Markaz News

Financial Services and Banking drag GCC Corporate earnings in Q2

Mon, 30 Aug 2010 00:00:00 GMT

After two months of the end of second quarter, we now have 75% visibility on trends in GCC corporate earnings. Corporate earnings dropped 6% QoQ and 7% YoY to USD10.7 Bn in 2Q10 primarily due to declines in the telecommunications, financial services and banking sectors, according to a recent report by Kuwait Financial Centre “Markaz”... 1H10 benefited from higher profits during 1Q10, which caused earnings to rise 13% YoY to USD22 Bn.

GCC Corporate Earnings Trend

Saudi Arabia

On YoY basis, Saudi Arabia’s corporate earnings (at 89%visibility) grew 25% in 2Q10. 1H10 results were more optimistic with earnings up 42% YoY. KSA’s earnings received a boost from the commodities sector led by SABIC, which reported earnings of USD2.8 Bn in 1H10. A recovery in commodity prices and higher demand for fertilizers and plastics (mainly from Asia) proved advantageous to the company. However, the banking sector’s profits contracted 10% in both 2Q10 and 1H10. This can be ascribed to the increase in loan loss provisioning, especially in 2Q - one probable reason for this is exposure to the Sa’ad and Algosaibi groups, which defaulted on their USD15.7 Bn loans (approximately USD5 Bn owed to Saudi Banks) in late 2009.

Kuwait

Zain’s earnings in 2Q10 were boosted by a USD2.65 Bn profit from sale of operations in Africa. Excluding these gains, Kuwait’s corporate profits (at 45%visibility) dropped 44% YoY due to dismal performance by most sectors. However, the Kuwaiti banking sector earnings continued rising, both during the quarter as well as the first half of 2010.

UAE

UAE’s earnings growth (at 93%visibility) fell 36% YoY in 2Q10 and 12% YoY in 1H10. Almost all sectors recorded YoY declines during the quarter, with the banking and telecommunications sectors proving to be major laggards. UAE banks witnessed higher provisions in 2Q, led mainly by Emirates NBD and Abu Dhabi Commercial Bank. The banks’ major concerns were exposures and impairments in Dubai World and the assets of related entities amidst tighter guidelines issued by the Central bank.

Qatar, Oman & Bahrain

Qatar and Oman’s earnings declined 19% and 20% respectively, marred by poor performances in non-banking sectors that dragged down earnings. Bahrain, however, managed to post a 29% YoY growth in its earnings. The banking sectors of Bahrain, Oman and Qatar posted YoY growths of 40%, 39% and 15%, respectively, during the quarter, confirming the recovery trend. Qatar’s overall earnings declined mainly due to a drop in Industries Qatar’s earnings.

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About Markaz

Kuwait Financial Centre 'Markaz', with total assets under management of over KD928 million as of June 30, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

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For further information, please contact:

Mariam A. Al Suwailem

Assistant Manager, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

“Markaz” internship program offers practical training experience to students and fresh graduates

Sun, 29 Aug 2010 00:00:00 GMT

“Markaz”, trained a group of 16 interns and fresh graduates since the beginning of the year assigning them real world tasks under the supervision of “Markaz” staff from different departments.

Ms. Rasha A. Al-Hamad, Human Resources Department at “Markaz” said “We believe that developing human resources in the markets we operate in is part of our corporate social responsibility. We are extremely keen to offer students and fresh graduates internships in order to expose them to practical experience. We have been providing internship to fresh graduates for last six years; students come from various nationalities, majors and from different governmental, private, local, and international colleges and universities.”

Ms. Rasha Al-Hamad added “We encourage learning at ‘Markaz’, our employees are continually kept at the cutting edge through the attendance of courses at reputable training institutes and in-house workshops in various subjects. Additionally, a large number of ‘Markaz’ staff are certified practitioners by renowned organizations in fields such as financial analysis, risk management, accounting, anti-money laundering, and wealth management.”

-Ends-

About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD 928 million as of June 30, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. ‘Markaz’ was listed on the Kuwait Stock Exchange (KSE) in 1997.

###

For further information, please contact:

Mariam Al - Suwailem

Assistant Manager - Media and Communications Department

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Fax: +965 2241 4499

Email: msuwailem@markaz.com

www.markaz.com

Markaz H1 2010 Results: KD1.44 million net profit / 3 fils EPS

Sun, 22 Aug 2010 00:00:00 GMT

Healthy balance sheet and full compliance with new CBK regulations

Markaz’s market share in asset management and corporate finance enhanced

“Markaz”, announced its financial results for the First Half ended 30 June 2010. The Company reported a net profit of KD 1.44 million, or 3 fils per share, compared to a net profit of KD2.18, or 5 fils per share for the same period in 2009.

Diraar Y. Alghanim, Chairman and Managing Director of Markaz said: "Markaz is in full compliance with new regulations set forth by the Central Bank of Kuwait on limits pertaining to financial leverage ratio, quick ratio and foreign liabilities exposure for investment companies. We anticipate more regulations in the near future targeting balance sheet quality and investment management practices. As always, we are proactive in applying strict guidelines ahead of the regulatory requirements and believe that this voluntary governance, liquid balance sheet, quality of asset management staff, and our consistent performance throughout the years, will help sustain our leadership in fund management in Kuwait and the GCC.”

Manaf A. Alhajeri, Chief Executive Officer of "Markaz" said: "Markaz continues to attract sophisticated institutional clients and those from regulated jurisdictions; that, and the its strong client base continue to make Markaz the leading fund manager in Kuwait, and fourth largest among GCC fund managers in terms of size of assets managed. Additionally, Markaz Funds continue to reap awards and ratings due to consistent performance, low volatility and excellent governance."

Alhajeri highlighted the Company’s activities in H1 2010, as follows.

Markaz Activities - Asset Management

Local and GCC Investments

Regional Equity markets got a good start for the year on the back of strength seen in global equity markets and crude oil prices. However, in the second quarter of the year, volatility crept into the markets as worries over the sovereign debt crisis of the Euro zone escalated. MSCI-Arabia Index closed H1 with 0.9% growth.

The Kuwait equity market weakened in the second quarter after the early rally for a combination of reasons. The fate of financially troubled companies remains uncertain; the delay in implementing the fiscal stimulus plan; ambiguity over the implementation of new rules by the upcoming Capital Market Authority; and finally, credit markets continue to be tight with the cost of financing relative to deposit rates reaching an all-time peak. KIC index closed June 2010 by -0.7% (YTD) due to the sharp decline in corporate earnings.

To minimize the impact of volatile markets on MENA equity funds, Markaz increased its allocation to cash in all its funds and portfolios, leading to positive performance. Markaz flagship funds ‘Mumtaz’ and ‘MIDAF’ managed to close the first half with a positive return of 1.6% and 1.7%. However, Markaz Islamic fund lagged behind its benchmark MADAR index gain of 2.9% achieving -0.25% returns and Markaz Gulf Fund had underperformed its benchmark by about 2.4%.

“Mumtaz” fund was awarded “Best Equity Fund - Kuwait” for the year 2009 by the leading regional publication ‘MENA Fund Manager’. Additionally, three funds collectively won four Lipper Awards for best risk-adjusted performance during the year. Markaz "Mumtaz" Fund won two awards for best Kuwaiti Equities Fund for the periods of three and five years. “Markaz Gulf Fund" won best MENA Equities Fund and "Markaz Islamic Fund" won best Islamic Kuwaiti Equities Fund, both for the period of three years. Additionally, Standard and Poor’s renewed its “A” rating for both “Mumtaz” and “Gulf” funds.

To reach a wider base of retail clients, Markaz signed a distribution agreement with Gulf Bank whereby the Bank acts as Selling Agent of Markaz investment funds through its Priority Banking network.

International Investments

The second quarter of the year 2010 has been very volatile and difficult for capital markets. MSCI World declined by 10.88%, and the debt markets experienced high volatility due to the European sovereign debt crisis.. Concerns over signs of slowdown in China and data casting doubts in economic recovery also contributed to this decline.

As of June 30, 2010, The flagship international products "Atlas Diversified Class", which reflects our asset allocation ideas, returned -12.14% for H1-10. Markaz themes based fund, "Atlas Emerging Markets Thematic Fund", which captures the global macro opportunitiesfrom ﬁve of the most promising investment themes, namely, Infrastructure, Commodities, Consumer, Telecom and Agribusiness. , was down 12.57%. And the "Atlas ETFs Program", which manages a slew of ETFs, declined by 9.74% during the same period.

Markaz Private Equity Net Assets Under Management return was up 7.75% as deal flow and fund raising activities are strengthening.

Markaz Activities - Investment Banking

Corporate Finance

Deleveraging through sale of assets and consolidation of debt is expected to accelerate towards year end. Markaz is increasingly being selected by leading companies to offer advisory services focusing on strategy. In H1, three mandates were executed, two restructuring and one M&A.

GCC Fixed income market issuance reached USD 24.2 billion in H1 2010, mainly by sovereign and quasi sovereign issuers; a decline of 32% from the same period last year. "Markaz Fixed Income Program" has shifted strategy from investing opportunistically in the past, achieving double digit returns, to investing in low risk issues. The program has achieved 2% in H1. Markaz is planning to launch a fixed income fund.

Structured Finance

Markaz remains the sole options market maker in the Middle East since 2005. A total of 4,750 contracts were traded in H1 2010 with an underlying value of KD 5.03 million, a decline of 34.66% and 33.50%, respectively, compared with the same period in 2009. The decline is due to the weak market sentiment and low trading volumes in the equity market.

