tv Bloomberg Markets Middle East Bloomberg May 4, 2016 12:00am-1:01am EDT
mentality. it's 8:00 a.m. across the emirates. welcome to bloomberg markets middle east. richa were shot, there -- ad, there are a couple of big factors in play. look at gold. we are soaring ahead. can we stay above $13? the question is this, is finance driving the gold market, or is it real demand coming from india? we have a big festival coming up mbai, driving in mu at domestic demand. the rally trumps the london rally. also driving the market, the spd funds. exchange of holdings, almost 21
metric tons. the biggest one-day expansion since 2011. $7 billion going to etf's. is that the feds, or is it the real demand from mumbai? haad, you have commodities in mind as well. is happening outside the indian wedding season. it is quite extraordinary that we are seeing this move take lace. it is also a running for the hills when we see what has happened with the markets. that is one thing. one of the things we have been -- theas how well property market is looking top-ish, where do they go next? you in about 20 or 25 minutes, they are going to steal delivering more than
the equity markets. there we have it. this is what we have right now. mumbai trading. the hang seng is entering its lunch break. the shanghai composite is just below that psychologically important 3000 level. the middle east, just two hours away from the open, the emirates markets, at least. other dobby, 10:00 a.m. local time is when they come on the scene. this is the last close. this is what we have on tuesday. this is the end of the session. the market in to buy -- in dubai is off. osha up by 3/10 of
1%. how open are the markets? leastre opening up, at that's what is being told to everybody, but are they really? we will be answering back question -- asking that question to people over the next several minutes. moving to tel aviv, israeli stocks off by a tenths, 9/10 of 1%. manus: that is your comprehensive roundup on the markets. let's check in on the other stories making headlines. yvonne man is here. reporter: atlanta fed president dennis lockhart called a june rate increase a real option that helps stall the dollar's slide from a one-year low. this year that rises are still possible after the fed kept policy on hold last month.
alberta has been forced to carry out the biggest ever evacuation as wildfires threaten the community at the heart of the country's main oil region. 21,000 people were moved from fort mcmurray. although operations themselves have not been affected. the main road to the town has been cut by the blaze, and authorities described the flames as aggressive. the global internet -- the global inquiry into malaysia's investment fund has reached hong kong. of severals unidentified people have been frozen and are being investigated by countries outside malaysia, including singapore. 1mdb is at the center of multiple inquiries of money laundering and embezzlement. the company has consistently denied any wrongdoing. strong sales in china and the u.s. are expected to make headlines. adidas is announcing earnings
per share 32% higher than the consensus. however, the original reports did not specify which regions had the growth. last year, china represented about 15% of their total sales and was the fastest-growing region. powered by over 2400 journalists in 150 euros around the world, this is bloomberg news. breaking news coming out of jakarta. first quarter gdp is coming through. we have one third of 1% contraction taking place in the economy. it is still expansion, albeit below the median estimate, which was nearly 5.1%. figure coming in just a short while ago, 4.92% year on year. that's what we just got out of indonesia. of theave a look at some political headlines coming out of indiana. donald trump is having a crushing victory that forced his main rival to quit the race. on the democratic side, bernie
sanders defeated the front runner hillary clinton, but only just. and joins us. andrew, trump had made pretty controversial comments about muslims. what do leaders in that part of the world make of him possibly becoming president? not heardwe have anything yet, obviously, but what i would say is the comments that he made were offensive to muslims in the u.s. and here. it was certainly noticed. we saw two weeks ago how, in trumps victory speech in new york, he started sending more presidential. i suspect we may start to see -- sounding more presidential. i suspect he may walk that back. he is quite linear and how he looks at the world, so perhaps he will drop a line between muslims and terrorists, but you will certainly have to do something, because the comments do not -- he will have to do something, because the comments did not go unnoticed. but we did not hear any official
comment. i think people here are watching with some the wildermuth and are a little bit -- the wildermuth -- bewilderment and are a bit perplexed, but it became more real overnight. course, business ties in the uae and the broader middle east too. he has these ties. the thing is, he could be putting those in danger. that is the argument being put forward by some. reporter: there are two aspects to that. one is the trump business. we used to have trump the boards around town. those are a little less visible. tomight be more difficult get your hands on some trump furniture if you wanted any. that's one side of it. the other aspects are ties between this region and the u.s., which run very deep. as i said before, people were a about the perplexed
u.s. system. they are probably going to start wargaming now. x, then y. if trump wins, then what will happen? in security aspect, the gcc saudi arabia are some of the biggest buyers of the u.s. weaponry. what does that mean for them? trump has said he wants this region to be more active and take on a bigger role in defending itself, so they are probably looking at that. another big aspect is oil, and all the big oil companies here, and one place where that is very visible is in iran. iran is opening up to the world. we saw the south korean president there, european leaders going there. one country that is not moving as the u.s., so i think that is one area where people are looking. keenly, whatg very happens with trump before they make any moves into the iranian space. rishaad: i think the operative
