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WeeklyMarketWatch

IssueNo.439

November24th‐November28th2014

LLEEBBAANNOONN NEWS

ECONOMIC INSIGHTS

> Real Estate Sale Transactions up by 3.97% Y-O-Y up to October 2014 1

> Lebanon Ranks 62nd Worldwide and 6th Regionally in the 2013 ICT Development Index 2

> Lebanon Ranks 121st in the World and 10th in the Region in the “2014 Global Petroleum Survey” 3

> Lebanon Reports Largest Container Throughput Increase in the Region in 2013 4

> Lebanon Ranks 37th Worldwide and 2nd in the Arab Region in Terms of Rental Prices in 2014 5

> Occupancy Rate in Lebanon’s Hospitality Sector at 51% up to October 2014 6

> Lebanese Treasury-Bills’ Domestic Portfolio Value up by 7.01% in Q3-2014 7

> Lebanon’s Industrial Exports Shed 11.10% Y-O-Y to Around $1,843 Million up to July 2014 8

> The Banking Sector’s Share of LBP-Denominated Debt Narrows to 51.7% in September 2014 9

> Consolidated Assets of Investment Banks Firm at $4.11 Billion as at End of Q3 2014 10

> Transfers to Electricité Du Liban (EDL) Near $1.04 Billion in H1-2014 11

CORPORATE NEWS

> Bank Audi S.A.E.’s Net Profits Increase by 11.22% Y-O-Y up to September 2014 12

> Bank Audi’s Additional GDRs to be Listed on the BSE 12 MONETARY PERFORMANCE

> Monetary Aggregates 13 > Money Markets 13

FIXED INCOME

> Fixed Income 14

LEBANESE EQUITIES

> Lebanese Equities & Credit Libanais Indices 15

Lebanon's Economic & Financial Sector Indicators 17 Lebanon's Ratings 18

REAL ESTATE SALE TRANSACTIONS UP BY 3.97% Y-O-Y UP TO OCTOBER 2014

The number of real estate transactions in Lebanon came in 3.97% higher y-o-y at 58,009 during the first ten months of the year 2014, from 55,794 transactions during that same period in 2013. LEBANON RANKS 62ND WORLDWIDE AND 6TH REGIONALLY IN THE 2013 ICT DEVELOPMENT INDEX

According to the International Telecommunication Union (ITU), Lebanon recorded an overall ICT Development Index (IDI) score of 5.71 in the year 2013, advancing as such to the 62nd place in the world, from the 64th place (score: 5.32) it occupied in 2012. LEBANON REPORTS LARGEST CONTAINER THROUGHPUT INCREASE IN THE REGION IN 2013

According to the UNCTAD, Lebanon’s container port throughput rose by a staggering 26.51% in the year 2013 to just over 1.11 million TEUs, reporting as such the largest y-o-y increase among its regional peers and one of the highest growth rates in the world. OCCUPANCY RATE IN LEBANON’S HOSPITALITY SECTOR AT 51% UP TO OCTOBER 2014

Beirut recorded the 3rd lowest (51%) occupancy rate among covered Middle Eastern (MEA) capitals in Ernst & Young’s “Middle East Hotel Benchmark Survey” report during the first ten months of the year 2014.

TABLE OF CONTENTS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-398169 FAX: 01-398169 EXT. 1085

"BDL" Banque Du Liban "ABL" Association of Banks in Lebanon "MOF" The Lebanese Ministry of

Finance "BOP" Balance of Payment "IMF" The International Monetary Fund "Moody's" Moody's Investors Service "BSE" Beirut Stock Exchange "GDRs" Global Depositary Receipts "M1" Currency in Circulation + Demand

Deposits in LBP "M2" M1 + Other Deposits in LBP "M3" M2 + Deposits in Foreign Currencies "M4" M3+ Treasury Bills Held By Non Banking System, Including Accrued

Interests "CPI" Consumer Price Index "PPI" Producer Price Index "CLASI" Credit Libanais Aggregate Stock Index "CLFI" Credit Libanais Financial Sector Stock Index

"CLCI" Credit Libanais Construction Sector Stock Index “EIU” Economist Intelligence Unit “EOY” End of Year "P/E" Price to Earnings Multiple "P/BV" Price to Book Multiple "YTD" Year To Date "YTD Price Performance" Yield to Date Price Appreciation

"Forex" Foreign Exchange "LBP" The Lebanese Pound "USD" The United States Dollar "Yen" The Japanese Yen "GBP" The British Pound/ Sterling Pound "CHF" The Swiss Franc "Y-O-Y" Year-On-Year "GDP" Gross Domestic Product "MENA" Middle East and North Africa

“LE” Livre Egyptienne – Egyptian Pound

“SAR” Saudi Arabian Riyal “AED” United Arab Emirates Dirham “BD” Bahraini Dinar

SYNOPSIS OF TERMS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-398169 FAX: 01-398169 EXT. 1085

REAL ESTATE SALE TRANSACTIONS UP BY 3.97% Y-O-Y UP TO OCTOBER 2014

Real estate activity was sluggish during the month of October 2014, with the number of transactions dropping to 6,179, down from 6,627 transactions in September. On a cumulative basis, however, the number of real estate transactions came in 3.97% higher y-o-y at 58,009 during the first ten months of the year 2014, from 55,794 transactions during that same period in 2013. The value of real estate transactions fell to $740.70 million in October alone, down from $802.79 million in September. Nevertheless, the aggregate value of real estate transactions burgeoned by 7.52% y-o-y to $7.41 billion over the first ten months of the current year, from $6.89 billion in the same period last year. Consequently, the average value per realty transaction increased to $127,710, from $123,539 a year before, with the share of foreigners of total real estate sales transactions receding to 1.54% as at end of October 2014, from 1.81% in October of last year and 1.85% as at end of year 2013. The average value per real estate transaction in Beirut rose to $607,514 as at end of October 2014, up from $499,948 as at year-end 2013, with the average value per transaction in the Metn region advancing to $216,260, from $213,584 in the full year 2013. Similarly, the average value per transaction in the Kesserwan region increased to $139,356 as at the end of October 2014, from $124,664 in the full year 2013.

LEBANON NEWS

Weekly Market Watch

SOURCE: GDLRC, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

Real Estate Transactions Y-O-Y

Oct-2013 Oct-2014 % Change

Number of Sale Transactions 55,794 58,009 3.97%

Value of Transactions (USD Billion) 6.89 7.41 7.52%

Average Value per Transaction (USD) 123,539 127,710 3.38%

For the Ten-Month Period Ending

Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit

Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit

6.48 6.79

9.488.84

9.18 8.71

7.4181,665 83,622

94,32082,984

74,569 69,198

58,009

0.001.002.003.004.005.006.007.008.009.0010.00

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

2008 2009 2010 2011 2012 2013 Oct-2014

Value of Transactions ($ Billion) Number of Transactions

$ Billion

Evolution of Value & Volume of Real Estate Transactions

2.38%2.53%

2.04%1.81% 1.86% 1.85%

1.54%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2008 2009 2010 2011 2012 2013 Oct‐2014

Sales to Foreigners as a Percentage of Total Sales

Source:GDLRC, Credit Libanais Economic Research Unit

Historical Evolution of Average Value per Transaction Accross Different Lebanese Regions