Markaz Real Estate Investments

In the first half of 2010, Kuwait real estate market continued to show signs of stability, which started in mid 2009. Markaz Real Estate Fund, with a low allocation to adversely affected commercial real estate, achieved a positive 3.24% return and continues to distribute a monthly cash dividend amounting to 7% annually. Government action to rent office space is expected to stabilize commercial real estate in the near future.

The development of residential projects in Lebanon is on target; with one project completely presold and 90% of the second project sold and delivered. As for the KSA land development program “Aradi”, the development of the land infrastructure is being finalized. “Markaz” has successfully sold 25% of the portfolio at a gross return of 26%, and is marketing the remaining plots of land. “Markaz” is in the process of launching an investment program targeting residential real estate development in the Eastern Province to take advantage of the acute shortage in supply of mid-income housing in KSA. In addition, the Company acquired for one of its funds a new property at Al Reem Island in Abu Dhabi at an advantageous price benefitting from distressed sellers with the aim of developing mid-level residential apartments. Additionally, the feasibility of a number of projects in Egypt is being studied.

As for US real estate, commercial property values are expected to decline further in the next 12-18 months due to financial distress caused by upcoming maturities of commercial mortgages. However, long – term forecasts remain optimistic that property values will recover. Given the current environment, Markaz’s strategy consist of preserving capital on our existing portfolio of commercial real estate, working closely to stabilize occupancy and to extend the maturity of loans.

In parallel, Markaz has launched an investment program to benefit from the short term decline in commercial property prices, towards that, Markaz US Distressed Debt Program has been established under the management of wholly owned subsidiary MarGulf Management, Inc, and two non-performing commercial mortgages were acquired, and funded by Markaz.

Oil and Gas

Energy stocks worldwide have been in decline from the fall-out from BP’s oil spill in the Gulf of Mexico, combined with signs of weaker economic recovery. "Markaz Energy Fund" substantially reduced its exposure to such public stocks, and is actively managing its private equity portfolio to maximize value. The Fund was up 0.8% as of the end of June 2010.

Our team is managing sector focused mandates, related to the capitalization and spin off of energy related companies; their knowledge in the sector is now being invested in assisting companies in restructuring, acquiring and financing operations.

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About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD928 million (USD 3.19 billion) as of June 30, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

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Photo Caption: Mr. Diraar Y. Alghanim - Chairman and Managing Director of Kuwait Financial Centre S.A.K. "Markaz"

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For more information kindly contact:

Mariam A. Al Suwailem

Assistant Manager, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

Markets Rebound in July

Sun, 08 Aug 2010 00:00:00 GMT

GCC markets turned positive in July as corporate earnings lifted sentiment in addition to positive reports from rating agencies. GCC markets gained 5% for the month, bringing the YTD gain to 4%. The MSCI GCC index underperformed emerging markets and BRIC for the month but is outperforming the indices on a yearly basis. All GCC markets saw gains, except Bahrain which shed 0.17%. Gains were led by Kuwait’s Weighted Index which was up 5.5% for the month.

As for corporate earnings, Gulf Bank swung to a profit of KD 2 mn after posting losses in the same period of the previous year. NBK posted a 10% growth in second quarter earnings and provisions of USD 81 mn for the same period. In the UAE, NBAD and First Gulf Bank saw 1H10 earnings growths of 21% and 12%, respectively, while Emirates NBD saw earnings decline 29% in the same period. While in Saudi Arabia, Blue Chips gained despite poor results; Al Rajhi Bank and Samba Financial Group gained 6% and 5%, respectively, despite 1H10 earnings declines of 1% and 3%, respectively.

Liquidity continued to dry up across the GCC in July, as volume and value traded declined a further 5% and 27%, respectively during July. In terms of volume, all markets saw declines, except Kuwait where volume traded was up 70% for the month, value traded in Kuwait was up 23% to USD 2.46 bn. Volatility in the GCC was down 40% in July, led by the UAE markets where MVX Abu Dhabi and MVX Dubai declined 48% and 39%, respectively.

GCC Markets Review

Market Indicators
	M. Cap (USD Bn)	Last	July 2010	YTD	P/E
Indicators	M. Cap (USD Bn)	Close	%	%	TTM
Saudi (TASI)	329	6284	3.12	2.65	15
Kuwait SE WT.INDEX	112	419	5.49	8.68	14
Abu Dhabi (ADI)^	75	2546	1.26	-7.21	9
Qatar(Doha SM)	71	7029	1.88	1.01	10
Dubai (DFMGI)	51	1512	3.46	-16.14	9
Oman(Muscat SM)	17	6295	3.90	-1.17	11
Bahrain (BAX)	16	1394	-0.17	-4.41	11
MSCI GCC Index	436	417	4.14	2.42	17
Source: Excerpt from Markaz ‘Daily Morning Brief’ August 1, 2010
^ PE is for UAE in totality,

Global Markets review

World markets saw gains in July as positive economic signals emerged from Developed Europe. MSCI World gained 8% in July after losing 3% in June, bringing the YTD loss to 2%. Monthly returns were positive for the month, led by MSCI Europe’s gain of 12% followed by Shanghai, up 10% for the month. The FTSE was up 7% as the UK reported strong 2Q GDP growth.

Monthly Returns

Source: MSCI, Thomson DataStream

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About Markaz

Kuwait Financial Centre 'Markaz', with total assets under management of over KD921 million as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

###

For further information, please contact:

Mariam Al – Suwailem

Assistant Manager – Media & Communications Department

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 224 8000 ext 1817

Fax: +965 241 4499

Email: msuwailem@markaz.com

Markaz report: GCC bonds & sukuk market review for H1 2010 - Kuwait first in value

Mon, 02 Aug 2010 00:00:00 GMT

“Markaz” published a market review for the GCC fixed income market in H1 2010 covering both conventional bonds & Shari’ah compliant sukuk.

GCC Aggregate Bonds & Sukuk Market H1 2009

Total value of GCC bonds and sukuk, issued during the first half of 2010 dropped by 32%, compared to the respective period of 2009, to USD24.2 billion. The month of April predominated in terms of issuance frequency and value, with 17 issuances and USD6.1 billion, raising 25.1% of H1 2010 total issuances value.

During H1 2010, sovereign/government issuances dominated the majority of the amount raised, with USD17.2 billion or a 71.0% of the total amount raised; this represents a continuation with the trend observed since 2003 except for the peak years of 2006-2007 and 2008, where corporate issuances dominated the market.

Continuing with the trend witnessed since 2003, conventional issuances raised the largest amount during H1 2010 with USD20.1 billion through 68 issues, which is five times the total value of sukuk issued during the same period.

Excluding sovereign/government issues, four sectors were active during H1 2010: the Financial Services sector which, continuing with the trend that has been witnessed since 2003, issued the greatest number and raised the largest amount, with USD3.3 billion through eight issuances, followed by the Power and Utilities sector with USD2.9 billion through two issuances, the Real Estate sector with USD0.6 million through three issuances, and finally the Oil and Gas sector with USD0.3 million through one issuance.

Kuwait first in value

In H1 2010, Kuwait raised the largest amount with USD10.8 billion, representing 44.7% of the total amount issued through 31 issuances, most of which were by Central Bank of Kuwait. Followed by Saudi Arabia with USD4.2 billion raised through five issuances.

However, in terms of frequency, Bahrain was the most active issuing 37 bonds and sukuk representing 45.1% of the total number of issuances and raising USD2.0 billion.

The Kuwaiti Dinar denominated issuances raised the largest amount in H1 2010 with USD10.8 billion, The US Dollar denominated issuances raised USD4.9 billion through 6 issuances, followed by the Qatari Riyal denominated issuances with USD3.3 billion and the Saudi Riyal denominated issuances raised USD3.1 billion. While the Bahraini Dinar denominated issuances were the most active, representing 42.7% of the total number of issuances.

Maturity Structure

Aggregate bond issuances during H1 2010 had tenors ranging from 3-months to 20-year. Issuances with 3-month maturities raised the largest amount with USD6.7 billion, representing 27.6% of the aggregate amount raised, as well as the largest number of issuances with 38 issuances, representing 46.3% of the total number of issuances. The 5-year maturity issuances raised the second largest amount with USD5.2 billion, through eight issuances.

Size

The bond and sukuk issuances during H1 2010 had sizes ranging from USD4.0 million to USD1.9 billion. Issuances with a principal amount of less than or equal to USD100 million were the most active with 39 issuances, while issuances with a principal value of more than USD500 million and equal to or less than USD1.0 billion raised the highest amount with USD7.8 billion, or 32.0% of the aggregate amount raised, through 12 issues.

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About Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD921 million (USD3.19 Billion) as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

-Ends-

For further information, please contact:

Mariam A. A; Suwailem

Assistant Manager, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

GCC Equity Mutual Funds - Markets end Q2 in the red

Sun, 01 Aug 2010 00:00:00 GMT

In a recently published quarterly report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of equity funds across the region, GCC markets sustained heavy losses in 2Q10, completely reversing the 1Q gain of 12%. All markets saw declines; the heaviest being a 22% loss in MSCI UAE as the market continues to grapple with the Dubai World dent issue in addition to other corporate weaknesses. Investor sentiment was also dampened by signs of a slowing global economic recovery. May was a particularly vicious month as negative global cues and tumbling oil prices (crude oil lost 15% in the month) led to panicked selling by investors leading the MSCI GCC to tumble 11% in the month which was the first monthly decline of the year.

The quarter’s best performer was MSCI Qatar which limited the loss to 4% for 2Q10 after gaining 6% in the previous quarter.

GCC Equity funds had an asset weighted loss of 8% in June 2010 as negative markets dragged down performance across the region.

AUM’s was USD 10.8 bn in 2Q10 representing an institutionalization rate (AUM/Mcap) of 1.5%. Both Saudi Arabia saw its AUM contract 14% in the quarter.