phrase was, trump furniture, if you want to buy any in the first place. manus: rishaad, thank you very much. equity markets, day six the asian stock market. off the board. let's go to david. reporter: absolutely. i think one of the stories, australia is leading everything in the commodity space lower, especially the metal. function on the bloomberg, very easy to spot the biggest sort of movers, sorted across from left to right by asset classes. so you have equity indices, bonds., commodities, and the way i like to look at this, this is a measure of risk appetite. red to write green -- from
to bright green, that is up here. my lunch has arrived. let me just ignore that. bear with me just one second. billion in over two big days. all-countrymsci world index. asia is extending the global selloff. we are looking at 600 billion u.s. dollars. i also want to point out, have a look at what is happening across the markets. the dollar is continuing to strengthen. it was a little bit down over the past few days. it leveled off early this inning in asia stop sent -- asia. since then, it has gone forward. the dollar index is writing for the first time in eight days. is offth korean ring it
the back. have a look at what is happening across the commodities space. let me point out what is happening with southeast asia. that is sort of like a fairly bright pocket of weakness. that is your chart year today. we are on nine straight days of decline on the southeast asia index. the data earnings coming through -- the big earnings coming through out of singapore, a election's coming through next weekend, or this coming weekend, and manila in the philippines. -- in manila in the philippines. this is something they keep in mind. on a day like this, there is very little appetite for risk. this is one pocket in asia that usually gets hit the hardest. manus: david ingles there with the latest on the markets. you can get more of that and the rest of the day's news on our
brand-new digital destination. you will find in-depth reports, market data from the region. plus, you can watch all of our reports, interviews, and special content. rishaad: fugitive indian business are hitting out at lawmakers and the media. we are heading over to mom by live -- mumbai live for all the details. after the break, reforms to make it a more attractive place to invest. this is bloomberg markets: middle east. ♪
said the ipo process will be named completely transparent. -- : >> leading by what he practice is the best way to lead. we want to attract companies. we want to go public. we want to go through this experience. and we want it to be a transparent experience. we will announce every single step and document every single when wemake sure that attract potential issuers in the future, we understand exactly. manus: we are joined by matthew martin, who is on the ground in riiad forr us -- in us.
why do you think this has changed? why do they want to go through this ipo and are shifting gears? reporter: one of the biggest changes the cma announced yesterday is that they are thatg the limits qualifying foreign investors have to have, down to $1 billion from $5 billion. obviously lowered the bar. so far, they only have about 1% of the market held by foreign investors. there is a big increase now, a big demand and countries trying to attract more foreign capital. that's what it looks like with the ipo. it is a government privatization program, as well is trying to hold themselves up as a standardbearer of the ipo well aswill stop -- as
trying to hold themselves up as a standardbearer of the ipo process. manus: i am going to play a conversation i had with the executive chairman of templeton emerging markets, earlier in the week. he says saudi arabia must make -- for to enter investors to enter into the market. >> the issue is the freedom to go in and invest as much as you've got, and to get out. you have to find problems, which china has as well. finally now, china is beginning to open up more and more. but it is necessary to open completely and allow investors to come in and house that there will. reporter: can we expect foreign investor status from you? >> it's possible. we are running open-ended funds, so we have to get in and out. this is a real problem. it is possible we will want the qsi, but it will be very
limited. manus: it is amazing, this momentum we have seen. it is all about gearing up for the aramco ipo. i am also noticing the ownership levels of change from 5% to 10%. a curtain raiser to the ipo? what are people saying to you on the blind? it is trying to set those -- set things up for that process. obviously, the aramco idea was huge. they will be more than local demand to be able to take out the size of that offering. they will need foreign investors under their own exchange and probably need to lift all of that as well. the government hopes it will be a huge success. they want to use this as part of sort of a cheerleading part of the reform package, which the government announced just the other week, which will also be a
key part of creating a sovereign to wean the trying country off of reliance on oil onto investment income. this is a key part of that. the other thing that is also very key is to be a part of the emerging market index. that attracts all of the that track that index onto the stock exchange. the stock exchange is different from the market opened a year .go we don't need the liquidity, we don't need foreign investment. right now, the whole program is attracting foreign investments and getting foreign companies into the country to help with the economy. manus: matthew, we are going to say thank you very much to our reporter on the ground, great work. the very latest on the potential
opening. on theseperspective sweeping changes, we are joined by rachel. rachel, great to have you with me this morning. this shift of gears, it's almost as if the kingdom has lifted the sixth gear, opening up, preparing for an ipo, in terms of their stock market and aramco. these changes, give me the sense of scale on the pace of change. , these measures on the financial markets side have really been part of a major step up in the opening of ideas that have been floating around saudi arabia for years, or even decades in some cases, and really a reaction to saudi arabia looking around and oilking about what a lower price and environment will mean for the economy going forward.
