We believe that the market behaved rationally, in our view, and did not send the stock down on the release date (shares appreciated by 1% on 31 October 2011), despite significant declines in further sessions in line with general market performance. We believe that the results reported by Sorouh in 3Q2011 were operationally strong, and we maintain our Buy rating, keeping our investment thesis unchanged. We favour the company?s investment properties portfolio and recurring revenue streams despite the weak medium-term outlook on its performance.

The overall outlook in the GCC economies remains positive, with growth rates averaging around 5.3% in 2011 and 4.9% in 2012. Depending on the levels of oil prices and the continuation of expansive fiscal standing, economic growth might maintain its current momentum or may taper off a little. As the fourth quarter of the year unfolds, the GCC banking system remains robust and largely stable, backed up by large deposits and a relatively weak credit growth. The 2008 financial crisis, coupled with the sovereign debt crisis and the Arab spring proved that GCC banks are generally resilient and well?capitalized helped by ample regional liquidity, fairly adequate regulatory supervision from the region?s central banks on top of government expansive fiscal measures and support. The downside is however in the slow expansion of credit growth by GCC banks.

The world's major money printers are in trouble. The debt-based monetary architecture is going through serious stress. The recent banking and sovereign debt crises are systemic symptoms indicating an upcoming and unavoidable change in money creation methodology. This paper addresses the key structural challenges of the crisis and proposes a solution in the form of a new product/channel designed for money creation that does not require a commensurate debt or credit increase in the system. Public Capitalization Notes (PCNs) are profit sharing investment instruments issued or guaranteed by the government treasury and purchased with fresh money by the central bank. PCNs are equity-like instruments with space value for money. PCNs, while channelling funding to where it is most needed, they facilitate job creation, employment, income, deposits, and real activity. Public Capitalization Notes allow the existing system: 1) to survive through a bypass of its own mechanisms, and 2) to balance the inadequacies of a purely debt-based model. After all, the State is the creator of money and a 'sovereign debt crisis' reveals a system chasing its own tale.

The United Arab Emirates (UAE) has shown continued political and economic stability in a regionfraught with turbulence. High living standards and high employment contribute to a settled communityunlikely to cause upheaval such as is occurring across other Middle East and North Africa (MENA)nations. As a result, the UAE fares well internationally as an oasis of order amidst the chaos and presentsas a secure market. Given its ties with Western Nations and its resources of oil and natural gas, plus itsgeographic position on the Arabian Sea, the UAE is in a strong strategic position, coming through theglobal economic crisis with relative ease.The UAE takes an active role in MENA affairs, contributing aid and manpower where required whilemaintaining autonomy from most international organisations. The UAE in March 2011 contributed to theenforcement of a NATO-imposed no-fly zone in Libya by providing 12 jet fighter planes, although not amember of NATO. The UAE has in July 2011 provided foodstuffs and other resources to the faminecrisis in Somalia, via its own agencies.In absolute terms, the UAE remains a major purchaser of high technology arms and materiel. Recentprocurement trends have been dominated by two themes. One is the scaling back of original orders, inresponse to budgetary constraints. Particular high profile deals ? such as the purchase of fighter jets toreplace the Air Force?s Mirage 2000-9s have stalled. The other is the desire to develop the UAE ingeneral, and Abu Dhabi in particular, as a regional defence-aerospace centre.At the IDEX and NAVDEX exhibitions that were held in the city in February 2011, three quarters of thedeals announced by the UAE government for the Armed Forces were awarded to local firms. Some ordersinvolve provision of technology by Mubadala Aerospace and other players in the country?s newaerospace industry. Others involve the engagement of UAE trading companies as purchasing agents forthe Armed F

We have largely maintained our economic forecasts despite the deteriorating global environment. The dominance of commodity exports has supported regional external positions, especially with the oil price remaining relatively strong. Moreover, our forecasts already assume a weakening in the external performance in 4Q2011. As such, we have made more conservative upgrades in our real hydrocarbon growth forecasts for Saudi Arabia, Qatar, Kuwait and UAE, than warranted by the 9M2011 performance.