Assets under Management – June 2010

Source: Markaz Research

Asset Allocation Trends– GCC Equity Funds (June 2010)

Fund managers continue to favor Saudi Arabia, with an allocation of 45%. Confidence in the Kuwait market remains at 12%; UAE allocation was up to 13% in June after declining to 10% in December 2009.

Geographical Allocation - Equity Funds

Country	Jun-09	Sep-09	Dec-09	Mar-10	Jun-10
Saudi Arabia	36%	37%	44%	43%	45%
Kuwait	20%	13%	12%	13%	12%
UAE	15%	17%	10%	11%	13%
Qatar	17%	17%	17%	16%	15%
Oman	3%	5%	5%	5%	4%
Bahrain	3%	2%	2%	1%	2%
Other Mena	6%	9%	10%	10%	8%

Source: Markaz Research

Risk aversion increased in June as fund managers upped Cash allocation to 11% from 7% in March while exposure to equity was down to 89% from 93% in March.

Saudi Arabia Equity Funds

The Tadawul index lost 10% in 2Q10 due to an 11% decline in May as crude oil prices tumbled, leading to aggressive selling. All sector indices saw quarterly declines except Retail which managed to gain 3%. Consequently, AUM’s contracted 14% to USD 4.66 bn.

Fund managers maintained their exposure to equities at 98% in June 2010 versus a low of 96% in June 2009, while allocation to Cash & Equivalents remained at 2%.

Top Five Fund Managers (in terms of AUM June-10)

Top 5 Fund Managers	AUM (USD mn)	Market share
Riyad Capital	1,295	27.8%
HSBC Saudi Arabia	1,150	24.7%
Samba Financial Group	772	16.6%
NCB Capital	484	10.4%
Arab National Bank	193	4.1%

Source: Markaz Research

Kuwait Equity Funds

The Kuwait market lost 13% in 2Q after gaining 8% in the previous quarter. Losses were led by the investment sector, down 20% and real estate with a loss of 17%. AUM’s contracted 8% to USD 3.6 bn in 2Q10.

Top Five Fund Managers (in terms of AUM in June 2010)

Fund Manager	AUM ($ Mn)	Market Share
Kuwait Financial Centre	751	21.0%
National Investments Company	705	19.7%
Kuwait Investment Company	554	15.5%
Global Investment House	424	11.8%
Burgan Bank	276	7.7%

Source: Markaz Research

Qatar Equity Funds

After losing 6% in 4Q09, Qatar’s Doha Securities Market (DSM) lost 7.5% in 2Q, reversing its first quarter gain. Only insurance saw a positive performance, gaining 25% for the quarter. Value traded fell 48% YoY to USD 5.1 bn for the quarter.

AUM’s for Qatari equity funds were down 5% to USD 149 mn.

Other GCC Equity Funds

UAE Equity Funds - Dubai (DFM) underperformed the Abu Dhabi Exchange (ADX) for the quarter, losing 21% versus a loss of 13.5% for the ADX. The DFM’s loss was led by Telecom and Investments, down 29% and 27%, respectively. Abu Dhabi’s loss was led by Real Estate, down 36% for the quarter.

Liquidity in the UAE was down; value traded declined 68% YoY to USD 7.35 bn.

AUM’s for UAE equity funds continue to contract, declining 3% in 1Q10 to USD 592 mn.

Oman Equity Funds - The Muscat Securities Market (MSM) lost 9.55% in 2Q after gaining 5.16% in 1Q10. AUM’s for Omani equity funds contracted 12% to USD 51 mn.

Bahrain Equity Funds - The Bahrain Exchange lost 9.75% in 2Q10. Sectoral returns were negative, led by a 13.5% loss in Investments. SICO Selected Securities Fund outperformed the benchmark, MSCI Bahrain index, which lost 20% in 2Q10.

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About Kuwait Financial Centre “Markaz”

-Ends-

For further information, please contact:

Mariam A. A; Suwailem

Assistant Manager, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

Markaz Launches US Distressed Debt Program

Wed, 21 Jul 2010 00:00:00 GMT

“Markaz” announced the launch of the US Distressed Debt Program, which will invest in non-performing and sub-performing commercial mortgages with net targeted annual returns of more than 15%.

Mr. Sami Shabshab, President – MarGulf Management, Inc. the wholly owned US real estate investments arm of Markaz, said, "With over USD1.2 trillion of commercial real estate mortgages maturing in the next four years, lenders will continue to face challenges. Sellers are, therefore, liquidating these distressed loans at large discounts to underlying collateral values. This is creating a unique opportunity to generate significant risk-adjusted returns by investing in sub-performing and non-performing first lien whole-loan commercial mortgages."

He continued, "The upside potential is great as gaining exposure to underlying real estate at low costs will enable us to reap the benefits from aggressive property management and forecasted improvement in economic conditions. The key opportunity drivers include the ability to acquire loans from distressed sellers at significant discounts, improved ability to select high-quality assets, capturing value through negotiating a workout / repayment with the borrower or through foreclosure and asset management, and downside protection through collateralized loans and borrower guarantees. Margulf acquired two loans in the second quarter ended June 2010, collateralized by properties in California, and has already received several offers from potential buyers."

The target size of the Markaz US Distressed Debt Program is USD100 million, of which Markaz is seeding USD10 million in proprietary funds. The investment period is two years, and the Program's term is four years. It is managed by MarGulf, the US Real Estate group of Markaz headed by Mr. Sami Shabshab.

Headquartered in Los Angeles, California, MarGulf has been active in almost all phases of real estate for over 22 years. The team is responsible for numerous tasks including: sourcing of debt acquisitions; due diligence review of loan and property information; analytical assessments and cash flow/value projections of underlying assets; submarket and onsite property inspections; critical reviews of loan borrower credit and other documentation; renegotiation of loan terms and conditions with existing borrower; property and asset management of properties acquired by foreclosure; and the ultimate disposition of loans and/or real estate.

About Kuwait Financial Centre “Markaz”

-Ends-

Photo Caption: Sami Shabshab, President – Margulf.

For further information, please contact:

Mariam A. A; Suwailem

Assistant Manager, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

Equity Research Gaining Ground-Markaz Research Reports

Sun, 18 Jul 2010 00:00:00 GMT

2Q10 witnessed 270 research notes on 110 companies by 27 brokers in the GCC region, according to a recent report by Kuwait Financial Centre “Markaz” on GCC Equity Research Statistics... The coverage represents 16% coverage in terms of number of companies and 68% in terms of market cap. Saudi Arabia topped the list both in terms of research notes (43%) and number of companies (38%). Out of the total 270 research notes published during the period, the majority (145) were “Buy” calls, followed by 97 “Hold”, and 28 “Sell” recommendations indicating renewed optimism following the depressed valuations seen in May/June.

In terms of market capitalization, the companies covered in the period accounted for 68% of the total market capitalization of the GCC. Saudi researched companies accounted for 85% of the local market capitalization followed by Oman at 66%. However, Bahrain had the lowest coverage at 38%.

Qatar had the maximum proportion (76%) of research notes with “Buy” ratings and no “Sell” calls. This was followed by the UAE with (66%). The proportion of Buy ratings in Saudi Arabia fell to 45% during the period compared to 58% in the previous quarter. In Kuwait, 18% of research notes were rated as “Sell” while 59% were “Hold” calls, highlighting the lingering uncertainty and caution among investors towards the local market.

Top picks for the period included Etihad Etisalat Co, Savola Group and Abu Dhabi Commercial Bank with the highest coverage of 7 research notes each, followed by Saudi Telecom Co, National Bank of Abu Dhabi (with 6 notes each). Furthermore, all of Etihad Etisalat Co.’s research notes advocated a “Buy” recommendation. Air Arabia, First Gulf Bank and National Bank of Abu Dhabi each had 5 “Buy” recommendations as well.

Sector-wise, banking had the highest number of research notes (90 notes with 48 “Buy”, 8 “Sell” and 34 “Hold” recommendations) followed by Chemicals and Integrated Telecommunication Services with 20 notes each. The majority of “Sell” recommendations were in the banking industry, reflecting the high level of uncertainty in the sector.

# End #

About Markaz

Kuwait Financial Centre 'Markaz', with total assets under management of KD921 million as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

###

For further information, please contact:

Mariam Al – Suwailem

Assistant Manager

Marketing & Communications Department

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Fax: +965 241 4499

Email: msuwailem@markaz.com

Continued market weakness in June

Thu, 15 Jul 2010 00:00:00 GMT

GCC markets continued to follow global cues in June, losing 1% versus a drop of 11% in May. All GCC markets saw another month of declines, except Qatar which gained 1.68%; losses were led by a 7.45% decline on the DFM (Dubai). Saudi saw the least decline, 0.44%, as three Blue Chips saw substantial monthly gains thereby mitigating the effect of Sabic and Al Rajhi Bank’s losses.

Crude oil gained 2% after tumbling 15% in May. Investors booked profits ahead of Q2 corporate earnings announcements.

Liquidity was down across the GCC in June, as volume and value traded declined 11% and 24%, respectively. In terms of volume, all markets ex. Bahrain saw declines, the highest being a 42% decline in Qatar. In terms of value traded, UAE and Qatar led the way with declines of 30% each. Volatility was down in all markets, with Qatar MVX declining 47%, the least decline among GCC markets was 15% in Dubai. Pan-GCC MVX doubled in Q2 led by substantial increases in April and May.

