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The July 2007 report on GCC Asset Allocation from Kuwait Financial Center S.A.K. (“Markaz”) shows a reduction in the allocation to Saudi Arabia and UAE markets. The research is based on a proprietary model which generates asset allocation weights on the six GCC markets and has consistently outperformed the benchmark index. For the month of June 2007, the out performance has been at 53 basis points. The YTD out performance is at 3.05%. The out performance in the month of June can be attributed to the overweight position of the model on Kuwait and Oman. Both these markets posted a return of 5.6% and 2.20% respectively. The returns of the model would have been higher if not for the 7% fall in the Saudi Arabian markets. Markets Asset Allocation (%) Market performance (June 2007)(%) Saudi Arabia 54 -6.98 UAE 20 -1.07 Kuwait 29 5.59 Bahrain 2 4.26 Qatar 12 0.58 Oman 2 2.20 Cash/(Loan) -20 TAA 100 -2.29 Source: Markaz Analysis The Tactical Asset Allocation model has decreased the allocation to Saudi Arabia to 28% from a neutral weight position of 54%. The asset allocation for UAE too has been decreased from an over weight position of 21% in the month of June 2007 to an equal weight position in the month of July at 14%. Kuwait market continues to be the model’s favorite. The model carries an overweight position on Kuwait at 29% in July as compared to the benchmark allocation of 19%. This allocation is directionally, in line with the fund manager’s asset allocation. It has to be noted that the average fund manager’s allocation on Saudi Arabia has declined in the month of May as compared to the month of April. The average allocation of the 20 GCC funds tracked by Kuwait Financial Centre “Markaz” on Saudi Arabia has declined by 200 basis points in May 2007 as compared to June 2007. It is also evident from the returns of these funds that Ex-Saudi funds and funds with lesser allocation to Saudi Arabia continue to provide higher returns than the rest. The model due to its underweight position in Saudi Arabia and UAE is left with 17% in cash. Benchmark allocation (%) Recommended Allocation - June 2007 (%) Fund Manager’s Average (%) Saudi Arabia 56 28 25 Kuwait 19 29 25 UAE 14 14 21 Qatar 8 8 11 Bahrain 2 2 4 Oman 1 2 3 Cash/(Loan) 0 17 9 Other MENA 0 0 2 Total 100 100 100 Market Review: After barely managing positive return in May (0.93%), Saudi market declined by 6.98% in June. Saudi remains the worst performing market in the GCC region with a year-to-date return of -12.15%, on the back of a 58% fall in the previous year. All the top 5 stocks (by market cap) declined during the month. SABIC the biggest stock by market cap in Saudi declined 10% by during the month, while Al Rajhi bank also pared 10% during the month. Saudi Telecom and Saudi Electricity each declined by 4%, while SAMBA Financial Group declined by 5%. Kuwait was the best performing market in GCC in June. The Kuwait stock market advanced 5.59% during the month, reaching new high during the month. The rise in the market was supported robust corporate earnings in Q1 07, coupled with positive news flows. During the month, MTC won license to offer mobile services in Saudi Arabia. Kuwait Projects Company Holding (KIPCO) bought a majority stake in local lender Burgan Bank, raising its stake in Burgan to 50.1% percent from 35%. National Bank of Kuwait evinced interest to acquire Arab Investment Bank (Egypt). Agility Projects Logistics, a unit of Kuwait's Agility won a $220 Mn shipping contract in Qatar. Agility was also selected as a part of a group with U.S. firm DynCorp International which won a $50 Bn deal from the U.S. military. Abu Dhabi and Dubai markets took a breather in June after a strong show in May (17.2% each). Abu Dhabi index 0.92% lower, while Dubai declined 1.51% in June. June was busy month in terms of merger and acquisition activity for UAE market. Dubai Banking Group agreed to buy a 32.0% stake in Shuaa Capital by purchasing convertible bonds worth AED1.5 Bn. Dubai Financial, a financial holding company for Dubai Group, signed a stock-purchase agreement to acquire a 60 per cent controlling stake in Taib Bank Abu Dhabi Islamic Bank and Emirates International Investment Co. made a bid this week to acquire 100.0% of Egypt's National Bank for Development for EGP310 Mn. Among other news, First Gulf Bank announced plans to issue $3.5 Bn non-convertible bonds before the end of 2007. Qatar (DSM) ended 0.58% higher during the month. In the previous month market was up 12.15%, driven by robust 1st quarter earnings growth. During June markets remained sluggish in absence of any major triggers. During the month, Qatar Telecommunications Company (QTEL) announced the acquisition of 9% stake in Shenington Investments Limited (Singapore) for $200 Mn through its subsidiary. The stock advanced 3% during the month. Qatar Islamic Bank signed memorandum of understanding to establish bank in Pakistan. During the month Oman advanced by 2.20%, while Bahrain was up by 4.26%. Both these markets had witnessed robust corporate first quarter earnings. ### About Markaz Kuwait Financial Centre 'Markaz', with total assets under management of over KD1.21 billion as of March 31, 2007, 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; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd.