Jazira Capital

Macro Presentation
A Case of Developed Countries being Over-
developed

January 2011
Global Picture
` A case of over-development in developed countries
` The following 10 years will be characterized with a further conversion between US
& Europe on one side and developing countries led by China on the other side
` Austerity in Europe will result in better long term impact while will be painful in the
short and medium term
` Stimulus in the US may cause short term improvement, but doubts regarding its
medium to long term impact
` Greece is the Enron of countries with rigged figures & public debt reaching 270% of
GDP (Germany is helping, while resistance is debating the moral hazard)
` But Spain if left to rattle will be the Lehman Brothers of countries, unemployment is
above 20%, RE market froze
` Ireland & Portugal are too small to cause a seismic impact in the EuroZone
` China domestic consumption and global investment are the new global economic
drivers, although this demand has put strain on commodity prices
` Target a global recovery by 2012-2013

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Egypt
` Tourism will grow but at lower per tourist spending (more tourists from Asia and
Latin America)
` With our expectations of Europe will become poorer, they will move more into
importing products from developed countries rather than using their local highly
priced peer products until prices balance
` European demand for housing units in Egypt’s coastal areas is not expected to
recover soon
` Further removal of subsidies as government seek to reduce public debt levels (will
start to happen more frequent after the presidential elections this September
` Cairo, out of 100 cities was ranked the 4th most established emerging outsourcing
destination in 2010 up from the 7th rank last year.
` RE developers are attempting to buck the trend and are now focusing on
developing office and commercial properties.
` Residential RE will witness an improvement in the small to mid size condominiums.
RE developers are still trying to reduce size while maintain margins, but following
exhausting this small income segment, they will need to squeeze margins

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Egypt
` As the result of the previous two points as well as the government intent to entice
infrastructure funding worth US$140 bn over the next 10 years either through its
own funds or through PPP ventures, we expect robust construction and building
materials sectors
` There is a political motivation as well as economic to government spending
program
` Recovery in GCC and especially Qatar’s expected spending spree will gradually
further improve the demand on construction and building materials as well as
remittance income
` Material Event
` Political
` Presidential Elections-September 2011
` Economic
` MPC not increasing rates – need currency depreciation
` Energy prices increase to non-intensive industries & in peak hours
` Tax rise on cigarettes, cement & steel, among other efforts to narrow budget deficit
` Government promoting new steel, cement and fertilizer licenses
` Issues on real estate land contracts and its impact on government creditability

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Egypt
` There is high potential for the banking sector to grow given:
` Expected improvement in both internal and external economy over the coming two years
` Improvement in non-interest income as economy improves
` Low loan to deposits ratio
` NPLs are at manageable and provisioned for
` Funding the government's expected PPP ventures
` Improvement in general private wealth
` Surge in low and medium real estate and homes setup spending, funded through loans and
mortgage
` Further penetration to retail banking (opportunities in micro size companies & outside of Cairo
& Alex.)

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 A Glance at the Region
Real GDP Growth (%) Inflation (%) Fiscal Balance (%) of GDP Public Debt % of GDP
2010a 2011e 2010a 2011e 2010a 2011e 2010a 2011e
Algeria 3.8 4.0 5.5 5.2 -9.9 -8.4 16.1 15.4
Bahrain 4.0 4.5 2.6 2.5 -5.4 -5.5 32.8 29.9
Egypt 5.1 5.7 10.9 9.5 -9.3 -8.7 68.7 66.2
Iran 1.6 3.0 8.0 10.0 0.4 2.4 21.7 20.2
Iraq 2.6 11.5 5.1 5.0 -14.2 -8.2 42.2 41.5
Jordan 3.4 4.2 5.5 5.0 -6.3 -5.5 63.0 62.7
Kuwait 2.3 4.4 4.1 3.6 17.1 17.8 6.5 6.0
Lebanon 8.0 5.0 5.0 3.5 -8.7 -9.6 139.0 137.5
Libya 10.6 6.2 4.5 3.5 13.3 14.2 0.0 0.0
Morocco 4.0 4.3 1.5 2.2 -4.5 -3.6 49.9 50.2
Oman 4.7 4.7 4.4 3.5 5.3 4.9 5.7 4.3
Qatar 16.0 18.6 1.0 3.0 10.8 7.3 27.2 22.5
Saudi Arabia 3.4 4.5 5.5 5.3 1.9 6.2 12.9 11.0
Syria 5.0 5.5 5.0 5.0 -4.3 -3.1 26.9 26.4
Tunisia 3.8 4.8 4.5 3.5 -2.8 -2.6 43.0 42.8
UAE 2.4 3.2 2.0 2.5 -2.7 3.7 24.7 21.6
Yemen 8.0 4.1 9.8 8.9 -5.5 -5.0 45.8 46.1
Source: IMF & Jazira Capital

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 A Glance at the Region
Exports Imports Current Account FOREX Reserves External Debt
(US$ bn) (US$ bn) (US$ bn) (US$ bn) % of GDP
2010a 2011e 2010a 2011e 2010a 2011e 2010a 2011e 2010a 2011e
Algeria 62 67 54 58 5.4 6.2 145 152 3 2
Bahrain 18 19 13 14 1.1 1.3 3 3 140 140
Egypt 24 28 49 54 -4.3 -3.8 35 36 16 15
Iran 95 98 81 84 14.3 15.3 89 102 6 5
Iraq 54 59 62 67 -12.1 -8.0 47 45 42 39
Jordan 12 12 18 19 -1.9 -2.5 11 11 19 17
Kuwait 75 81 34 37 35.3 38.7 24 26 46..2 43
Lebanon 26 28 32 35 -4.3 -4.8 30 32 160 162
Libya 48 53 29 31 15.7 17.3 110 123 7 7
Morocco 28 30 39 42 -4.9 -4.7 20 20 24 25
Oman 37 39 25 27 3.1 3.6 13 14 15 13
Qatar 73 96 46 52 19.7 36.3 20 22 81 70
Saudi Arabia 243 265 193 209 29.1 29.4 433 456 23 22
Syria 19 20 21 23 -2.3 -2.3 17 16 15 14
Tunisia 20 21 22 23 -1.9 -1.9 10 11 46 45
UAE 220 239 198 216 12.9 14.3 35 40 53 49
Yemen 9 10 10 11 -1.5 -1.5 5 4 21 21

Source: IMF & Jazira Capital

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 Thank You

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