GCC Markets Review

Market Indicators
	M. Cap (USD Bn)	Last	June 2010	2009	P/E
Indicators	M. Cap (USD Bn)	Close	%	%	TTM
Saudi (TASI)	320	6094	-0.44	27	15
Kuwait SE WT.INDEX	105	397	-2.31	-5	13
Abu Dhabi (ADI)^	74	2514	-3.46	15	9
Qatar(Doha SM)	71	6900	1.68	1	10
Dubai (DFMGI)	50	1462	-7.45	10	9
Oman(Muscat SM)	17	6058	-3.75	17	11
Bahrain (BAX)	16	1396	-3.72	-19	11
MSCI GCC Index	420	400	-2.18	18	19
Source: Excerpt from Markaz ‘Daily Morning Brief’ July 1, 2010
^ PE is for UAE in totality,

Global Markets review

World markets remained in the red as continued economic uncertainty in Europe, a slowing recovery in the US and troubles in China weighed on world markets. MSCI World lost 3% in June after tumbling 10% in May, taking the YTD loss to 9%. On a market cap weighted basis, the US was the largest contributor with a loss of 2.8%.

Monthly returns remained negative across the board led by Shanghai’s loss of 8% for June; the market is down 25% for the year. India managed a gain of 4% for the month. The CBOE VIX index, as a result of the volatility of market returns, was up another 8% in June after spiking 45% in May.

#End#

About Markaz

Kuwait Financial Centre ‘Markaz’, with total assets under management of over KD921 million as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

###

For further information, please contact:

Mariam Al – Suwailem

Assistant Manager

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 224 8000 ext 1817

Fax: +965 241 4499

Email: msuwailem@markaz.com

Commentary on New Regulations on the Kuwait Investment Sector

Sun, 27 Jun 2010 00:00:00 GMT

Given the severe losses sustained by the investment sector in Kuwait, which dwarf those of other GCC nations, a move towards increased regulation of the sector has been expected for some time says a recently released commentary by Kuwait Financial Centre “Markaz” entitled “The New Regulations on the Kuwait Investment Sector” which aims to analyze the current state of the investment sector in light of new regulations by CBK. The sector lost over USD 2 bn in 2009 following a monstrous loss of upwards of USD 3 bn in 2008, and continues to post an aggregate loss of over USD 100 mn in 1Q10 (an annual run rate of USD 400 mn). The losses are tied to impaired assets which companies have been writing-off in an attempt to restore some health to their balance sheets. Liquidity and over-leverage have also been an issue for the sector, whose assets are often comprised of difficult to value and illiquid investments which are then pledged as collateral against further borrowings. These issues were not bothersome during the boom periods; however, when the global financial crisis hit, it exposed the sector’s vulnerabilities resulting in a massive destruction of wealth.

Consequently, in June 2010, the Central Bank of Kuwait (CBK) issued an announcement of tightened regulation over the sector through three criteria spanning liquidity and leverage. The new regulations are effective immediately with the CBK expecting quarterly reports on the same, but it has given the sector until June 2012 to fully comply with the new measures or face as yet unnamed action from the CBK. According to CBK, nearly 50% of investment companies (both listed and unlisted) comply fully with all the three criteria. Given the fact that CBK’s criteria are more stringent than the traditional definition of these ratios; this will likely alleviate much of the negative sentiment associated with investment companies due to the financial crisis.

According to the report, the new regulations aim to increase transparency, credibility and uniformity in the investment sector, which has grown to be of systemic importance to the Kuwait financial sector; the move from CBK would have also been inspired by its pioneering engagement with Basel II banking accords (Kuwait was the first Arab country to adopt the accords back in 2005). The new regulations may mirror those of Basel due to the similar skill set required in implementation which CBK would already posses.

These regulations provide a level playing field of sorts whereby the health of the sector, and its constituent firms, could be objectively measured and compared, which would significantly ramp up investor confidence in the country with a positive trickledown effect to the banking sector.

-Ends-

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD921 million as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:

Farah Sabeeh Al-Essa
Assistant Vice President, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"
Tel: +965 2224 8000 ext 1808/1814
Direct: +965 2224 8071
Fax: +965 2249 8740
Email: fessa@markaz.com
Url: www.markaz.com

Markaz manages the acquisition of a majority stake in Al Kout Industrial Projects (AIP)

Wed, 16 Jun 2010 00:00:00 GMT

“Markaz” announced the acquisition of a majority stake of 48.35% in Al Kout Industrial Projects (AIP) on behalf of its clients. The total number of shares is 42,648,675, with a total value of KD 16,419,739 million at KD 0.385 per share.

The acquisition of Al Kout Industrial Projects Company (“Alkout”) was done through Markaz portfolios while meeting the deadline without any further extensions and despite challenging times where financing one’s operations has become increasingly difficult. The beneficiaries are three clients, including two corporate clients, one of which is listed in the KSE, and the other client being an individual. Moreover, the deal was closed with a high degree of confidentiality.

Markaz has a full-fledged investment banking division which is powered by a team of highly specialized and professional financial advisors. Mergers and acquisitions services range from investment advisory to legal due diligence. The team, which is renowned for both its agility and confidentiality, has executed mandates worth USD 1.7bn since 1997.

###

About Markaz:

For more information, kindly contact :

Mariam A. Al Suwailem

Assistant Manager

Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1807

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

Does past performance matter?

Sun, 13 Jun 2010 00:00:00 GMT

The asset management industry revolves around one theme i.e., past performance. Even though standard disclaimers beat down the importance of past performance, it is quite a popular and common strategy to chase good performers (winners) according to a recent strategic report titled “Persistence in Performance” by M.R. Raghu, Head of Research at Kuwait Financial Centre “Markaz”... should this assumption hold true, two questions come to mind;

1. Do fund managers outperform, and if so

2. Do they do it consistently

As part of examining the experience in the GCC context, the research ranked the performance of around 80 equity funds across the region during the last four years. The research indicates that regional fund managers are reasonably successful in generating outperformance (which is in divergence to global experience). However there is no persistency in performance (in convergence with the global experience). The findings are no different between conventional and Islamic funds. Lack of persistency would make the few fund managers that are consistently good performing (top quartile) very precious.

	Outperformance		Persistence in Performance
Country Focus	Conventional	Islamic	Conventional	Islamic
GCC/Mena	Yes	Yes	No	No
Saudi Arabia	Yes	No	No	No
Kuwait	No	Yes	No	No
UAE	Yes	Yes	No	No

While professional fund managers managing money in international stock markets find it difficult to generate alpha, GCC fund managers seem to enjoy alpha generation capabilities. The very low level of institutionalization in the GCC markets means that there is no zero-sum game between winning and losing asset managers as it would be the case in more advanced markets. The fact that managers are able to outperform easily could also be due to market inefficiencies in general and index concentration in particular. Most of the markets are top heavy in few stocks that account for a large share of the market capitalization. Lack of liquidity reduces this population set even further. This eases the task of the fund manager in terms of research, tracking market rumors, etc. Also, the retail and speculative nature of the markets, means that information gleaned out of “party conversations” are more valuable than “DCF based” fundamental analysis being carried out by non-local research analysts.

Also the second question becomes more important i.e. persistency in performance. Again the global and regional findings are clearly towards lack of persistency. The answer could lie with frequent change in the manager. The asset management industry in GCC relies heavily on local talents (due to language and cultural issues) which is still developing in nature. Due to the high net worth nature of the market, attracting assets under management is quite challenging given the fact that most investors feel confident playing it on their own than entrusting their money with money managers. This in turn leads to very high degree of competition to gather assets which forces managers to take more risk to perform better. This may produce high levels of tracking error leading to variable performance (and not consistent performance).

Furthermore, in many asset management firms the rules for portfolio management may not be that well designed, developed and implemented primarily due to lip service being paid to risk management. Loose definition of rules can make a manager go unchecked in terms of the risk being taken. Also, underperformance is not punished as much as outperformance is rewarded due to lack of skills in this space. This lack of accountability may be a perfect setting to take unwarranted bets in pursuit of alpha.

And finally, fund size does make a big difference. In one case, we observed a very small country-based GCC fund with a huge weight in favor of local market outperforming the peers. Managing a $300 m fund is a very different proposition compared to managing a $3 m fund.

Among GCC funds, most of the fund managers outperformed their benchmark in bear markets (2006 and 2008) but struggled to outperform in bull markets (2007 and 2009). Islamic funds were doing slightly better as five out of seven funds generated positive alpha during the four-year period.

Only four conventional funds showed consistent performance versus their peers and remained either in the first or second quartile throughout the study period. Most of the funds moved from top quartile to bottom quartile during the four-year period, not being able to retain a stable performance versus their peers. All the Islamic funds showed lack of persistency in their performance over the four-year period.

For the Saudi funds, conventional funds enjoyed a better track record than Islamic funds as eight out of 11 funds managed to show positive alpha while only six out of 12 Islamic funds could show outperformance. Conventional funds in KSA showed a relatively narrow range of alpha, as it went from 4.52% to -1.75%. Outperformance was generated in both bear market such as in 2008 and in bull market such as in 2007. In terms of persistency in performance, conventional funds in KSA fared better than MENA/GCC mandate funds as seven out of 11 funds posted positive alpha at least three out of four years while Islamic funds showed less mettle with 50% of the funds generating positive alpha in at least three years.

For the Kuwait funds, surprisingly, less than half of the conventional funds generated alpha. The gap between the best and worst alpha was actually quite large The Islamic funds fared a bit better with six funds out of eight posting positive alpha, but still a relatively wide range of alpha as it went from +4.59% to -10.93%. The persistency in the performance of the conventional funds is in line with the findings for the KSA and MENA/GCC mandate funds. Only four funds were able to outperform their benchmark at least three out of four years. The Islamic funds did much better with six out of eight funds maintaining positive alpha at least three years. Three funds have not been able to beat the market even once. Overall, 2009 was a very challenging year for Kuwait funds and very few of them were able to generate positive alpha during that year.

###

About Markaz:

For further information, please contact:

Mariam A. Al Suwailem

Assistant Manager

Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1807

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Markaz Organizes In-House Training on Capital Market Law

Tue, 08 Jun 2010 00:00:00 GMT

“Markaz”, organized an in-house workshop on Capital Market Law featuring senior partners from Al-Ruwayeh & Partners ("ASAR"), a leading Kuwaiti legal services firm at the Holiday Inn – Downtown.

Speakers from ASAR included Mr. Hossam Abdullah - Corporate, Banking & Finance Partner, who presented different angles such as the pressing need for establishing a Capital Market Authority, laws to regulate the Kuwait Stock Exchange and protect shareholders’ rights and increase transparency and credibility, to attract foreign investors. The workshop also covered the principles behind the CMA Law, and identified underlying parties.

Whereas Mr. Robert Little - Corporate, Banking & Finance Partner discussed select transitional issues related to the Law and answered some questions.

Ms. Rasha A. Al-Hamad, Senior Vice President of Human Resources and Administration at Markaz said, "Markaz always advocated for the implementation of a Capital Market Authority Law in Kuwait. As one of the oldest investment companies and a major local asset manager, Markaz plays an important role managing mutual funds and portfolios that invest in listed stocks in the KSE. Our clients range from sovereign funds to governmental and private institutions, in addition to high-net-worth individuals and small investors.”

Al-Hamad added “as a result of the workshop, Markaz employees including our executive, investment and legal teams now have heightened awareness of the Law's intricacies, which will no doubt be reflected on their performance towards ensuring that our stakeholder's rights are fully protected.”

###

Photo Caption: Markaz team at the workshop

About Markaz:

For more information, kindly contact :

Mariam A. Al Suwailem

Assistant Manager

Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1807

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

An alliance between Markaz and Gulf Bank

Sun, 06 Jun 2010 00:00:00 GMT

Markaz Real Estate and Equity funds now available to Gulf Bank clients

Markaz and Gulf Bank announced today the signing of a distribution agreement by which Gulf Bank will act as a Selling Agent of Markaz investment funds through its Priority Banking network located in selected branches throughout the country.

Manaf Alhajeri, Chief Executive Officer of Markaz said, “We are glad to be offering our investment products to Gulf Bank’s Priority Clients, our various funds are suited to meet investors' needs in this rapidly changing and challenging investment climate. Gulf Bank is a leading financial services provider with a large network of branches. We think this agreement will help Markaz reach a wider base of investors.”

Michel Accad, Chief Executive Officer & Chief General Manager of Gulf Bank said, “We look forward to working with Markaz and distributing their award-winning investment products to our customers. This agreement is the culmination of a long mutual understanding between the two institutions and highlights Gulf Bank’s commitment towards offering our clients a wide range of investments products to suit their needs and build their wealth.”

The agreement will commence with the marketing of two unique investment products to Gulf Bank’s Priority Banking Clients, the products are: Markaz Real Estate Fund “MREF” and Markaz Fund for Excellent Yields "Mumtaz".

MREF is an income generating and Shari'ah-compliant fund that invests in real estate properties within the State of Kuwait. It has achieved 10.2% CAGR, making it the highest performing fund in its class. MREF was established in 2002 and its net assets of KD26.8 million are invested across a diverse real estate portfolio. The fund distributes stable monthly cash returns of 7% on the par value per annum, or 5.8 fils per share per month. Subscription and redemption are monthly/bi-annually, respectively. The NAV as of April 30, 2010 is KD1.327.

"Mumtaz" is a multi-award winning and actively managed Kuwaiti equities fund. Its objective is to outperform the KIC index. It has achieved 22.0% CAGR since inception in 1999. Its net assets are worth KD65.6 million and the fund's investment decisions rely heavily on research driven top-down considerations. Subscription and redemption are weekly. The Net Asset Value (NAV) as of May 31, 2010 is KD4.017.

Markaz’s experience in real estate and asset management extends back to more than three decades. Today, Markaz is the leading fund manager in Kuwait in terms of market share.

Gulf Bank Personal Bankers are available on Priority floors at the following branches: Adan, Audiliya, Dahiyat Abdullah Al Salem, Fahaheel (Alghanim Electronics), Fahaheel (Nayef Al Dabbous Complex), Farwaniya, Jabriya, Mubarak Al Kabeer (Head Office), Nuzha, Salmiya (Co-op), Shaab, Sharq, Al-Mansouriya, Surra, Shuwaikh Main and Shuwaikh Port, or call 1 805 805 to arrange for a personal visit by a Gulf Bank Personal Banker.

# End #

Photo Caption: Manaf Alhajeri – CEO of Kuwait Financial Centre “Markaz” and Michel Accad, CEO & CGM of Gulf Bank

About Markaz:

About Gulf Bank:

Gulf Bank was established in 1960 and has progressed to becoming an industry-leading financial services provider complemented by a large network of 51 branches strategically positioned in key locations in Kuwait. The main groups of the Bank are Retail, Corporate, Treasury and International Banking.

For further information, please contact:

Mariam A. Al Suwailem

Assistant Manager

Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1807

Direct: +965 2224 8078

Fax: +965 2249 8740

Email: msuwailem@markaz.com

Url: www.markaz.com

Hadeel Al-Fadhli

halfadhli@gulfbank.com.kw

1885588-22449501 Ext. 2189

Emiranda Winter

ewinter@gulfbank.com.kw

Mobile : 99292738

www.e-gulfbank.com

About Markaz Real Estate Fund "MREF":

Fund Objective: The objective of the fund is to generate stable and recurring returns, in compliance with the Islamic Shari'ah, by investing in a portfolio of real estate properties within the state of Kuwait during the life of the fund.

Fund Performance :

NAV per unit as of 30th April, 2010	1.327 KD per unit
Nominal Value	1.000 KD per unit
Return since Inception	80.9%
CAGR	10.15 %
YTD 2010	2.4%
Cash Distribution (since Inception)	481.8 Fils per unit

Key Facts :

Net Assets	KD 26,765,939.897
NAV per unit	KD 1.327
Type	Open-ended
Investment Manager	Kuwait Financial Centre "Markaz"
Property Manager	Commercial Real Estate Co.
Fund Inception	February 2003
Management Fees	10% of net fund income
Subscription Fees	2%
Incentive Fees	20% of the net Incentive Income which is equal to the net income less an 8% annual preferred return.
Subscription/Redemption	Monthly / Bi-annually
Fund Valuation	Monthly
Assets Valuation	On March and September of each year
Custodian	Kuwait Clearing Co
Auditor	PriceWaterhouseCoopers

Portfolio statistics :

Occupancy	88.8%
Number of properties	19
Number of Units	442
Collection Rate (Average of last 12 months)	99.1%

Portfolio Composition:

About Markaz Fund for Excellent Yields "Mumtaz":

Fund Objective: To achieve long term capital appreciation through investing in blue-chip companies listed on the KSE.

Awards and Ratings:

· Winner of five Lipper Fund Awards: 2010, 2008, 2007.

· Winner of Kuwait Equity Fund of the Year Award from MENA FM: 2010.

· "A" Rating from Standard & Poor's: 2009-2011.

Fund Performance:

Fund vs. Benchmark	MUMTAZ	KIC Index
Since inception (CAGR) %	22.8	12.5
Volatility (SD) %	20.7	19.8
Sharpe Ratio (RFR = KIBOR + 0.5%)	1.0	0.5
Information Ratio	1.2	-
Beta	0.95	1.0
Ex Post Alpha	10.9	-
Tracking Error (Annualized)	8.8
Number of Holdings	35
Portfolio Turnover (Annual)	0.7x

Key Facts :

Net Assets	KD. 69.240 Million
NAV per unit as of 30th April 2010	KD. 4.22576657
Type	Open-ended
Investment Manager	Kuwait Financial Centre
Fund Inception	December 1999
Management Fees	1.50% p.a.
Subscription/Redemption fee	0.25%
Minimum Subscription	100 units
Subscription/Redemption	Weekly
Fund Valuation	Weekly
Custodian	Kuwait Clearing Co
Auditor	PriceWaterhouse Coopers
ISIN	KW0EQ0903298
Bloomberg	MUMTAZF KK
Lipper Code	LP65038179
Zawya Code	KFCMUMT.MF

Markaz Q1 2010 Financial Results

Mon, 17 May 2010 00:00:00 GMT

KD 3.72 million net profit / 8 fils EPS - Assets under management grow 18% - Increased demand for corporate finance advisory services

“Markaz”, announced its financial results for the first quarter ended March 31 2010. The Company reported a net profit of KD 3.72 million, or 8 fils per share, compared to a net loss of KD3.36 for the same period in 2009, primarily due to management fees and income and gains in GCC and international equity investments. Markaz short-term debt totalled KD 8.02 million and total debt reached KD38.37 million which represents 9% and 44% of total shareholders’ equity, respectively. Markaz assets under management grew by 18%.

Diraar Y. Alghanim, Chairman and Managing Director of Markaz said: "Markaz capitalized on the upturn in regional and worldwide capital markets in the first quarter of the current year. Markaz continues to pursue investment opportunities while enjoying a healthy balance sheet in terms of quality of assets and low debt-to-equity ratio."

Markaz Activities - Asset Management

Local and GCC Investments

GCC equity markets continued positive momentum in the first quarter of year 2010 as MSCI Arabian Index closed the quarter with a gain of 12.8 percent. Kuwait led the top performing markets during the period, followed by Saudi and Egypt. Kuwait market turned buoyant in the middle of the quarter as KSE weighted index closed the quarter with gains of 14.33%.

