Amwal on outlook for 2015 (“Al Sharq”)

January 2015

Amwal on outlook for 2015 (“Al Raya”)

Mr. Fahmy twig CEO stressed that the money value of the assets in the State of Qatar size ranging from 5 to 10 billion riyals.

This was announced during a press conference held yesterday funds W Hotel in the presence of Mr. Afaboran head of asset management funds and Mr. Abdullah Mohammed Alli, Executive Vice President for funds.

Ghsain said the value of the size of the investment funds of funds amounted to 400 million Qatari riyals.

He added that funds and manages stock portfolios balanced in all parts of the Gulf Cooperation Council (GCC) and Turkey, adding that the first product of the company Qatar Gate Fund, which is still on the market-leading products with the longest record of superior performance. He pointed out that Al-Ha'ir Fund in the Gulf Cooperation Council, which funds managed by countries achieved superior performance rate stood at 3.7% in 2014 in light of volatile market conditions.

Twig explained that Qatar Gate Fund works in partnership with the National Bank, one of the best funds in the Qatari stock performance over the past five years in terms of revenue cumulative UNFPA country Portal amounted to 110% compared with an average 95% of other funds and 102% of the nearest competitor outperforming the average fund by 15% and the nearest competing funds by 8%.

Twig predicted that crude oil prices rise a year from now to $ 70 or less per barrel, adding, if the barrel price remained $ 50 can get in Qatar deficit spending from 5 to 10 billion dollars, but in return the State of Qatar has 150 billion He pointed out that if the price of a barrel of crude to $ 57 a reserve, there would be no deficit in the State of Qatar, adding that the deficit spending comes because of the State of Qatar in the 2022 World Cup projects.

He said the funds is proud to be a national success story, we are first and we remain independent asset management the only company in Qatar, Amwal is the first independent asset management company in Qatar, was established in 1998 under the Central Bank of Qatar umbrella and in 2011 moved under the umbrella of the Qatar Financial Centre Regulatory Authority . Funds company wholly owned by Sheikha Hanadi girl Nasser Bin Khaled Al Thani.

He added that the strong performance of the Fund in 2014 and superior performance on the market each calendar year since the launch of the Fund.Qatar Gate Fund and to our knowledge is the only fund in the Gulf Cooperation Council, which outperformed the index countries every year since its inception and we are also excelling in reducing the downside risks for the index, which indicates that the investment funds we give higher returns with lower volatility, when investing one can lucky to be in a year or two but to achieve strong returns year after year requires more than luck to have a disciplined investment process to analyze companies and earnings forecasts and stock selection.

He shares how we choose to invest: When you invest begin by understanding the earnings forecasts for the company, which is the key in the selection process we choose companies that are valued attractively compared to the potential profits in the future. Investors often fall into the trap buy stocks that look cheap compared with the past profits without understanding how it will change in the future profits. We went through across many cases in the past where stocks fell due to start in the assessment of the stock were not reflect the real prospects of profitability. In addition there have been cases in the past that good companies which are valued much higher than the true level, which also leads to a sharp decline thereafter.

He explained that there is a recent report on the impact of dividends on stock prices. There is a common belief in Qatar that stocks that pay high profits are good investments. In the report we have shown that the opposite is the case.Companies that pay high profits less performance than those that pay less profits and this is an example of this type of analysis we do before choosing stocks for investment, adding that the outlook for stocks of oil and country stock: the price of oil is very important for the Gulf Cooperation Council (GCC) because it determines the level of spending The government oil and gas revenues about 90% of the total Saudi and Kuwaiti government revenues and about 70% of the Qatari government revenues. With lower oil prices, government revenues will decline, but we do not expect to have a significant impact on government spending in the short term as long as all of these countries have large savings in the government reserve. Let's take the example of the State of Qatar, there may be a small deficit in the budget this year in a few billion dollars borders, including capital spending of huge projects, but this compares with a sovereign wealth fund in the range of US $ 200 billion.The deficit in the Saudi budget in 2015, including higher spending in the capital could be in the range of US $ 90 billion and this compared with the sovereign wealth fund in the country in the range of US $ 700 billion in our opinion, as long as the price of oil at the end of the day we are recovering Do not expect that have a significant impact on government spending. Spending over the longer term depends on whether the price of oil will remain low or recovering.

He said we see that the oil price of US $ 100 a barrel was too high in earlier and we believe now $ 50 is too low we build this on the reasons of analysis (1) When you adjust the currency the US dollar and the time value of money moves and we depend on long-term average of 60 US dollars -70 (2) regardless of OPEC's decision not to supply cut, the increase in oil production in the United States (shale oil in particular) is the main reason for the recent decline in oil However the cost of shale oil production is not cheap is in the range of $ 75 US so most producing countries, oil shale is losing money now (3) the current imbalance between supply and demand in the range of 1 to 1.5 million barrels a day this is that global demand has the potential to grow each year.

What are our views on stocks / sectors? During the major economic phases such as where we are now we feel that the right choice for shares of a great importance while the decline in oil price will have a negative impact on some stocks is likely to have a positive impact on others because of major changes on the economic situation, we see There are likely to be more volatility than in the past on the basis of the sector and we believe will be a negative impact mostly of chemicals and oil services while it would be least impact on basic transportation, health care and consumer industries.

For his part, Mr. Ofayoran head of asset management in funds, said that if not changed significantly in government spending in the near term as most companies are not likely to be affected with the exception of companies affected directly such as chemicals and oil services explaining that banks will not see any impact on short-term profit If oil prices stay at current levels this means spending more conservative and thus lower demand for loans.

Buran pointed out that the petrochemical stocks will be the most influential directly because they get cheap raw materials (partly fixed cost) Therefore, the decline in selling prices leads to a reduction in profits and declining profit is likely to be higher than the revenue decline at a rate due to the fixed costs ( both raw materials and operating costs), for example, that the decline in Qatar Industries Company by 10% in product prices leads to a reduction of 24% in profits, pointing out that the oil services will see a moderate impact as contracts, As for local consumption shares and style banks are not likely to be affected in the near term, however can result in lower oil prices for some impact on consumer sentiment, which could lead to lower spending and therefore we expect that the effect will be very limited. Buran said that real estate prices and shares of real estate companies will as well as it will reflect the expectations of regional government spending affected the confidence of investors.

He explained that the shares in Qatar and the UAE landed within one month accounted for 15% and this is the highest percentage for them in the same month, mostly due to the relatively low oil prices, the Saudi market has fallen by 25%.

In my opinion that the decline in oil prices was due to it being very high and partly supply and demand factors.

He pointed out that before the lower oil price, we thought that the price of $ 100 is too high and will eventually return to the normal price. We believe that the current $ 50 level is probably less than the fair value for several reasons, including the cost of extraction in the United States is not low The extraction of shale oil around $ 75 as that part of the decline in the price of oil is linked to the US dollar as a result of the currency's strength and our analysis of the long-term mild dollar US indicates that the oil price is lower than the average over the long term.

Buran He pointed that the lack of reducing government spending in the Gulf Cooperation Council (GCC) in the near term, the short-term profits for most companies will not be greatly affected, but this does not mean that share prices are not affected as the stock prices of companies reflects the present value of all future profits, pointing out that $ 50 oil price will affect naturally on future corporate profits and stock prices, and therefore we believe that choosing the right stocks is the key.