$262,181

$295,033

$314,941

$369,696

$456,136

$524,277

$499,948

$607,514

$70,031

$103,037

$118,546

$153,064

$170,953

$182,797

$213,584

$216,260

$52,172

$78,536

$84,290

$94,325

$97,487

$117,596

$124,664

$139,356

$52,746

$71,345

$78,245

$103,397

$100,712

$108,028

$120,983

$142,992

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000

2007

2008

2009

2010

2011

2012

2013

Oct‐2014

Baabda Kesserwan Metn Beirut

Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit

LEBANON RANKS 62ND WORLDWIDE AND 6TH REGIONALLY IN THE 2013 ICT DEVELOPMENT INDEX

The International Telecommunication Union (ITU) released on November 24, 2013 the 6th issue of “Measuring the Information Society” report, which ranks 166 countries around the globe based on two information & communication technology (ICT) indices, namely the ICT Development Index (IDI) and ICT Price Basket (IPB). The report aims at providing policy-makers, investors, and analysts with the necessary information pertaining to the development of ICT services worldwide. In details, the IDI is by definition “a composite index combining 11 indicators into one benchmark”, serving as an assessment and comparison tool for ICT development internationally. The IPB, on the other hand, is a “composite basket based on the price for fixed-telephony, mobile-cellular telephony, and fixed-broadband internet services, and is computed as a percentage of average income levels”. The report highlighted that internet penetration continues to grow year after year across the globe, with an estimated 3 billion subscribers to some form of internet connection in 2014, up from 2.7 billion subscribers in the year 2013. In this context, the report anticipated that the worldwide internet penetration rate will near the 40.4% mark by year-end 2014. In parallel, the report commented that the use of mobile-related services is on the rise, with a penetration rate of around 32% by year-end 2013, almost four times the penetration rate recorded five years earlier. The report also unveiled that the speed of both fixed and mobile broadband services remained on the rise in the year 2013, with the related prices receding significantly over the past couple of years. In fact, fixed broadband prices in developing countries sank by a staggering 70% during the five-year period ending in 2013. According to the report, Denmark ranked first in the world in terms of IDI, with a score of 8.86 in 2013, up from 8.78 in 2012, followed by Korea (score: 8.85) and Sweden (score: 8.67). On a regional basis, however, the report commented that the Arab region suffers the second lowest IDI among all other regions, with a score of 4.55 in 2013, followed only by Africa (score: 2.31). Bahrain topped the list of countries in the region in the ICT development index, with an IDI score of 7.40 in 2013 (global rank: 27), followed by the United Arab Emirates (score: 7.03; global rank: 32), Qatar (score: 7.01; global rank: 34), Saudi Arabia (score: 6.36; global rank: 47), Oman (score: 6.10; global rank: 52) and Lebanon (score: 5.71; global rank: 62). In fact, Lebanon recorded an overall IDI score of 5.71 in the year 2013, advancing as such from the 64th place (score: 5.32) it occupied in 2012. In fact, Lebanon was among just six regional countries to exceed the global average IDI value of 4.60. In addition, the report commented that the proportion of businesses in Lebanon with an internet access stands at 97%, the highest among developing countries. The report also highlighted that the country’s internet penetration rate rose to 75.2% in the year 2013, up from 61.2% in 2012. In details, the fixed broadband penetration rate improved to 10% in the year 2013, up from 9.7% in 2012, and the wireless broadband penetration rate attaining 43%, from 28.3% in the previous year.

LEBANON NEWS

Weekly Market Watch

SOURCE: ITU, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

Country Regional Rank 2013

Global Rank 2013 IDI 2013 Global Rank

2012 IDI 2012Global Rank

Change 2012-2013

Bahrain 1 27 7.40 28 7.22 1United Arab Emirates 2 32 7.03 46 6.27 14Qatar 3 34 7.01 42 6.46 8Saudi Arabia 4 47 6.36 50 6.01 3Oman 5 52 6.10 61 5.43 9Lebanon 6 62 5.71 64 5.32 2Jordan 7 87 4.62 84 4.48 -3Egypt 8 89 4.45 87 4.28 -2Morocco 9 96 4.27 92 4.09 -4Tunisia 10 99 4.23 96 4.07 -3Palestine 11 100 4.16 95 4.07 -5Syria 12 112 3.46 112 3.39 0Algeria 13 114 3.42 114 3.30 0Sudan 14 122 2.88 121 2.69 -1Yemen 15 138 2.18 138 2.07 0Djibouti 16 141 2.08 140 2.01 -1Mauritania 17 147 1.91 145 1.90 -2Average 4.55 4.30

ICT Development Index (IDI) in the Arab Region

Source: International Telecommunication Union, Credit Libanais Economic Research Unit

LEBANON RANKS 121ST IN THE WORLD AND 10TH IN THE REGION IN THE “2014 GLOBAL PETROLEUM SURVEY”

Fraser Institute, an independent non-partisan research and educational organization based in Canada, published its eighth annual edition of the “2014 Global Petroleum Survey” in which it ranks 156 jurisdictions across the globe based on their attractiveness for upstream oil and gas investments. More particularly, the survey assesses each jurisdiction’s barriers to investment in the petroleum industry, the former enclosing the jurisdiction’s high tax rates, costly regulatory schemes, uncertainty over environmental regulations and the interpretation and administration of regulations governing the petroleum industry, and political and security threats. Concerning the methodology approach, the lower a jurisdiction’s score, the more attractive its investment environment is, hence the higher its ranking. According to the survey, eight states in the United States of America surfaced among the top 10 most favorable jurisdictions for investment in the oil and gas industry, with Oklahoma ranking first (2014 score: 7.02), Mississippi second (2014 score: 7.25), and Arkansas fourth (2014 score: 11.06). On a regional basis, the United Arab Emirates ranked 28th globally and 1st in the region, with a 2014 score of 31.83, slipping, though, by three positions from its 2013 rank. Qatar came in 34th worldwide and 2nd regionally (2014 score: 34.90), followed by Oman (36th worldwide, 3rd regionally; 2014 score: 36.03), Jordan (45th worldwide, 4th regionally; 2014 score: 38.70), and Morocco (53rd worldwide, 5th regionally; 2014 score: 44.34). The survey, on the other hand, assigned Lebanon a 2014 score of 73.66, positioning it 121st in the world and 10th in the region. When accounting for some of the petroleum industry’s investment barriers in Lebanon, the survey highlighted that around 19% of interviewed executives and managers deemed the country’s political instability as a “mild deterrent to investment”, while more than 60% considered instability to be a “strong deterrent to investment”. Moreover, other factors that were judged by surveyed executives and managers to be “mild deterrents to investment” in the upstream oil and gas industry in Lebanon include the country’s environmental regulations (around 23% of respondents), the cost of regulatory compliance (around 32% of respondents), and trade barriers (around 36% of respondents), only to name a few.

LEBANON NEWS

Weekly Market Watch

SOURCE: FRASER INSTITUTE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

2014 Rank 2013 Rank

(a total of 156 jurisdictions) (a total of 157 jurisdictions)

Oklahoma (US1) 1 1 7.02 9.84

Mississippi (US) 2 2 7.25 11.19

Saskatchewan (CA2) 3 3 10.29 11.43

Arkansas (US) 4 5 11.06 12.34

Manitoba (CA) 5 9 11.51 16.87

Alabama (US) 6 7 11.90 15.34

Kansas (US) 7 6 12.82 12.64

Texas (US) 8 4 13.19 11.71

North Dakota (US) 9 8 13.55 15.92

Wyoming (US) 10 15 19.11 22.63

United Arab Emirates 28 25 31.83 26.49

Qatar 34 18 34.90 24.16

Oman 36 31 36.03 27.84

Jordan 45 45 38.70 34.60

Morocco 53 51 44.34 36.18

Bahrain 64 44 51.37 34.51

Tunisia 82 78 60.09 49.35

Kuwait 95 60 66.58 39.56

Yemen 111 120 70.82 64.42

Lebanon 121 88 73.66 52.22

Algeria 124 126 75.74 71.04

Egypt 136 117 83.08 62.62

Syria 138 143 83.53 78.53

Libya 144 145 85.43 79.98

Iraq 150 149 88.59 82.88

Iran 153 155 93.78 97.17

Jurisdictional Rankings According to the Extent of Investment Barriers in the Petroleum Industry

Middle East & North Africa Jurisdictions

Jurisdiction2014 score 2013 score

Source: Fraser Institute, Credit Libanais Economic Research Unit

1: United States; 2: Canada

LEBANON REPORTS LARGEST CONTAINER THROUGHPUT INCREASE IN THE REGION IN 2013

The United Nations Conference on Trade and Development (UNCTAD) published its “Review of Maritime Transport 2014” report in which it assesses the maritime markets and businesses across the globe, and tracks any new developments in the international seaborne trade. More specifically, the report unveiled that international maritime trade crawled sluggishly throughout the year 2013, and this amid the relatively weak global economic growth, which came as a result of the ailing economic performance of developing countries and the frail improvement in that of developed countries. In figures, the world’s seaborne trade widened by a shy 3.8% in the year 2013 to around 9.6 billion tons, while the world fleet expanded by 4.1% to nearly 1.7 billion deadweight tons (dwt) as at January 1, 2014. Concurrently, the world container port throughput rose by 5.1% to end the year 2013 at 651.1 million 20-foot equivalent units (TEUs). As for the maritime regulatory framework, the report mentioned that several legal decisions governing the international seaborne trade have been amended and implemented during the year 2013 and early 2014, mainly focusing on environmental issues and on maritime and supply-chain security. The report also features a key seaborne trade index, the Liner Shipping Connectivity Index (LSCI), which measures the connectivity of a country to maritime shipping and its accessibility to global trade. In this context, China preserved its leading position in the liner shipping connectivity index, followed by Hong Kong, Singapore, and the Republic of Korea. It is worth noting, however, that this issue of the “Review of Maritime Transport” report does not provide a full world coverage of LSCI scores. On a regional basis, the United Arab Emirates topped the list of Western Asian countries in terms of container port traffic in the year 2013 (nearly 19.34 million TEUs), faring better than Turkey (around 7.28 million TEUs), Saudi Arabia (around 6.74 million TEUs), and Oman (around 3.93 million TEUs), only to name a few. On the local front, Lebanon’s container port throughput rose by a staggering 26.51% in the year 2013 to just over 1.11 million TEUs, reporting as such the largest y-o-y increase among its regional peers and one of the highest growth rates in the world. Moreover, the report commented that a fleet of 159 ships had entered the Lebanese ports in the year 2013, carrying around 1.47 million deadweight tons, 93% being foreign-flagged, as further elaborated in the table below:

