than-expected food prices. We maintain our expectations for the Central Bank of Egypt (CBE) holding its benchmark interest rates unchanged when it meets later today. Food prices fell 0.5% M-o-M in May, driven primarily by declines in largely volatile vegetable prices after rising 25 % M-o-M in April as well as lower dairy product prices, according to CAPMAS. No further details were released yet. Non-food inflation saw a noticeable increase of 0.7% M-o-M, according to our calculations. This was driven by an expected increase in foreign cigarette brand prices of 5.0% M-o-M announced earlier by the state-owned monopoly Eastern Company, but also by various increases in prices of clothes, housing, furnishing and recreation and culture. The monthly increase in non-food inflation is the highest in since October 2010. While we dont expect non-food inflation to continue rising, we expect the CBE to keep a close eye on non-food inflation to monitor any further increases. We expect core inflation expected to be released later today by the CBE to remain stable at 8.8% Y-o-Y, remaining above the CBEs comfort zone of 6-8%. We note that core inflation excludes prices of fruits, vegetables and regulated items from the headline index. We maintain our 2011 inflation outlook and forecast average headline inflation of 12.0% Y-o-Y (YTD the average is 11.4% Y-o-Y). Inflation should remain largely driven by rising food prices (mostly local as subsidies shield the

population from rising global commodity prices) and a weakening USD-EGP. Weak economic activity, with our expectations of a contraction in growth in 2011, should help balance these inflationary pressures. (Mohamed Abu Basha) First court hearing in the case of Ibrahim Soliman and Magdi Raskh set for 27 August 2011 A court has set the first hearing date in the case of Ibrahim Soliman (former Minister of Housing), four of his deputies, and Magdi Rasekh for 27 August 2011, Al Masry Al Youm reported. Magdi Rasekh has resigned in May from his position as Board Chairman of Sixth of October Development and Investment Company (SODIC) [OCDI.CA]. Soliman and Rasekh stand accused of squandering public funds in a land deal. (Al Masry Al Youm) SODIC: EGP65.73, MCap: USD401 million, OCDI EY / OCDI.CA OTs Wind Canada allowed to continue operating by court Orascom Telecoms (OT) [ORTE.CA] Canadian subsidiary, Wind Canada, will be allowed to continue operating after the Federal Court of Appeal ruled, backing the federal cabinets decision to allow the company to offer wireless telecommunications services over the objection of the federal telecoms regulator. (The Star) OT: EGP4.23/USD3.42, MCap: USD3,591 million, ORTE EY / ORTE.CA Ministry of Housing completes preliminary urban development plan for Egypt The Ministry of Housing, Utilities and Urban Planning (Ministry of Housing) has completed the preliminary urban development plan for Egypt, which will be presented to the Higher Council of Urban Planning, headed by the Prime Minister, Essam Sharaf. On a separate note, the Ministry of Housing is planning to offer residential land plots for family housing every six months in several new cities, Al Masry Al Youm reported, quoting the Minister of Housing, Mohamed Fathy El-Baradei. (Al Masry Al Youm)

Saudi Arabia News

Saudi cement sales rise 10% Y-o-Y Saudi cement sales volume rose 10% Y-o-Y, Argaam reported, reaching 4.45 million tonnes in May. Higher local demand has led local volumes (96% of total sales) to jump 14% Y-o-Y, at the expense of exports, which dropped 40% Y-o-Y. According to the geographical breakdown, the largest growth of 21% Y-o-Y was in the central region, followed by the southern region (up 15% Y-o-Y), the western region (up 11% Y-o-Y), the eastern region (up 6% Y-o-Y), while the only drop was in the northern region (down 14% Y-o-Y).Riyadh Cement Company (central region) has witnessed the strongest growth of 57% Y-o-Y, followed by Tabuk Cement Company (northern region) and Yamama Cement Company (central region) with growth of over 30% Y-o-Y. On the other hand, Al Jouf Cement Company (northern region) has witnessed the largest drop in sales (down 36% Y-o-Y), mainly on lower clinker sales. (Argaam)

Kuwait News

Negotiations for the sale of the stake in Zain Saudi Arabia ongoing, Badr al Kharafi says Negotiations for the sale of a stake in Zain Saudi Arabia (7030.SE) are currently in progress between the Batelco (BTEL.BH)/Kingdom Holdings (4280.SE) consortium and Zain Group (ZAIN.KW), Kuwaits daily Al-Qabas quoted Badr Nasser el Kharafi as saying. Any development will be announced officially, he added. There is no deal at the present to sell a 46% stake in Zain Group, he said. (Al-Qabas, Argaam) Zain Saudi Arabia: SAR8.00, Rating: Sell, FV: SAR7.08, MCap: USD2,987 million, ZAINKSA AB / 7030.SE Zain Group: KWD1.32, Rating: Sell, FV: KWD1.12, MCap: USD18,172 million, ZAIN KK / ZAIN.KW
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