Markaz equity funds capitalized on the strength seen in local and regional equity markets with optimal management of risk. Markaz flagship Kuwait focused equity fund "Mumtaz" delivered gains of 11.8 percent while Markaz Gulf Fund posted gains of 9.4 percent for the quarter. Recognition of Markaz’s pre-eminence in the equity fund management industry came as "Mumtaz" fund was awarded as the best equity fund for the year 2009 by the leading regional publication "MENA Fund Manager". Three of Markaz mutual funds collectively won four Lipper Awards for best risk-adjusted performance during the year. Markaz "Mumtaz" Fund won two awards for best Kuwaiti Equities Fund for the periods of three and five years. "Markaz Gulf Fund" won best MENA Equities Fund and "Markaz Islamic Fund" won best Islamic Kuwaiti Equities Fund, both for the period of three years.

“Markaz” manages a significant market share in the GCC fund management industry; the company maintained its ranking as fourth on the GCC in terms of size of assets managed, and maintained its market leadership in Kuwait. The company is in the final stages of launching a Shariah-compliant MENA equities fund.

International Investments

The flagship fund of our international investment products, "Atlas Diversified Class", which reflects our asset allocation ideas, returned 1.92% for Q1-10. Our themes based fund, "Atlas Emerging Markets Thematic Fund", which captures the global macro opportunities with a thematic approach to investing, rose by 0.62%. And the "Atlas ETFs Program", which manages a slew of ETFs, rose 2.96% during the same period.

Our asset allocation calls for the year have been biased towards emerging markets and commodity sector, while US market has been over weighted among the developed. In the case of emerging markets, we are overweight on Russia. And among sectors, we are overweight on Energy, Materials, Technology and Manufacturing. We believe our asset allocation thoughts haven’t played out completely during the first quarter and the second quarter should see the gains accruing from the same as the macroeconomic picture improves globally.

Markaz Activities - Investment Banking

Corporate Finance

Markaz has been selected by leading companies to offer advisory services focusing on strategy, liquidation of non-core assets, restructuring capital bases, in addition to mergers and acquisitions. The company signed a mandate with a client to acquire on its behalf a KSE listed operating company in the industrial sector.

GCC Fixed income market issuance decreased to USD 10.1 billion in the Q1 2010 from USD16.9 billion for the same period last year. The assets under management of "Markaz Fixed Income Program" appreciated by 16% due to the positive performance of portfolios which exceeded the targeted 12% IRR. Markaz is planning to launch a fixed income fund with capital ranging from USD15-150million.

Structured Finance

Markaz remains the sole options market maker in the Middle East since 2005. A total of 3,048 contracts were traded in Q1 2010 with an underlying value of KD 2.62 million, a decline of 4.79% and 17.65%, respectively, compared with the same period in 2009. The decline is due to the high volatility of the stock market.

Markaz Real Estate Investments

In the first quarter of 2010, the Kuwait real estate market witnessed a continuation of a stabilization process which started mid-2009. This has led to a positive 2% return for Markaz Real estate Fund. Going forward, we expect further stabilization with a room for a marginal increase in prices for the rest of 2010. Our residential projects in Lebanon are on target in relation to the planned construction schedules, and sales and marketing objectives. The Lebanese real estate market is on a solid positive upward trend, and Markaz is keeping an eye on new opportunities in that market. As for our KSA "Aradi Portfolio", progress in executing the infrastructure is nearing an end and we are planning to start selling the developed plots of land in the coming months in accordance with our marketing and sales strategy for the developed properties in the Eastern Province. Markaz is contemplating the commencement of the development of villas in the Eastern Province to take advantage of the acute shortage in the supply of mid-income housing in KSA in general and the Eastern Province in particular. Our new targets for investments and developments are the real estate markets of Abu Dhabi and Egypt, where we are studying the feasibility of a number of projects in the residential and commercial segments of these markets.

Investor sentiment surrounding commercial real estate in the US appears to be improving. The fundamentals have strengthened slightly as the economy is showing early signs of a recovery. Transaction volumes, too, have advanced as debt and equity capital are making a cautious re-entry into the market. Notwithstanding the above, recovery is expected to be slow and a large volume of upcoming debt maturities is likely to suppress markets. Consistent with this outlook, in the first quarter of this year, we have made significant progress towards replacing existing maturing debt with longer-term financing for our funds. Furthermore, we are actively pursuing distressed real estate debt investments for our proprietary account as well as for our clients.

Oil and Gas

"Markaz Energy Fund" was up 3.6% as of the end of March 2010 due to gains in fixed income, dividends and value improvements in select strategic holdings. Markaz signed a mandate to manage a capital increase for a leading client listed in the KSE's services sector.

-Ends-

Photo Caption: Diraar Y. Alghanim, Chairman and Managing Director of Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD921 million (USD 3.19bn) as of March 31, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. “Markaz” was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:

Farah Sabeeh Al-Essa

Assistant Vice President, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1808/1814

Direct: +965 2224 8071

Fax: +965 2249 8740

Email: fessa@markaz.com

Url: www.markaz.com

GCC Equity Mutual Funds: Markets begin the year on a positive note

Wed, 05 May 2010 00:00:00 GMT

In a recently published quarterly report by "Markaz", which aims to analyze the performance of equity funds across the region, GCC markets had a positive start to the year; after ending 2009 with a red quarter amid negative corporate news, namely Dubai World, markets swung into positives for the first quarter of 2010, led by healthier corporate earnings, stronger economic outlooks and more positive corporate news. MSCI GCC gained 12% in 1Q10 after losing 8% in 4Q09.

The quarter’s worst performer was MSCI Bahrain, which remains in the red while the best performance came from MSCI Kuwait which gained 19% in 1Q10, driven by positive news from Zain which lifted most blue chips. MSCI Saudi followed with a gain of 13% for the quarter.

GCC Equity funds had an asset weighted return of 11% for 1Q10 as fund managers took advantage of blue chip gains as local indices were carried upwards by earnings momentum and strong economic outlooks.

AUM’s was just over USD 12.3 bn in 1Q10 representing an institutionalization rate (AUM/Mcap) of 1.6%. Both Saudi Arabia and Kuwait saw their AUM expand in the first quarter by 7% and 4%, respectively.

Assets under Management – March 2010

Source: Markaz Research

Asset Allocation Trends– GCC Equity Funds (March 2010)

Fund managers continue to favor Saudi Arabia, with an allocation of 43%. Confidence in the Kuwait market has declined, from 20% in June to 11% in March 2010; the same can be said for the UAE, where managers allocated 17% of their assets in September before cutting exposure to 11% in March.

Geographical Allocation - Equity Funds

Country	Mar-09	Jun-09	Sep-09	Dec-09	Mar-10
Saudi Arabia	39%	36%	37%	44%	43%
Kuwait	18%	20%	13%	12%	13%
UAE	14%	15%	17%	10%	11%
Qatar	16%	17%	17%	17%	16%
Oman	4%	3%	5%	5%	5%
Bahrain	3%	3%	2%	2%	1%
Other Mena	6%	6%	9%	10%	10%

Source: Markaz Research

Exposure to equities increased throughout 2009 and into 2010, with a 93% allocation in March, while Cash exposure is down to 7%, based on asset weighted average, reflecting a higher risk appetite from local and foreign investors.

Saudi Arabia Equity Funds

The Tadawul index gained 11% in 1Q10 as positive end of year results, strong economic outlook and healthy oil prices boosted the market. Banks, Agriculture and Petrochemicals led the index higher, gaining 13.7%, 13.2%, and 12.7%, respectively, for the quarter. Consequently, AUM’s expanded 7% to USD 5.08 bn.

Fund managers maintained their exposure to equities at 98% in March 2010 versus a low of 96% in June 2009, while allocation to Cash & Equivalents increased to 2% from 1% in December 2009.

Top Five Fund Managers (in terms of AUM Mar-10)

Top 5 Fund Managers	AUM (USD mn)	Market share
Riyad Capital	1,410	27.8%
HSBC Saudi Arabia	1,264	24.9%
Samba Financial Group	819	16.1%
NCB Capital	507	10.0%
Bank Al Bilad	203	4.0%

Source: Markaz Research

Kuwait Equity Funds

The Kuwait market gained 8% for the quarter after two consecutive quarterly declines. Gains were led by Industrials and Services, 12.5% and 12.2%, respectively, on the back of positive news flow from Zain. AUM’s expanded 4% to USD 3.9 bn in 1Q10.

Top Five Fund Managers (in terms of AUM in March 2010)

Fund Manager	AUM ($ Mn)	Market Share
Kuwait Financial Centre	836	21.5%
National Investments Company	788	20.2%
Kuwait Investment Company	527	13.5%
Global Investment House	468	12.0%
Burgan Bank	298	7.7%

Source: Markaz Research

Qatar Equity Funds

After losing 6% in 4Q09, Qatar’s Doha Securities Market (DSM) gained 7.23% in 1Q10 led by banking, up 11.6% for the quarter after the Central Bank lifted a ban on local banks from trading on the exchange. Value traded fell 18% to USD 4.6 bn for the month.

AUM’s for Qatari equity funds were flat at USD 156 mn.

Other GCC Equity Funds

UAE Equity Funds - Dubai (DFM) underperformed the Abu Dhabi Exchange (ADX) for the quarter, gaining 2.2% versus a gain of 6% for the ADX. The DFM’s gain was led by Banking, up 5% for the quarter while Insurance and Financial Services lost 1.9% and 0.4%. Abu Dhabi’s gain was led by Telecoms, up 13.6%. Liquidity in the UAE was down; value traded declined 39% from 4Q09 to USD 10.68 bn.

AUM’s for UAE equity funds continue to contract, declining 3% in 1Q10 to USD 592 mn.

Oman Equity Funds - The Muscat Securities Market (MSM) gained 5.16% in 1Q10 after losing 3% in 4Q09. AUM’s for Omani equity funds dropped to USD 58 mn as Oman Gateway Fund was retired.