LEBANON NEWS

Weekly Market Watch

SOURCE: UNCTAD, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

2012 2013e % Change 2012-2013

Number of Ships

Dead-Weight Tonnage

(thousand dwt)

% of world total (dwt)

Foreign Flag as a % of Total dwt

Dwt Growth

Over 2013Bahrain 329,470 355,498 7.90% 31 147 0.009 65.00% -8.1% 139Iraq - - - 24 145 0.009 58.00% 0.0% 145Jordan 703,354 758,919 7.90% 18 177 0.011 97.00% 0.0% 177Kuwait 1,126,668 1,215,675 7.90% 75 6,861 0.409 44.00% -0.8% 6,861Lebanon 882,922 1,117,000 26.51% 159 1,474 0.088 93.00% 26.5% 1,325Oman 4,167,044 3,930,261 -5.68% 35 6,923 0.413 99.92% 12.8% 6,923Qatar 393,151 424,210 7.90% 109 5,510 0.329 84.58% 0.0% 4,564Saudi Arabia 6,563,844 6,742,397 2.72% 200 8,073 0.481 82.36% 2.8% 15,353Syria 737,448 795,707 7.90% 154 1,237 0.074 94.49% -21.4% 1,480Turkey 6,736,347 7,284,207 8.13% 1,547 29,266 1.745 70.61% 0.4% 29,431United Arab Emirates 18,120,915 19,336,427 6.71% 716 19,033 1.135 97.74% 12.7% 13,415Yemen 760,192 820,247 7.90% 19 566 0.034 22.80% 0.4% 566

Beneficial Fleet Owner Location as at January 1, 2014 Real Nationality - Dead-Weight

Tonnage (thousand dwt)

Western Asian Countries

Container Port Traffic (in TEUs1)

Source: UNCTAD, Credit Libanais Economic Research UnitTEU1: 20-foot equivalent unit

Source: UNCTAD, Credit Libanais Economic Research Unit

-10% -5% 0% 5% 10% 15% 20% 25% 30%

Lebanon

Turkey

Syria

Kuwait

Qatar

Bahrain

Jordan

Yemen

United Arab Emirates

Saudi Arabia

Oman

26.51%

8.13%

7.90%

7.90%

7.90%

7.90%

7.90%

7.90%

6.71%

2.72%

-5.68%

Y-O-Y % Change in Container Port Traffic per Western Asian Country in 2013

LEBANON RANKS 37TH WORLDWIDE AND 2ND IN THE ARAB REGION IN TERMS OF RENTAL PRICES IN 2014

According to Cushman & Wakefield’s “Main Streets Across the World 2014-2015” report, the international retail sector was restrained by the gloomy economic environment during the one-year period ending June 2014, yet rental prices, mainly driven by the prices of top locations around the world, managed to post a 2.4% annual increase. More particularly, the report indicated that among the 330 surveyed locations, only 53 locations suffered a contraction in rental prices. The abovementioned rise in rental prices was mainly fueled by a considerable increase in retail activity in both the Americas and Asia Pacific. In this context, the report highlighted that retail sector’s rental prices are expected to sustain their upturn in the coming one-year period, with New York emerging as the most expensive city in terms of rental prices on a global basis, standing at €29,822/sqm/year as of June 2014, followed by Hong Kong (Causeway Bay) (€23,307/sqm/year) and at quite a distance by Paris (Avenue des Champs-Elysées) (€13,255/sqm/year). As far as Lebanon is concerned, the latter occupied the 37th position in the world for the second consecutive year in terms of retail rental prices which stood at €1,583/sqm/year in the renowned ABC center in Achrafieh. The report also classified Lebanon as the second most expensive Arab country when it comes to its 2014 rental prices in retail commercial centers, preceded only by Dubai’s shopping center (€2,204/sqm/year), while outperforming each of Qatar (€965/sqm/year), Bahrain (€756/sqm/year), Oman (€543/sqm/year), and Jordan (€317/sqm/year). The report also screened the ABC shopping center in Achrafieh as the most expensive location in Lebanon in terms of retail rental prices, followed by the Beirut Central District (€792/sqm/year), the Verdun region (€633/sqm/year) and the Hamra and Kaslik regions (€554/sqm/year each).

LEBANON NEWS

Weekly Market Watch

SOURCE: CUSHMAN & WAKEFIELD, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

Country City Location Rental Prices €/sqm/Year

Rank2013

Rank2014

USA New York Upper 5th Avenue 29,822 - 1

Hong Kong (China) Hong Kong Causeway Bay 23,307 1 2

France Paris Avenue Des Champs-Elysées 13,255 3 3

United Kingdom London New Bond Street 10,361 4 4

Australia Sydney Pitt Street Mall 8,658 8 5

Italy Milan Via Montenapoleone 8,500 6 6

United Arab Emirates Dubai Shopping Centre 2,204 36 28

Lebanon Beirut ABC Centre Achrafieh 1,583 37 37

Luxembourg Luxembourg Grand Rue 1,500 38 38

Qatar Doha Shopping Centre 965 - 47

Bahrain Manama City Centre Shopping Centre 756 61 53

Oman Muscat Shopping Centre 543 49 58

Jordan Amman City Centre (BCD) 317 64 64Source: Cushman & Wakefield "Main Streets Across The World 2014", Credit Libanais Economic Research Unit

0

200

400

600

800

1000

1200

1400

1600

Verdun Hamra Kaslik ABC Centre Achrafieh

Beirut Central District

633554 554

1,583

792

Rental Prices in Lebanon's Prime Locations (€/sqm/year) in June 2014

0 500 1,000 1,500 2,000 2,500

United Arab Emirates

Lebanon

Qatar

Oman

Bahrain

Jordan

2,204

1,583

965

756

543

317

Rental Prices (€/sqm/Year) in the Arab Region in June 2014

OCCUPANCY RATE IN LEBANON’S HOSPITALITY SECTOR AT 51% UP TO OCTOBER 2014

Ernst & Young (EY) published its “Middle East Hotel Benchmark Survey” report on the performance of 4 & 5 stars hotels in the Middle East region, conveying a 10 percentage points annual expansion in the average occupancy rate in Beirut’s hospitality sector to 59% during the month of October 2014, up from 49% in October 2013. Moreover, the average room’s rate rose by 0.6% y-o-y to $169 in October, with the average room’s yield rallying by 20.3% annually to $100.

The following chart captures the monthly evolution in the occupancy rate in Beirut’s 4 & 5 star hotels since the beginning of 2014:

On a cumulative basis, however, Beirut recorded the 3rd lowest (51%) occupancy rate among covered Middle Eastern (MEA) capitals during the first ten months of the year 2014, with Abu Dhabi-UAE outperforming the region, recording an average occupancy rate of 77%, followed by Doha-Qatar (70%) and Riyadh-Saudi Arabia (65%). Doha, on the other hand, charged the highest average room’s rate of $232 in the region’s 4 & 5 star hotels, right ahead of Riyadh-Saudi Arabia ($214), and Manama-Bahrain ($203).

LEBANON NEWS

Weekly Market Watch

SOURCE: ERNST & YOUNG, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 6

36%

42%

41%

52%

63%67%

36%

60%56% 59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Monthly Evolution of Hotel Occupancy in Beirut During the Year 2014

Source: Ernst & Young, Credit Libanais Economic Research Unit

Country - Capital October-2013

October-2014

Change in % Pts

October-2013

October-2014

% Change

October-2013

October-2014

% Change

Bahrain - Manama 42.0 48.0 6.0 206 203 -1.3% 87 98 12.6%Egypt - Cairo City 26.0 33.0 7.0 83 91 10.2% 22 31 42.5%Jordan - Amman 61.0 61.0 0.0 156 162 3.7% 96 99 3.2%Lebanon - Beirut 52.0 51.0 -1.0 169 163 -3.6% 88 83 -5.8%Qatar - Doha 62.0 70.0 8.0 233 232 -0.3% 145 164 13.3%Saudi Arabia - Riyadh 58.0 65.0 7.0 220 214 -2.4% 129 140 8.7%United Arab Emirates - Abu Dhabi 76.0 77.0 1.0 200 188 -5.6% 152 146 -3.9%

Middle East Hotel Benchmark Survey During the Ten-Month Period Ending

Hotels' Occupancy Rates (%) Average Room Rates (USD) Room Yields (USD)

Source: Ernst & Young - Middle East Hotel Benchmark Survey, Credit Libanais Economic Research Unit

