GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap3,952 0.24
Med Cap3,852 -0.19
Small Cap4,974 0.16
Micro Cap8,461 -0.09

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QNBK 140.3 75,190
DAMAC 2.88 5,374,904
MMG 0
RIBL 10.3 89,694
BKMB 0.4 354,051
GMPC 4.11 161,018
WALAA 28.1 202,424

Market Review and Outlook

Source: NCB Capital

Copper Demand Growth is Slowing

The volume of refined copper demand in Saudi Arabia increased by 18% to 265,000 metric tones in 2008, and is expected to rise nearly by 2% to 270,000 metric tones in 2009. Weakening international refined copper prices and piled up inventory at mainly cable and piping making industries are the main drivers behind a slimmer growth in our expectation for the demand volume this year. The entire domestic demand is met by imports and only 730 metric tones is produced from the local resources, which accounts for about 0.3% of the country's aggregate usage. The Kingdom's five cable makers consumed nearly 94% of the total volume of refined copper usage while other small industrial plants engage in producing pipes, and items of semi-conductors consuming nearly 6% of the aggregate volume of copper usage. The market value of cables and other products of refined copper sold in the country is estimated to have reached SAR12 bn in 2008, of which the two listed cable makers sold SAR4.8 bn worth of cables and accounted for nearly 40% of the aggregate market value. Their combined sales, however, dropped 27.7% Y/Y to SAR1.78 bn in 1H09 over SAR2.5 bn in 1H08, on weakening prices and sliding volume.

US Employment Data Dim Hope for Recovery

Labor market conditions in the US remain unsupportive to a quick economic recovery. Recent data released by the Bureau of Labor Statistics show that the decline in non-farm payrolls had accelerated to -263K in Sep after having fallen to a revised 201K in Aug. Although the size of job losses is still massive, it has moderated significantly to 768K this quarter compared to 2.1 million in 1Q09 and 1.3 million in 2Q09. The sector breakdown shows that job losses continued in the goods-producing sector (-116K in Sep after -132K in Aug), but increased markedly in the service-providing sector (-147K in Sep after -69K in Aug). In particular, employment in transport and trade continued to trend down by more than average, while employment in other professional services showed little change over the month. In addition, employment in the government sector fell by a massive 53K, a reflection of tight budget constraints. Another disappointing feature was the marginal decline in the average work week from 33.1 to 33 hours, which brought the overall index down to 0.5% M/M. This will certainly add to the downward pressure on hourly wages, which slowed to 2.5% Y/Y. The unemployment rate has now ticked up a notch to 9.8%, and with GDP growth remaining modest until 2H2010 we do not believe it will level off before then.

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