Bahrain Equity Funds - The Bahrain Exchange managed a gain of 6.1% in 1Q10, regaining the 4Q09 loss. Sectoral returns were mixed, from a high of 22% for Commercial Banks to a low of -6% for Industrials. SICO Selected Securities Fund outperformed the benchmark, MSCI Bahrain index, which lost 3.86% in 1Q10.

-Ends-

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD865 million as of December 31, 2009, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:

Farah Sabeeh Al-Essa

Assistant Vice President, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1808/1814

Direct: +965 2224 8071

Fax: +965 2249 8740

Email: fessa@markaz.com

Url: www.markaz.com

Markaz "Mumtaz" "Islamic" and "Gulf" Funds Win Four Lipper Awards for Best Performance

Sun, 04 Apr 2010 00:00:00 GMT

“Markaz”, announced that three of its MENA mutual funds collectively won four Lipper Awards for best risk-adjusted performance. Markaz "Mumtaz" Fund won two awards for best Kuwaiti Equities Fund for the periods of three and five years. "Markaz Gulf Fund" won best MENA Equities Fund and "Markaz Islamic Fund" won best Islamic Kuwaiti Equities Fund, both for the period of three years.

Amani Al-Omani, Senior Vice President of Local and GCC Investments at Markaz said "Markaz Funds have now won a total of eight Lipper Awards in the last three years alone. These awards recognize Markaz's commitment to achieving the best risk-adjusted performance through following a research driven methodology and investing in high quality assets."

"Mumtaz", rated "A" by Standard & Poor's, is a winner of five Lipper Fund awards for the years 2010, 2008 and 2007, and recently won the Kuwait Equity Fund of the Year Award by MENA Fund Manager. It is an actively managed fund, targeting outperformance of the KIC index. It has achieved 23.1% CAGR since inception in 1999, outperforming its benchmark by 10.1%. Its net assets are worth KD68.4 million and the fund's investment decisions rely heavily on research driven considerations. The Net Asset Value (NAV) as of February 28, 2010 is KD4.177.

Markaz Islamic Fund, winner of two Lipper Fund awards for the years 2010 and 2008, was established in 2003 and aims to invest in Sharia'h-Compliant quoted and unquoted equities in Kuwait. It has posted 8.3% CAGR since inception, outperforming its benchmark by 7.2%. Its net assets are worth KD21.8 million The Net Asset Value (NAV) as of February 28, 2010 is KD1.666.

Markaz Gulf Fund, rated "A" by Standard & Poor's, was launched in 2006, and in 2008 the fund's mandate was changed to expand its investment universe into the MENA region. The fund has been run to outperform the MSCI Arabian Markets index, while retaining a GCC bias of approximately 75-80%. It has posted -4.1% CAGR since inception, outperforming its benchmark by 11.2%. Its net assets are worth USD 34.4 and the Net Asset Value (NAV) as of February 28, 2010 is USD2.52.

All the above mentioned funds have a low minimum subscription and weekly subscription and redemption. In addition, subscription is open to all nationalities.

Markaz manages a major market share in the region through its funds; it’s ranked the first in Kuwait and the fourth in the GCC. As of January 31, 2010 the Markaz Local and GCC Investments team managed assets of approximately KD 543 million (USD 1.89 billion), of which more than 60% are managed on behalf of institutional investors.

Markaz’s track record in asset management in Kuwait and the GCC extends back to more than two decades. In 1983, the company started offering portfolio management services in the Kuwaiti Market and in 1999 it entered the fund management field with the launch of the first Kuwaiti Equities Fund – "Mumtaz".

Lipper is a Thomson Reuters and the Awards program highlights funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers. The Awards are granted to funds across 21 countries in Asia, Europe, and the United States.

-Ends-

Photo Caption: Mr. Mohamed Al-Saad, Manager – Local and GCC Investments represented Markaz in the Lipper Awards ceremony that took place on 30 March 2010 in Dubai.

About Markaz:

For further information, please contact:

Farah Sabeeh Al-Essa

Assistant Vice President, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1808/1814

Direct: +965 2224 8071

Fax: +965 2249 8740

Email: fessa@markaz.com

Url: www.markaz.com

Markaz organizes M&A seminar in collaboration with leading US based law firm

Wed, 24 Mar 2010 00:00:00 GMT

Markaz announced that it held a legal training seminar in collaboration with leading US based law firm, Gibson, Dunn & Crutcher LLP. The training was attended by select VIP clients and Markaz employees, and held at the Holiday Inn – Downtown.

Ms. Rasha Al-Hamad – Senior Vice President of Human Resources and Administration said "Given the rapid economic developments, Markaz staff need to be updated on pressing legal matters on an ongoing basis. Markaz is always striving to develop its staff and to provide them with a learning environment and we can't think of a better way of achieving this other than organizing such seminars by first-rate speakers. The training covered M&A's for the MENA Region, a very pertinent topic in today’s environment."

The speakers were Jeffrey Trinklein, Paul Harter and Nick Tomlinson, Partners at Gibson, Dunn & Crutcher LLP (“GDC”). The firm is global with more than 1,000 lawyers in 16 offices across the United States, Europe, the Middle East, Asia and Latin America. GDC has been acting as legal and tax advisor to Markaz for the past 2 decades on various matters including US Real Estate projects, private equity funds investments and others.

-Ends-

Photo Caption: (Left to right) Paul Harter, Nick Tomlinson, Jeffrey Trinklein – Partners at Gibson, Dunn & Crutcher with Ali H. Khalil, Executive Vice President of Markaz.

For further information, please contact:

Farah Sabeeh Al-Essa

Assistant Vice President, Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1808/1814

Direct: +965 2224 8071

Fax: +965 2249 8740

Email: fessa@markaz.com

Url: www.markaz.com

Markaz reports 6 fils EPS for the year 2009

Sat, 06 Mar 2010 00:00:00 GMT

Company in robust health and has significant market share in GCC fund management industry

Markaz announced its 2009 financial results, reporting a net profit of KD 2.54 million, or 6 fils per share, compared to a net loss of KD18.77 in 2008, primarily due to management fees and income and gains in GCC and international equity investments. “Markaz” short-term debt totalled KD 4 million and total debt reached KD32.68 million which represents 4.87% and 39.75% of total shareholders’ equity, respectively. The Board of Directors proposed no dividend distributions for the 2009.

Diraar Y. Alghanim, Chairman and Managing Director of “Markaz” said: "In 2009, the stamina of financial institutions was tested. Besides their ability to survive, preserving shareholders' and investors' capital became a key concern. In spite of these circumstances, “Markaz” fared well during the crisis on the following accounts: The Company's healthy balance sheet in terms of quality of assets and low debt-to-equity ratio kept it afloat in these difficult waters. Additionally, “Markaz” strengthened its market positioning in the region and achieved attractive profits for its shareholders."

Manaf Alhajeri, General Manager of "Markaz" said: " “Markaz” emerged as a MENA investment partner of choice targeted by international institutions. “Markaz” has been selected by a leading European investment provider to act as the Investment Advisor based on experience in the field and performance track record. According to in-house research , “Markaz” manages a significant market share in the GCC fund management industry; the company moved up a spot to fourth place on the GCC in terms of size of assets managed, and maintained its market leadership in Kuwait. Additionally, Standard & Poor’s assigned "A" Ratings for "Mumtaz" and "Gulf" Funds which is a testimonial to the high standards followed in our investment processes and consistent track record. It also highlights our ability to adapt to changing market conditions."

Markaz Activities - Asset Management
Local and GCC Investments
Our flag-ship Kuwaiti Fund "Mumtaz" remained ahead of its peers posting a YTD 3.1% return beating its benchmark by 12.4%. Markaz Gulf Fund posted a YTD 14.3% return, underperforming its benchmark by 8.1% due to a conservative strategy employed to avoid risks of getting trapped in bear market rallies. The Portfolio managers’ bias towards large-mid cap companies with sustainable business revenues allowed the accounts to post 9.7% YTD Composite return.

International Investments
MSCI World posted a growth of 26.98% while BRICs gained 86.94%. Our Atlas portfolios Atlas Diversified Class and Emerging Markets Thematic Class have improved 11.02% and 24.46%, respectively. Atlas ETF's program generated alpha of more than 11 percentage points.

Private Equity
The Private Equity industry is no exception to the damage that was incurred in 2009, “Markaz” private equity investments were down 3.43% for the same period.

Treasury
Due to defaulting of large financial institutions, and like all other money market funds in Kuwait, our Money Market Funds managed by the Treasury Department also bore the impact of the financial crisis. Therefore, acting in the best interest of investors, “Markaz” has swiftly taken the necessary measures to ensure equitable and fair treatment to all Unit holders equally by ceasing further subscriptions/redemptions and redeeming the units on a pro rata basis to all Unitholders without exception as and when cash is available. All additional income earned from that period including any profit credited to the Fund’s account shall accrue to the unit holders.

Markaz Activities - Investment Banking
Corporate Finance
At the outset of 2009, “Markaz” acted swiftly to capitalize on an investment opportunity in the GCC fixed income market which emerged as a result of the credit crisis. Markaz Fixed Income Program was established in February to acquire high quality GCC debt securities trading at steep discounts. The program also invested in primary bond and sukuk issues that were offered throughout the year by GCC government and corporate entities. In the 10 months period, the program invested over USD100 million and achieved an aggregate return of 17%. Combined with the high returns, the Program displayed remarkable resilience in the face of market shocks throughout the year reflecting the high quality of its assets.

Over the year, the Department successfully executed three capital restructuring mandates for clients, including advising companies active in the construction and investment sectors. Sourcing of new capital for clients, however, slowed down to its lowest levels amidst tightening of credit and poor investment sentiment.