0% 20% 40% 60% 80% 100%

Abu Dhabi

Doha

Riyadh

Amman

Beirut

Manama

Cairo

77%

70%

65%

61%

51%

48%

33%

Hotels' Occupancy Rate in the Middle East Region up to October 2014

Source: Ernst & Young, Credit Libanais Economic Research Unit

0 50 100 150 200 250

Doha

Riyadh

Manama

Abu Dhabi

Beirut

Amman

Cairo

232

214

203

188

163

162

91

Average Rooms' Rate in the Middle East Region up to October 2014 (USD)

Source: Ernst & Young, Credit Libanais Economic Research Unit

October-2013 October-2014 Change

Hotel Occupancy Rate (%) 49.0 59.0 +10 pctg pointAverage Room Rate (USD) 167 169 0.6%Rooms Yield (USD) 83 100 20.3%Source: Ernst & Young, Credit Libanais Economic Research Unit

Performance of Beirut's Hospitality Sector During the Month of

LEBANESE TREASURY-BILLS’ DOMESTIC PORTFOLIO VALUE UP BY 7.01% IN Q3-2014

According to the Lebanese Ministry of Finance’s “Debt & Debt Markets” quarterly report, the value of the government’s outstanding treasury bills portfolio rose by 7.01% during the first nine months of the year 2014 to just over $39.88 billion, up from $37.27 billion as at year-end 2013. Lebanese banks continue to detain the lion’s share (51.59%) of the government’s treasury bills portfolio, with Banque Du Liban controlling a stake of 31.28% and public institutions amassing 12.47%, as illustrated in the section hereunder: As far as the maturity spectrum is concerned, the pie below depicts that the majority (96.61%) of Lebanon’s outstanding treasury bills’ portfolio is long term in nature (in excess of one year), addressing as such the government’s long term borrowing needs on the one hand, and lenders’ pursuit of attractive yields on the other, and this amid the scarcity of attractive placement opportunities for banks in the international financial and money markets. The share of the three-year tenure T-bonds stood at 38.78% of the total outstanding treasury bills’ portfolio at end of Q3-2014, with bonds having a tenor of seven years or above representing 32.73% of the portfolio value, followed by the five-year (21.80%) and two-year to maturity (3.29%) T-bonds. The share of outstanding short-term treasury bills constituted a mere 3.39% of the outstanding value of the treasury bills’ portfolio as at the end of Q3-2014, comparing to a share of 3.81% as at year-end 2013.

LEBANON NEWS

Weekly Market Watch

SOURCE: MOF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

USD Million Dec-2006 Dec-2007 Dec-2008 Dec-2009 Dec-2010 Dec-2011 Dec-2012 Dec-2013 Sep-2014 % Change

BDL 6,065 5,736 5,585 6,662 8,565 10,769 9,946 11,390 12,474 9.51%

Commercial Banks 10,898 11,134 16,068 18,031 18,001 16,631 18,019 19,753 20,576 4.17%

Public Institutions 2,198 3,181 3,358 4,032 4,158 4,337 4,298 4,721 4,972 5.31%

Others 541 450 560 846 1,090 830 931 1,406 1,861 32.37%

Total 19,702 20,501 25,570 29,570 31,814 32,567 33,193 37,270 39,883 7.01%

Breakdown of Domestic T-Bills Outstanding by Investor Type

Source: The Lebanese M inistry of Finance, Credit Libanais Economic Research Unit

BDL31.28%

Commercial Banks

51.59%

Public Institutions

12.47%

Others4.67%

Breakdown of Domestic T-Bills Outstanding by Type of Investor as at End of Q3-2014

Source: The Lebanese Ministry of Finance, Credit Libanais Economic Research Unit

Short Term T-bills3.39%

24-month Notes3.29%

36-month Notes38.78%

60-month Notes21.80%

84-month and above Notes

32.73%

Breakdown of Domestic T-Bills Outstanding by Tenoras at End of Q3-2014

Source: The Lebanese Ministry of Finance, Credit Libanais Economic Research Unit

LEBANON’S INDUSTRIAL EXPORTS SHED 11.10% Y-O-Y TO AROUND $1,843 MILLION UP TO JULY 2014

The Lebanese Ministry of Industry released the industrial statistics for the first seven months of the year 2014 uncovering a 5.93% monthly contraction in Lebanon’s industrial exports during the month of July 2014 to $261.8 million, down from $278.3 million in June. On a cumulative basis, moreover, industrial exports came in 11.10% lower y-o-y at $1,843.0 million as at the end of the first seven months of 2014, down from $2,073 million during the same period in 2013. More specifically, exports of base metals and articles of base metal dropped by 35.99% ($126.1 million) annually to $224.2 million until the month of July, accompanied by a 23.95% (around $136.4 million) decline in exports of machinery and mechanical appliances to $433.1 million. In parallel, industrial imports shed 12.13% y-o-y to $170.3 million over the first seven months of 2014, compared to $193.8 million a year earlier. This contraction is primarily attributed to the 7.04% drop in imports of industrial equipment from Italy to $38.3 million, coupled with some 19.81% decline in imports of industrial equipment from Turkey to $8.5 million. Exports of “machinery and mechanical appliances” topped the list of Lebanon’s industrial exports, accounting for 23.50% ($433.1 million) of the total exports’ bill, followed by “prepared foodstuffs” ($313.1 million <16.99%>). On the imports front, Italy led the list of countries exporting to Lebanon ($38.3 million <22.5%>), followed by China ($30.6 million <17.97%>) and Germany ($28.7 million <16.86%>) as elaborated in the section below:

LEBANON NEWS

Weekly Market Watch

SOURCE: THE LEBANESE MINISTRY OF INDUSTRY, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

1,650

1,700

1,750

1,800

1,850

1,900

1,950

2,000

2,050

2,100

2,150

July 2012 July 2013 July 2014

2,137.0

2,073.0

1,843.0

$ Million

Evolution of Cumulative Industrial Exports

Source: Ministry of Industry, Credit Libanais Economic Research Unit

0

20

40

60

80

100

120

140

160

180

200

July 2008 July 2009 July 2010 July 2011 July 2012 July 2013 July 2014

100.8120.0

135.5 141.1

172.2

193.8

170.3

$ Million

Evolution of Cumulative Industrial Imports of Equipment & Machinery

Source: Ministry of Industry, Credit Libanais Economic Research Unit

Machinery and mechanical appliances

23.50%

Prepared Foodstuffs16.99%Chemical

Products15.73%

Base Metals and Articles of

Base Metal12.16%

Paper & paperboard and articles

thereof6.61%

Others25.01%

Breakdown of Industrial Exports During the First Seven Months of the Year 2014

Country Value ($ Million)Italy 38.3China 30.6Germany 28.7USA 9.7Turkey 8.5Others 54.5Total Industrial Imports 170.3

Breakdown of Imports of Equipment & Machinery by Country of Origin During The First Seven Months of the Year 2014

Source: Lebanese M inistry of Industry, Credit Libanais Economic Research Unit

Product Value ($ Million)Machinery and mechanical appliances 433.1Prepared Foodstuffs 313.1Chemical Products 289.9Base Metals and Articles of Base Metal 224.2Paper & paperboard and articles thereof 121.8Others 460.9Total Industrial Exports 1,843.0

Breakdown of Industrial Exports by Product During the First Seven Months of the Year 2014

Source: Lebanese M inistry o f Industry, Credit Libanais Economic Research Unit

(USD Million) July 2013Industrial Exports 2,073.0

Industrial Imports of Equipment & Machinery 193.8Source: Lebanese M inistry o f Industry, Credit Libanais Economic Research Unit

170.3 -12.13%

July 2014For the Seven-Month Period Ended

1,843.0

Y-O-Y% Change

-11.10%

Italy22.50%

China17.97%

Germany16.86%

USA5.69%

Turkey4.98%

Others32.00%

Breakdown of Imports of Equipment & Machinery by Country of Origin During the First Seven Months of the Year 2014

THE BANKING SECTOR’S SHARE OF LBP-DENOMINATED DEBT NARROWS TO 51.7% IN SEPTEMBER 2014

According to statistics published by the Association of Banks in Lebanon (ABL), gross public debt rose by 0.17% during the month of September 2014 to LBP 99,454 billion ($65.97 billion), up from LBP 99,281 billion ($65.86 billion) in August. The share of Lebanese banks of LBP-denominated debt narrowed to 51.7% in September, down from 52.0% in August, with the share of the non-banking sector easing to 17.1% (down from 17.3% in August) and that of Banque Du Liban expanding to 31.2% (up from 30.7% in August). As far as foreign currency-denominated debt is concerned, sovereign debt in the form of Republic of Lebanon Eurobonds represented 90.2% of total foreign currency debt, followed by lines of credit obtained through bilateral agreements (4.8%), multilateral facilities (4.2%), and funds secured in the aftermath of the Paris II summit (0.3%). The average maturity of debt denominated in domestic currency timidly narrowed to 3.23 years as at end of Q3-2014, carrying a weighted annual interest rate of 6.88%. These figures compare to an average maturity of 3.27 years in August, at a time when the weighted annual interest rate stood at 6.89%. Similarly, outstanding debt denominated in foreign currencies carried a maturity of 5.57 years during the month of September, down from 5.64 years in August, with the weighted average annual interest rate remaining unchanged at 6.38% for the fourth consecutive month.

LEBANON NEWS

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

Banks51.7%

BDL31.2%

Non-Banking Sector17.1%

Breakdown of Debt in LBP by Holder -September 2014

Source: ABL, Credit Libanais Economic Research Unit

Eurobonds, 90.2%

Multilateral, 4.2%

Bilateral, 4.8% Paris II Loans, 0.3%

Others, 0.5%

Breakdown of Debt in FC by Type -September 2014

Source: ABL, Credit Libanais Economic Research Unit

6.30%

6.35%

6.40%

6.45%

6.50%

6.55%

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

6

Sep-2013

Oct-2013

Nov-2013

Dec-2013

Jan-2014

Feb-2014

Mar-2014

Apr-2014

May-2014

Jun-2014

Jul-2014

Aug-2014

Sep-2014

Years

Evolution of Average Maturity and Weighted Interest Rate of Debt Denominated in Foreign Currency

Average Maturity Weighted Interest Rate

Source: ABL, Credit Libanais Economic Research Unit

Breakdown of Gross Public Debt (USD Billion)

Sep-2013 Aug-2014 Sep-2014 Monthly % Change

Y-O-Y % Change

Debt in LBP by Holder 35.99 39.75 39.98 0.59% 11.10%

- Banks 18.82 20.67 20.67 0.01% 9.83%

- Banque Du Liban 11.12 12.20 12.47 2.23% 12.18%

- Non-Banking Sector 6.05 6.88 6.84 -0.57% 13.09%

Average Maturity (in years) 3.44 3.27 3.23 -1.34% -6.06%

Weighted Average Interest Rate 6.80% 6.89% 6.88%

Debt in FC by Type 26.41 26.11 25.99 -0.46% -1.61%

- Eurobonds 23.88 23.50 23.44 -0.24% -1.82%

- Multilateral 1.24 1.12 1.09 -2.78% -12.07%

- Bilateral 1.03 1.28 1.25 -2.49% 21.10%

- Paris II Loans 0.13 0.10 0.08 -25.35% -40.96%

- Others 0.13 0.10 0.13 24.42% -1.61%

Average Maturity (in years) 5.84 5.64 5.57 -1.24% -4.62%

Weighted Average Interest Rate 6.50% 6.38% 6.38%

Gross Public Debt 62.40 65.86 65.97 0.17% 5.72%

Source: The Association o f Banks in Lebanon, Credit Libanais Economic Research Unit

6.74%

6.76%

6.78%

6.80%

6.82%

6.84%

6.86%

6.88%

6.90%

3

3.1

3.2

3.3

3.4

3.5

3.6

Sep-2013

Oct-2013

Nov-2013

Dec-2013

Jan-2014

Feb-2014

Mar-2014

Apr-2014

May-2014

Jun-2014

Jul-2014

Aug-2014

Sep-2014

Years

Evolution of Average Maturity and Weighted Interest Rate of Debt Denominated in LBP

Average Maturity Weighted Interest Rate

Source: ABL, Credit Libanais Economic Research Unit

CONSOLIDATED ASSETS OF INVESTMENT BANKS FIRM AT $4.11 BILLION AS AT END OF Q3 2014

According to Banque Du Liban (BDL) statistics, the consolidated balance sheet of investment banks operating in Lebanon expanded by 2.98% during the first three quarters of the year 2014 to nearly $4.11 billion, up from nearly $3.99 billion as at year-end 2013. This expansion owes, in the first place, to the 16.80% rise in claims on the private sector to $1,405 million, eclipsing the 12.49% drop in claims on the public sector to $432 million.

Abiding by legislative decree number 50 and subsequent BDL circulars, investment banks operating in Lebanon have managed over the last couple of years to dampen their exposure to the public sector at the expense of increasing loans to the private sector. Consequently, the surplus representing the difference between loans to the private sector and claims on the public sector ended the 3rd quarter of 2014 at $973 million, in comparison with a surplus of $710 million as at end of year 2013, $419 million in 2012, and $353 million in 2011.

It is worth noting that the number of investment banks operating in Lebanon stood at 16 as at end of Q1-2014, allocated over 21 branches, as captured by the chart below:

LEBANON NEWS

Weekly Market Watch

SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 10

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 Q1-2014

12 12 1213

1517 17

1617 17 17

1820

22 2221

Evolution of the Number of Investment Banks and Branches in Lebanon

Number of Investment Banks Number of Branches

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 Q3-2014

794 762

493 432

1,147 1,181 1,203

1,405

Investment Banks' Loans to the Private Sector V/S Claims on The Public Sector ($ Million)

Claims on the Public Sector Claims on the Private Sector

Starting the year 2010, Investment Banks' Loans to the Private Sector > Claims on the Public Sector in Conformity with BDL's Directives

in Millions of USD 2011 2012 2013 Q3-2014 % change

Cash and Banks 1,916 1,736 1,922 1,989 3.50%Claims on Private Sector 1,147 1,181 1,203 1,405 16.80%Claims on Public Sector 794 762 493 432 -12.49%Other Items 320 338 368 279 -24.16%Total Assets 4,178 4,017 3,986 4,105 2.98%

Private Sector Deposits: 2,335 2,178 1,946 2,027 4.19% o/w Resident Deposits in LBP 924 849 688 690 0.26% o/w Resident Deposits in Foreign Currencies 1,005 1,022 971 986 1.47% o/w Non Resident Deposits in LBP 109 74 66 68 3.39% o/w Non Resident Deposits in Foreign Currencies 296 233 220 284 28.71%Liabilities to the Public Sector 283 162 193 161 -16.70%Liabilities to the Financial Sector 558 570 598 645 7.89%Capital Accounts 811 927 1,000 1,126 12.59%Other Items 190 181 250 146 -41.51%Total Liabilities 4,178 4,017 3,986 4,105 2.98%

Evolution of Investment Banks Consolidated Balance Sheet

Source: BDL, Credit Libanais Economic Research Unit

TRANSFERS TO ELECTRICITÉ DU LIBAN (EDL) NEAR $1.04 BILLION IN H1-2014

The Lebanese Ministry of Finance published its monthly snapshot on government transfers to Electricité Du Liban (EDL), reporting a $96.19 million annual increase in the amounts transferred to LBP 1,565 billion (around $1.04 billion) during the first half of the year 2014, up from LBP 1,420 billion ($941.96 million) during that same period last year. Said expansion owes primarily to some 12.40% annual rise in the value of gas and fuel purchases from Kuwait Petroleum Corporation (KPC) and Sonatrach to LBP 1,550 billion (nearly $1.03 billion). Transfers to EDL constituted 22.3% of the government’s total primary expenditures as at end of H1-2014, compared to a lower stake of 19.5% in H1-2013.

LEBANON NEWS

Weekly Market Watch

SOURCE: MOF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 11

Transfers to EDL(USD Million) Jun-2013 Jun-2014Transfers to EDL, of which: 941.96 1,038.14 10.21% - Debt Service 26.53 9.95 -62.50% - Reimbursement for Purchase of Gas and Fuel 914.76 1,028.19 12.40%

Y-O-Y % Change

Source: The Lebanese Ministry of Finance, Credit Libanais Economic Research Unit

For the Six-Month Period Ending

Transfers to EDL

19.5%

Other Primary

Expenditures80.5%

Share of Transfers to EDL of Primary Expenditures as at End of H1-2013

Source: MOF, Credit Libanais Economic Research Unit

Transfers to EDL

22.3%

Other Primary Expenditures

77.7%

Share of Transfers to EDL of Primary Expenditures as at End of H1-2014

Source: MOF, Credit Libanais Economic Research Unit

Weekly Market Watch

SOURCE: BSE, BANK AUDI, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 12

BANK AUDI S.A.E.’S NET PROFITS INCREASE BY 11.22% Y-O-Y UP TO SEPTEMBER 2014

Bank Audi S.A.E., the Egyptian affiliate of Bank Audi S.A.L., released its financial statements for the first three quarters of the year 2014 reporting an 11.22% increase in its net after tax profits to EGP 329.50 million ($46.08 million) as at end of September, up from EGP 296.26 million during that same period in 2013. In fact, the Bank’s net interest income rose by 13.18% y-o-y to EGP 601.21 million ($84.08 million), while net commission & fee income soared by 26.84% to EGP 150.16 million ($21.0 million). On the other hand, total expenses (administrative expenses and impairment charges on credit losses) rose by 14.17% y-o-y to EGP 337.33 million ($47.18 million). On the balance sheet front, Bank Audi S.A.E.’s consolidated assets expanded by 20.35% during the first nine months of the year 2014 to around EGP 27.26 billion ($3.81 billion), with customer deposits firming at EGP 24.17 billion ($3.38 billion). Similarly, net customer loans advanced to EGP 11.88 billion ($1.66 billion), with the ratio of net loans to customer deposits contracting to 49.15%. Concurrently, the Bank’s equity increased to just over EGP 2.39 billion ($334.26 million), from EGP 2.19 billion as at end of year 2013, thanks to some EGP 300 million ($41.96 million) capital increase to EGP 1.84 billion ($257.34 million). BANK AUDI’S ADDITIONAL GDRS TO BE LISTED ON THE BSE