Structured Finance
“Markaz” remains the sole options market maker in the Middle East since 2005. The number of stocks covered in the Options Market at the Kuwait Stock Exchange was decreased from 60 companies in 2008 to 56 companies in 2009, as companies were delisted due to defaults and illiquidity. The number of options contracts traded in 2009 witnessed a decline due to strong correlation with the stock market which declined 35% for the same period.

“Markaz” in 2009 submitted several proposals to the Kuwait Stock Exchange to allow investors to issue options contracts covered by their portfolio and to allow new market-makers in the options market to stimulate competition and liquidity. Work is underway on submitting a proposal to the KSE that will allow options trading during the official hours of the market.

Markaz Real Estate Investments
In 2009, the MENA real estate market suffered sharp declines in prices, with financing options and transactions almost nonexistent. “Markaz” invested in low risk countries and sectors which limited the impact of the financial crisis. In addition, all underlying investments within MENA funds and portfolios are above cost and most of these investments are on track to achieve the original targeted returns.

Although, the real estate market in Kuwait declined on average by around 20%, Markaz Real Estate Fund (MREF) finished the year with a decline of 5.2%. The Fund continued to pay dividends on a monthly basis.

"Markaz Real Estate Opportunities Fund" which invests in developmental real estate in KSA, Lebanon, Syria, Jordan and Qatar, initiated exiting from underlying investments after achieving its targets. The fund has exited completely from its investments in Clemenceau, Beirut and is in the process of exiting from "Aradi" in KSA by the end of 2010, and from Lusail, Qatar, partially in H2 2010 and completely by H1 2011.

Conditions in the U.S. commercial real estate market have continued to worsen, both with respect to real estate fundamentals and capital markets. The outlook for net operating income for commercial real estate remains weak for the next two years. Consistent with this outlook, we have reduced our U.S. real estate assets under management by 50% from the peak in 2006 through asset dispositions. For our remaining holdings, we are focusing our efforts on the preservation of capital values. Towards this objective, we have taken a number of actions, maintaining occupancy, proactively working with lenders to extend the maturity of underlying loans, attempting to maximize cash reserves and taking adequate provisions and write-downs in 2009.

Oil and Gas
Kuwait First Transportation Company, of which both Markaz Energy Fund (MEF) and “Markaz” are major shareholders, withstood pressures on the equipment leasing business and continues to perform well. MEF, which is qualified for the Kuwait Offset Program, received an enhancement in multiplier from 3.5 to 4 during 2009.

Research
We believe that “Markaz” has a responsibility to promote transparency in the GCC and to keep the investment community up-to-date with rapid developments. The research initiative of “Markaz” was further strengthened during 2009, a year full of challenges and surprises. “Markaz” research continued to focus on strategic reports on themes relating to capital markets, in addition to equity research, infrastructure and real estate.

Corporate Social Responsibility
“Markaz” intensified its corporate social responsibility efforts, primarily focusing on two causes: the youth and the health sector.

-Ends-

Photo Caption: Diraar Y. Alghanim, Chairman and Managing Director of Kuwait Financial Centre “Markaz”

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD865 million (USD 3.02bn) as of December 31, 2009, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. “Markaz” was listed on the Kuwait Stock Exchange (KSE) in 1997.

For further information, please contact:
Mariam Al-Suwailem
Assistant Manager
Media and Communications
Kuwait Financial Centre S.A.K. "Markaz"
Direct: +965 2224 8073
T: +965 2224 8000 ext. 1817
E: msuwailem@markaz.com

GCC Fund Managers favoring Saudi Arabia: Markaz Study

Mon, 15 Feb 2010 00:00:00 GMT

Markets lost in 4Q09

A recently published report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of equity funds across the region, states that, GCC markets swung between gains and losses throughout the year; the first quarter showed lingering losses from the previous year, while the second and third quarters produced significant gains as markets rallied on the back of recovering commodity prices and a global market rally. The fourth quarter saw a reversal of fortunes as GCC markets turned south led by Dubai sentiment. MSCI GCC lost 8% in the fourth quarter bringing the annual gain to 18%.

The quarter’s best performance was from MSCI Saudi Arabia which limited its loss to 1%, bringing full year gain to 33%, which was the second best performance in 2009 (MSCI Indices). The worst performer for 4Q09 was MSCI Kuwait, which lost 19% bringing the full year decline to 11.7%.

AUM’s ended the year at USD 12 bn representing an institutionalization rate (AUM/Mcap) of almost 2%. Both Saudi Arabia and Kuwait saw their AUM decline in the fourth quarter by 3% and 10%, respectively.

Assets under Management – December 2009

Source: Markaz Research

Asset Allocation Trends– GCC Equity Funds (December 2009)

Fund managers favored Saudi Arabia throughout the year, allocating between 36% and 42% of assets to the Kingdom in 2009 (Table 3). Confidence in the Kuwait market declined dramatically, from 20% in June to 11% in December; the same can be said for the UAE, where managers allocated 17% of their assets in September before cutting exposure to 10% in December.

Geographical Allocation - Equity Funds

Country	Dec-08	Mar-09	Jun-09	Sep-09	Dec-09
Saudi Arabia	36%	39%	36%	37%	42%
Kuwait	19%	18%	20%	13%	11%
UAE	16%	14%	15%	17%	10%
Qatar	17%	16%	17%	17%	16%
Oman	5%	4%	3%	5%	5%
Bahrain	4%	3%	3%	2%	2%
Other Mena	4%	6%	6%	9%	9%

Source: Markaz Research

Exposure to equities increased throughout the year as managers took advantage of a second and third quarter rally; allocation was at 87% in December from a low of 70% in March whereas Cash began the year with 28% of manager assets steadily declining to 12% by December.

Saudi Arabia Equity Funds

Saudi Arabia’s Tadawul All-Share Index (TASI) lost 3.17% in 4Q09, bringing the full year gain to 27%, the highest among GCC markets. Banks & Financials lost 9% in the quarter while Petrochemicals and Energy gained 5% and 8.8%, respectively. Liquidity in the Saudi market was down by 35% for the year, with Value Traded at USD 338 bn.

In December, fund managers decreased allocation to cash to 1.5% (on an asset weighted basis) and held 98% of assets in equities. AUM’s were flat in the final quarter of the year at USD 4.7 bn after expanding by 6.5% in the third quarter and 14% in 2Q09.

Kuwait Equity Funds

The Kuwait market faltered again in the final quarter of the year, losing 10% in 4Q09 after declining 3.25% in the third quarter. Losses were led by the Investment, Banking, and Industrial sectors. AUM’s declined 10% to USD 3.75 bn in 4Q09.

Kuwait Financial Centre “Markaz” was the top equity fund manager with an AUM of USD 752 mn, representing a 20% market share.

Top Five Fund Managers (in terms of AUM in Dec- 2009)

Fund Manager	AUM ($ Mn)	Market Share
Kuwait Financial Centre	752	20.0%
National Investments Company	689	18.4%
Global Investment House	577	15.4%
Kuwait Investment Company	528	14.1%
Burgan Bank	275	7.3%

Source: Markaz Research

Qatar Equity Funds

Qatar’s Doha Securities Market (DSM) saw two consecutive quarters of gains; 33% in 2Q09 and 14% in 3Q09, however, the trend reversed in 4Q09 with the market recording a loss of 6.14%. This brought the Doha Exchange to a flat close with a gain of just 1%. All sector indices saw quarterly losses, the largest of which was in Banking & Financials, down 7.71% in 4Q09. Liquidity was down on the Doha Exchange, with value traded ending the year at USD 26 bn, an annual decline of 46%.

AUM’s for Qatari equity funds decreased 7% in 4Q09 to USD 155 mn.

Other GCC Equity Funds

UAE Equity Funds - Dubai (DFM) underperformed the Abu Dhabi Exchange (ADX) for the quarter, losing 17.68% versus a loss of 12% for the ADX. Full year gain on the DFM was 10% versus 14.79% for the ADX. The DFM’s loss was led by the Investments & Financials sector which was down 26% in 4Q09. Abu Dhabi’s quarterly loss was led by the Real Estate and Construction sectors which were down 24% and 21.5%, respectively, in 4Q09. Liquidity in the UAE was down; value traded on the ADX was down 77% in 2009 to USD 18.9 bn while the same on the DFM contracted by 24% to USD 47.6 bn.

AUM’s for UAE equity funds contracted 11% in 4Q09 to USD 611 mn.

Oman Equity Funds - The Muscat Securities Market (MSM) lost 3% in 4Q09 after clocking in substantial gains in the second and third quarter of 22% and 17%, respectively. The market ended the year with a 17% return, i.e. the second best performer within the GCC. AUM’s for Omani equity funds were flat at USD 65 mn for 4Q09. The majority of Omani funds underperformed the index in the fourth quarter.

Bahrain Equity Funds - The Bahrain Exchange showed another year of losses, closing out 2009 with a decline of 19%. In the fourth quarter, the index was down 6% making it the fourth consecutive quarterly loss. Sectoral returns were mixed, from a high of 12% for Hotels & Tourism to a low of -8% for the Investment index. SICO Selected Securities Fund outperformed the benchmark, MSCI Bahrain index, which lost 13.4% in 4Q09.

Bahrain AUM’s were at USD 19 mn in 4Q09.

###

About Markaz

Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD960 million as of September 30, 2010, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997.

###

For further information, please contact:

Mariam Al - Suwailem

Assistant Manger – Media & Communications

Kuwait Financial Centre S.A.K. "Markaz"

Tel: +965 2224 8000 ext 1817

Fax: +965 2241 4499

Email: msuwailem@markaz.com