According to BSE’s circular 401/2014 dated November 27, 2014, Bank Audi will list 13,021,942 new GDRs on the Beirut Stock Exchange as of the 1st of December 2014. It is worth noting that the new listing concerns the 11,018,762 common shares that were converted to GDRs on the 7th of October 2014, and the 2,003,180 shares that were converted to GDRs on the 9th of October 2014.

CORPORATE NEWS

In Millions of EGP

End of Year 2013

Up to September

2014 % Change

Key Balance Sheet FiguresTotal Assets 22,649.77 27,259.83 20.35%Net Loans and Acceptances 10,784.31 11,878.86 10.15%Customer Deposits 19,772.52 24,171.02 22.25%Shareholders' Equity 2,194.06 2,394.02 9.11%

Liquidity & Asset Quality Ratios (%)Net Loans to Customer Deposits 54.54% 49.15%

In Millions of EGP

Up to September

2013

Up to September

2014 % Change

Key P&L FiguresNet Interest Income 531.20 601.21 13.18%Net Commission and Fee Income 118.39 150.16 26.84%Impairment Charges on Credit Losses 53.53 41.25 -22.93%Administrative Expenses 241.93 296.08 22.38%Net Profits 296.26 329.50 11.22%

Bank Audi S.A.E.

Source: BSE, Bank Audi, Credit Libanais Economic Research Unit

270.00

280.00

290.00

300.00

310.00

320.00

330.00

Up to September 2013 Up to September 2014

296.26

329.50

Mil

lion

s of

EG

P

Evolution of Bank Audi S.A.E.'s profitability

MONETARY AGGREGATES

On the monetary front, the overall money supply, “M4”, expanded by some $426.69 million during the week of November 13, 2014 to nearly $123.41 billion, with the non-banking sector’s treasury bills’ portfolio increasing by $247.43 million. On the other hand, Lebanese-pound denominated deposits and currency in circulation, “M1”, shed $68.63 million week-on-week to around $5.02 billion, and this on the back of the $77.61 million contraction in money in circulation, which outweighed the $9.29 million increase in demand deposits. Similarly, local currency term deposits, “M2”, gained some $9.77 million on a weekly basis, and rose by 6.53% year-on-year to just over $47.79 billion. Consequently, private sector term and saving deposits denominated in LBP (“M2- M1”) firmed at around $42.78 billion during the concerned week, while deposits denominated in foreign currencies (“M3–M2”) notched slightly higher to $68.36 billion. MONEY MARKETS

The November 20th Treasury bill auction raised around LBP 138.00 billion ($91.54 million), down from LBP 679.70 billion ($450.88 million) in the previous auction.

Subscriptions were majority (69.18%) concentrated in the five-year to maturity T-bonds, followed by the six-month (26.77%), and three-month (4.05%) tenure bills.

The weighted average yield on Lebanese Pound Treasury bills contracted to 6.18% during the auction of November 20, down from 7.93% in the latest auction of same maturities held on the 7th of November. This mainly owes to the issuance of high-yielding ten-year to maturity bonds during the auction of November 7, boosting as such the average yield back then. The yields on the three-month, six-month, and five-year term-bills remained unchanged at 4.44%, 4.99%, and 6.74% respectively.  

MONETARY PERFORMANCE

Weekly Market Watch

SOURCE: BDL, REUTERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 13

3 Months6 Months

12 Months24 Months

36 Months

60 Months

84 Months96 Months120 Months

144 Months

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

0 2 4 6 8 10 12

On The Run Yield Curve

Mone y Supply

USD Million

M1 5 ,08 6 5 ,0 17 - 1.3 5%

M2 47 ,7 8 2 4 7 ,7 92 0 .0 2 %

M3 115 ,9 7 6 116 ,15 5 0 .15 %

M4 12 2 ,9 7 9 12 3 ,40 6 0 .3 5 %

M2 - M1 42 ,6 9 6 4 2 ,7 75 0 .18 %

M3 - M2 6 8 ,19 4 6 8 ,3 63 0 .2 5 %Source: Banque Du Liban, Credit Libanais Economic Research Unit

Nove mber 6 , 2 0 14 Nove mbe r 13 , 2 0 14 % Cha nge

6,000

26,000

46,000

66,000

86,000

November 6, 2014

November 13, 2014

122,979 123,406115,976 116,155

Money Supply - USD Million -

M4 M3

Source: BDL, Credit Libanais Economic Research Unit

Lebanese Treasury Bills

Yield (%) Face Value (in billions

of LBP)

% of Total Face Value

Lebanese Treasury Bills

Yield (%) Face Value (in billions

of LBP)

% of Total Face Value

12 Months 5.35% 16.395 2.41% 3 Months 4.44% 5.588 4.05%24 Months 5.84% 75.670 11.13% 6 Months 4.99% 36.942 26.77%36 Months 6.50% 587.633 86.46% 60 Months 6.74% 95.467 69.18% Total 679.698 100.00% Total 137.997 100.00%Source: Reuters, Credit Libanais Economic Research Unit

November 13, 2014 November 20, 2014

Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months 96 Months 120 Months 144 MonthsTreasury Yield 4.44% 4.99% 5.35% 5.84% 6.50% 6.74% 7.50% 7.80% 7.98% 8.74%

FIXED INCOME

Activity on the Lebanese Eurobond market was subdued this week amid the local political tensions. More specifically, Lebanon’s five-year spreads on credit default swap hovered between 360 and 390 basis points, with static spreads leveling at 327.79 bps.

FIXED INCOME

Weekly Market Watch

SOURCE: CREDIT LIBANAIS CAPITAL MARKETS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 14

Lebanese Eurobonds Currency Coupon Maturity Bid Ask Bid Yield Bid Static Spread

Republic of Lebanon USD 5.875% Jan-15 100.39 100.60 3.000% 279Banque Du Liban USD 10.000% Apr-15 102.66 103.19 3.500% 327Republic of Lebanon USD 8.500% Aug-15 103.34 104.08 3.600% 333Republic of Lebanon USD 8.500% Jan-16 105.28 106.15 3.750% 337Republic of Lebanon USD 4.000% Dec-17 100.00 101.00 4.000% 283Republic of Lebanon USD 4.500% Apr-16 100.95 101.98 3.800% 333Republic of Lebanon USD 11.625% May-16 110.94 111.85 3.850% 337Republic of Lebanon USD 4.750% Nov-16 101.38 102.39 4.000% 331Republic of Lebanon USD 9.000% Mar-17 110.75 111.75 4.090% 326Republic of Lebanon USD 5.000% Oct-17 101.38 102.38 4.480% 341Republic of Lebanon USD 5.150% Dec-18 101.00 102.00 4.840% 352Republic of Lebanon USD 5.500% Apr-19 101.88 102.88 5.020% 345Republic of Lebanon USD 6.000% May-19 103.75 104.75 5.050% 348Republic of Lebanon USD 6.375% Mar-20 105.25 106.25 5.220% 347Republic of Lebanon USD 5.800% Apr-20 102.38 103.38 5.290% 350Republic of Lebanon USD 6.150% Jun-20 103.85 104.85 5.340% 353Republic of Lebanon USD 8.250% Apr-21 115.13 115.88 5.410% 349Republic of Lebanon USD 6.100% Oct-22 102.65 103.50 5.680% 352Republic of Lebanon USD 6.000% Jan-23 101.65 102.15 5.740% 355Republic of Lebanon USD 7.000% Dec-24 106.75 107.50 6.090% 375Republic of Lebanon USD 6.250% Jun-25 100.75 101.50 6.150% 376Republic of Lebanon USD 6.600% Nov-26 103.60 104.10 6.170% 369Republic of Lebanon USD 6.750% Nov-27 104.65 105.15 6.220% 369Source: Credit Libanais Capital Markets

LEBANESE EUROBONDS

Government Eurobonds

LEBANESE EQUITIES

Activity on the Beirut Stock Exchange remained frail this week in the absence of any new developments surrounding the pending political issues. In fact, the number of shares changing hands plunged to 333,655 shares this week, down from 791,485 shares last week, with Solidere “A” shares controlling alone 27.30% of total weekly trades. Concurrently, value traded slumped to around $3.63 million, down from $5.22 million a week before. In this perspective, this week’s average daily trading value narrowed to $0.73 million, down from $1.04 million last week, with the average daily trading volume easing to 66,731 shares, from 158,297 shares a week before. Eight gainers and two losers were spotted this week, lifting the BSE’s market capitalization up to just over $11.29 billion. In this context, the Credit Libanais Aggregate Stock Index (“CLASI”) maintained its upturn for the third consecutive week, closing 0.63% higher at 1,091.18. In the real estate sector, the price of Solidere “A” shares rose by 2.64% this week to $11.65, with that of Solidere “B” adding 3.53% to $11.73. Consequently, the Credit Libanais Construction Sector Stock Index (“CLCI”) ended its week on a positive note, up by 2.01% to a market close of 643.28. In the banking sector, the Credit Libanais Financial Sector Stock Index (“CLFI”) notched 0.21% higher this week to close at 1,375.46. This primarily owes to the 0.63% appreciation in the price of Bank Audi’s listed shares to $6.34, the 1.25% hike in the price of Byblos Bank’s listed shares to $1.62, and the 0.52% increase in the price of BLOM Bank’s GDRs to $9.60, which outweighed the 2.31% drop in the price of Bank Audi’s GDRs to $6.35.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 15

Credit Libanais Previous Closing WeeklyIndices 21-Nov-2014 28-Nov-2014 % ChangeCredit Libanais Aggregate StockIndex <.CLASI> 1,084.35 1,091.18 0.63%

Credit Libanais Financial Sector StockIndex <.CLFI> 1,372.51 1,375.46 0.21%

Credit Libanais Construction SectorStock Index <.CLCI> 630.58 643.28 2.01%

Source: Credit Libanais Economic Research Unit

.CLASI Credit Libanais Aggregate Stock Index

Value Daily % Chng Daily Net Chng

1,091.18 -0.453% -2.93

Yr.High Year Hi.Date Yr.Low Year.Lo.Date

1,096.30 18-Jun-14 1,004.78 1-Jan-14

Life High Life Hi.Date Life Low Life.Lo.Date

1,801.01 7-Jul-08 836.11 25-Mar-09

Friday, November 28, 2014

500

600

700

800

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Credit Libanais Aggregate Stock IndexWeekly Performance

CLASI

CLASI 0.63%

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Credit Libanais Financial Sector Stock IndexWeekly Performance

CLFI

CLFI 0.21%

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Credit Libanais Construction Sector Stock IndexWeekly Performance

CLCI

CLCI 2.01%

The weighted average price to earnings (P/E) and price to book (P/BV) multiples of the Beirut Bourse prolonged their upturn for the second week in a row to close higher at 7.801x and 0.968x on a respective basis.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 16

P/E P/BV

Solidere A $11.65 2.64% 91,091 $1,057,363 100,000,000 $1,165,000 10.55 1.11 5.43%Solidere B $11.73 3.53% 63,836 $736,286 65,000,000 $762,450 10.62 1.12 6.44%BLC Bank $1.70 0.00% - - 51,033,333 $86,757 7.73 1.13 -8.11%-BLC Bank Preferred Class "A" $103.00 0.00% - - 400,000 $41,200 n.a n.a 1.98%BLC Bank Preferred Class "B" $100.00 0.00% - - 550,000 $55,000 n.a n.a 0.00%BLC Bank Preferred Class "C" $100.00 0.00% - - 350,000 $35,000 n.a n.a 0.00%Bank Audi - Listed Shares $6.34 0.63% 29,003 $184,747 399,749,204 $2,534,410 6.28 0.99 1.60%Bank Audi GDR $6.35 -2.31% 70,744 $449,187 102,493,911 $650,836 6.29 0.99 -2.16%Bank Audi Preferred "E" $102.20 0.69% 300 $30,660 1,250,000 $127,750 n.a n.a -0.29%Bank Audi Preferred "F" $101.00 0.00% - - 1,500,000 $151,500 n.a n.a -1.46%-Bank Audi Preferred "G" $101.50 0.00% - - 1,500,000 $152,250 n.a n.a 1.50%Bank Audi Preferred "H" $101.00 0.00% - - 750,000 $75,750 n.a n.a 1.00%Bank Of Beirut - Listed Shares $18.39 0.00% - - 16,822,467 $309,365 7.83 0.85 -3.21%-Bank Of Beirut Priority Shares 2014 $21.00 0.00% - - 4,762,000 $100,002 8.94 0.97 0.00%Bank Of Beirut Preferred "E" $26.00 0.00% - - 2,400,000 $62,400 n.a n.a 0.00%-Bank Of Beirut Preferred "H" $26.00 0.00% 1,475 $38,350 5,400,000 $140,400 n.a n.a 0.62%Bank Of Beirut Preferred "I" $25.75 0.00% - - 5,000,000 $128,750 n.a n.a -0.19%-Byblos Bank - Listed Shares $1.62 1.25% 8,443 $13,652 565,515,040 $916,134 8.53 0.76 4.52%Byblos Bank Preferred Class 2008 $101.30 0.30% 3,804 $385,142 2,000,000 $202,600 n.a n.a 0.30%Byblos Bank Preferred Class 2009 $103.00 1.88% 696 $71,178 2,000,000 $206,000 n.a n.a 1.48%Byblos Bank GDR $76.00 0.00% - - 1,309,078 $99,490 8.00 0.72 4.11%-BEMO Bank - Listed Shares $1.73 0.00% - - 51,400,000 $88,922 10.18 1.59 -5.98%-BEMO Bank Preferred Class 2013 $100.90 -0.10% 1,000 $100,900 350,000 $35,315 n.a n.a 0.90%BLOM Bank GDR $9.60 0.52% 5,500 $52,800 73,896,010 $709,402 6.00 0.84 9.09%BLOM Bank Listed Shares $8.80 0.00% 50,148 $441,273 215,000,000 $1,892,000 5.50 0.77 6.67%BLOM Bank Preferred Class 2011 $10.20 0.00% 5,431 $55,396 20,000,000 $204,000 n.a n.a 0.29%RYMCO Class "B" $3.32 0.00% - - 10,920,000 $36,254 27.24 1.71 -5.14%-Holcim Liban $15.00 0.00% 416 $6,240 19,516,040 $292,741 16.3 1.42 -3.72%Ciment Blancs Bearer $3.75 0.00% 1,768 $6,630 6,000,000 $22,500 13.39 2.11 7.14%Ciment Blancs Nominal $2.75 0.00% - - 3,000,000 $8,250 9.82 1.54 -15.12%-

Weekly %ChangeClosing

Source: Beirut Stock Exchange, Credit Libanais Economic Research UnitNote: n.a stands for not applicable

Market Capitalisation

($000)

YTD Price Perf.

Weekly Volume Traded

Lebanese Equities

BEIRUT STOCK EXCHANGEWeekly Value

TradedTotal Listed

Shares

Previous Last % ChangeValue Traded ($) 5,224,549 3,629,804 -30.52%Volume Traded 791,485 333,655 -57.84%Average Daily Trading Value ($) 1,044,910 725,961 -30.52%Average Daily Trading Volume 158,297 66,731 -57.84%Market Cap - BSE ($) 11,215,567,128 11,292,428,111 0.69%Weighted Average P/E 7.712 7.801 1.16%Weighted Average P/BV 0.960 0.968 0.85%Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Activity Analysis

Source: BSE, Credit Libanais Economic Research Unit

0.000

2.000

4.000

6.000

8.000

November 21, 2014 November 28, 2014

7.712 7.801

0.960 0.968

Evolution of Beirut Bourse Comparable Benchmarks

P/E P/BV

LEBANON’S MAIN INDICATORS

Weekly Market Watch

SOURCE: BDL, ABL, MOF, IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 17

2 0 0 4 2 0 0 5 2 0 06 2 00 7 2 0 0 8 2 0 0 9 2 0 10 20 11 2 012 2 0 13 2 014

MACROECONOMIC INDICATORS

GDP ($ Billion) 20.96 21.29 21.80 24.58 28.83 35.14 38.01 40.08 42.96* 45.02* 47.50*

Real GDP Growth Rate 5.06% 2.70% 1.60% 9.40% 9.10% 10.30% 8.00% 2.00% 1.50% 1.50% 1.80%*

GDP Per Capita ($) 5,438 5,339 5,343 5,937 6,888 8,274 8,756* 9,145* 9,609* 9,920* 10,086*

Net Foreign Direct Investment ($ Billion) 1.99 2.79 2.68 3.38 4.33 4.84 4.96 3.40 2.30 3.79

FDI/GDP Ratio 9.51% 13.11% 12.30% 13.74% 15.02% 13.77% 13.05% 11.79% 7.86% 12.71%

INDUS TRY

Industrial Exports ($ Million) 1,467 1,667 1,737 2,353 2,978 2,595 3,291 3,530 2,952 3,076 1,843 (5)

Import of Industrial Machinery ($ Million) 142 137 130 163 188 199 227 239 288 300 170 (5)

TOURISM

Total Number of Tourists 1,278,469 1,139,524 1,062,635 1,017,072 1,332,551 1,851,081 2,167,989 1,655,051 1,365,845 1,274,362 1,018,541 (7)

Growth in Tax- Free Spending N.A 2% - 15% 17% 56% 13% 21% 10% - 6% 4% 9% (7)

REAL ES TATE

Value of Real Estate Transactions ($ Million) 2,883.0 3,295.9 3,120.3 4,174.8 6,443.7 6,958.4 9,478.8 8,841.0 9,175 8,708 7,408 (8)

Number of Real Estate Sales Transactions 50,582 50,057 49,051 65,681 80,018 83,465 94,202 82,984 74,569 69,198 58,009 (8)

Construction Permits (000 sqm) 7,719 7,928 7,532 7,919 14,281 11,509 15,187 13,980 12,362 10,527 9,686 (8)

Cement Delivery (000 tons) 2,729 3,040 3,423 3,945 4,219 4,897 5,227 5,550 5,309 5,831 3,693 (6)

TRANS PORTATION

Beirut Port: Freight Activity (000 Tons) 5,060 4,476 4,226 5,318 5,746 5,769 6,469 6,677 7,225 8,268 6,921 (8)

Beirut Airport: Number of Passengers (million) 3.2 3.18 2.74 3.41 3.87 4.74 5.55 5.65 5.96 6.26 5.57 (8)

FOREIGN TRADE

Imports ($ Million) 9,397 9,340 9,398 11,815 16,137 16,242 17,964 20,158 21,280 21,228 15,729 (7)

Exports ($ Million) 1,747 1,880 2,283 2,816 3,478 3,484 4,253 4,265 4,483 3,936 2,501 (7)

Trade Balance ($ Million) (7,650) (7,460) (7,115) (8,999) (12,658) (12,758) (13,711) (15,893) (16,797) (17,292) (13,228) (7)

BALANCE OF PAYMENTS

Net Foreign Assets at the Financial Sector ($ Million) 168 747 2,792 2,037 3,460.60 7,899.00 3,325.20 (1,996) (1,537) (1,127) (301.6) (7)

Foreign Assets ($ Billion) 11.48 11.66 12.97 12.39 19.73 28.30 30.85 32.24 35.74 35.29 38.77 (10)

PUBLIC FINANCE

Government Expenditures ($ Million) 6,992 6,768 7,880 8,350 9,922 11,388 11,336 11,675 13,321 13,640 6,815 (4)

Government Revenues ($ Million) 4,984 4,912 4,853 5,804 7,000 8,428 8,414 9,333 9,396 9,420 5,238 (4)

Budget Primary Defic it / Surplus ($ Million) 1,851 1,802 1,335 1,787 2,730 3,380 1,203 1,662 (110) (240) 580 (4)

Total Defic it ($ Million) (2,008) (1,856) (3,027) (2,546) (2,921) (2,960) (2,894) (2,342) (3,925) (4,220) (1,577) (4)

Defic it / GDP Ratio 9.58% 8.72% 13.89% 10.36% 10.13% 8.42% 7.61% 5.65% 9.23% 9.52%

Debt Service / GDP Ratio 12.43% 10.88% 13.47% 13.08% 12.16% 11.49% 10.85% 9.99% 8.51% 8.55%

Net Public Debt ($ Billion) 32.98 34.76 37.42 39.02 41.50 44.11 45.01 46.35 49.12 53.18 55.89 (7)

Gross Public Debt/GDP Ratio 171.18% 180.70% 185.19% 171.02% 163.09% 145.57% 138.39% 133.88% 135.67% 139.68%

MONETARY AGGREGATES & INFLATION

M4 ($ Billion) 49.63 51.59 56.08 63.56 72.58 87.08 97.31 103.5 110.0 117.4 123.41 (9)

(M2- M1) ($ Billion) 15.22 14.27 13.37 14.11 21.93 31.14 35.66 35.82 39.32 40.56 42.78 (9)

Monetization Level (M2/GDP Ratio) 80.27% 74.24% 69.39% 65.76% 85.55% 97.35% 103.46% 99.31% 103.14% 102.75%

change in CPI (%) 1.70% - 2.60% 5.60% 9.30% 6.36% 4.20% 6.19% 4.27% 4.68% 2.05% 1.24% (7)

BANKING S YS TEM

Number of Commercial Banks 53 54 54 54 53 53 54 54 54 56 56 (1)

Number of Branches 799 825 830 847 860 885 912 948 962 985 986 (1)

Total Assets ($ Million) 67,786 70,325 76,179 82,255 94,255 115,250 128,925 140,576 151,883 164,821 171,343 (7)

Total Deposits ($ Million) 55,835 58,117 61,541 68,059 78,663 96,821 108,601 117,703 127,657 139,166 145,256 (7)

Loans to the Private Sector ($ Million) 15,934 16,230 17,201 20,425 25,039 28,374 34,929 39,375 43,452 47,381 49,947 (7)

Customer Loans/ Deposits 28.54% 27.93% 27.95% 30.01% 31.83% 29.31% 32.16% 33.45% 34.04% 34.05% 34.39%

Dollarization Rate 68.78% 71.71% 75.16% 77.34% 69.57% 64.46% 63.24% 65.92% 64.82% 66.10% 65.75%

Net Profit - After Tax ($ Million) 463 580 754 962 1,215 1,429 1,838 1,743 1,620 2,246 (1)

Exchange Rate (LBP to USD) 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50

Recap of Lebanon's Major Indicators

(1) As At End of M arch, 2014, (2) As At End o f April, 2014, (3) As At End of M ay , 2014, (4) As At End of June, 2014, (5) As At End of July, 2014, (6) As At End o f August, 2014, (7) As At End o f September, 2014, (8) As At End of October, 2014,

(9 ) As At November 13, 2014, (10) As At M id November, 2014

* Figures Reflect IM F Estimates

LEBANON’S RATINGS

Weekly Market Watch

SOURCE: S&P, MOODY’S, FITCH, CAPITAL INTELLIGENCE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 18

Rating Agency Tenor Rating

Long- Te rm B-

Short- Te rm B

Moody's Inve stors Se rvic e Ltd. Long- Te rm B1

Fitc h IBCA Ltd. Long- Te rm B

Short- Te rm B

Republic Of Lebanon Sovereign Ratings

Outlook

Sta ble

Ne ga tive

Sta nda rd & Poor's

Source: M oody's Investors Service, Standard & Poor's, Fitch Ratings

Ne ga tive

Rated Banks

Long Term Foreign Currency

Financial Strength

Outlook Long Term Foreign Currency

Outlook Long Term IDR

Outlook Long-Term Counterparty Credit Rating

Short-Term Counterparty Credit Rating

Outlook

Bank Audi B1 D- Negative B Stable B Stable B- C Stable

BLOM Bank B1 D- Negative B Stable - - B- - Stable

Credit Libanais - - - B Stable - - - - -

Byblos Bank B1 D- Negative B Stable B Stable - - -

BBAC - - - B Stable - - - - -

Fransabank - - - B Stable - - - - -

Bank of Beirut B1 D- Negative - - - - - - -

BankMed - - - - - - - B- C Stable

Fitch Ratings

Sources: M oody's Investors Service, Capital Intelligence, Fitch Ratings, S&P Ratings

S&P Ratings

Lebanese Banks' Latest Ratings

Capital Intelligence Moody's Investors Service

CONTACTS

RESEARCH

Fadlo I. Choueiri, CFA

fchoueiri@cl.com.lb

961-1-398 169 EXT: 1080 Jad Abi Haidar jabihaidar@cl.com.lb 961-1-398 169 EXT. 1083

Joelle Samaha jsamaha@cl.com.lb 961-1-398 169 EXT. 1081 Patrick Karawani pkarawani@cl.com.lb 961-1-398 169 EXT. 1082

Joanna Gergi joannagergi@cl.com.lb 961-1-398 169 EXT. 1084

MONEY MARKETS DESK

Robert Araman

raraman@cl.com.lb

961-1-200 028 EXT. 116 CAPITAL MARKETS DESK

Gaith Mansour

gmansour@cl.com.lb

961-1-322 191

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Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-398169 FAX: 01-398169 EXT. 1085 19