on the equity markets side are exactly the sort of changes that the institution investors i spoke to when theyhs back -- were doing the roadshow, what they were all asking for. i think it has made it easier for those, and it will make it easier for those to attract, to invest. the question mark will be on the of limitations side of financial market policy. -- the implementation side of financial market policy. rachel, you are going to stay with us. you will continue this conversation. she is in our frankfurt euro. .- bureau what are the implications for society, liquidity, and social change? much more to come. ♪
for, -- from frankfurt, is rachel. we are having conversations on the ground here, and many are that the deputy of saudi arabia is a man in to much of a hurry, and he is perhaps overreaching in terms of his ambitions. what does roubini make of the ambitions? there is a lot of change going on right now in saudi arabia. there is a period of catch up after many years of slow movement. it is something that global investors and local investors have been struggling to wrap their hands around. our concern is that the old ,riole -- the old order is gone but there is some uncertainty about the combination of policies going forward. in particular, related to
implementation of the ipo trajectory, but also of the economic plans. the plan announced two weeks ago had a lot of good ideas, but it was a little bit sketchy on how that would be implemented, so we are waiting to see which of the priorities gets the upper hand, and i would highlight that oil prices, where they are today, make some of the transition a bit easier, but this is still one in which difficult decisions have to be taken, and it remains to be seen whether the government is comfortable with foreign investors taking a more meaningful control over local access, which would -- local assets, which would be implied by ipo. manus: what fascinates me is some of the ships in release from the kingdom, which is them saying they will go from global norms about settlements, and other words t plus 2, rather
than no time at all, allowing 10% ownership, encouraging sovereign wealth funds and educational institutions. this is beckoning the globe to read ferguson on the kingdom -- to refocus on the kingdom. radical.d be quite mean, moving to international norms is part of the cost of playing this game, so to speak, and that was very much the take away from conversations with institutional investors, rather they were -- sovereigney were wealth funds or others. what is important is that the andbing of investment capital markets, but also the revenues and the like. that implementation will be at least as important. what saudi arabia needs -- road: rachel over at
manus: in chinese commodity markets, speculators are making the stock exchange look positively dull. rishaad: plus, and he is devastating drought, pushing up food prices and threatening economic growth -- india's devastating drought, pushing up food prices and threatening economic growth. manus: it is a: 30 in to buy. -- 8:30 in dubai. reporter: we are in london. here are some of the big scenes we are dealing with. once again, big banks and big oil at the center of things. french big banking name, those stocks are out later this morning. yesterday, we had bnp paribas numbers. they are coming to the downside towards the end. they produced a low lot provision. today, stocks are in focus.
how much will they stand apart, and how much will they stand to the same challenges we have seen in the rest of the banking sector in the first quarter? the trading environment and volumes are so weak, as we saw yesterday. how quickly can they cut costs? how quickly can the banks in this sector change their strategies to move away from the more regulated, more capital-intensive areas? course, we have blooming numbers from the u.s. banking sector as well. these i am looking at asian markets overnight. we are getting ready to start our trading day in just a few -- just under an hour. the whole sentiment is about the banks, but we had energy on the block, gold on the move, and i find it fascinating that the atlanta fed is putting june back on the cards again. you and i will have a conversation all about the dollar during our show. aporter: yeah, there is still 12% chance if you look at the
function on the bloomberg. a 12% chance of a hike in june. you are right, the fed is talking this week about june, they are suggesting that june is. many big companies will be focused on what is happening with the dollar, including royal dutch shell, the dutch oil business, a norm is by european standards. -- enormous by european standards. they face first-quarter numbers coming out. how much will the refining profits and trading profits offset the weakness they are seeing in the business because of a 12 year low in oil prices? bp, manus, you may remember, beat estimates. how will this factor in? the ceo has been stating his rugged -- stating his reputation . we will have to see what they have to say about that. that -- the we've got manus, we've got that and a host
of numbers this morning. manus: and i will be back with you. and i and words in london. let's shift gears and talk about abu dhabi. -- a construction of an oil plant is permanently put on ice. reporter joins us. anthony, what is driving the delay on this, or the cancellation? it's not just a delay, is it? reporter: gas imports are strategic for abu dhabi and other countries in this region. the government needs to keep the lights on. they are very rich in oil resources, but they are using some of the gas to help produce the oil, so they are a bit short on gas for all that they want to do, power generation industry. .t is a strategic issue the abu dhabi national oil company is bringing in a ship off its coast, and that is going to bring in additional surprise
-- supplies of gas. that breaks into the question the size and the reason for this big onshore facility. manus: when i read a story like this, what comes into my mind is that this is a much bigger story at play. this is about the fiscally, responsible? are exactly right. all these countries are rationalizing the projects saying, ok, do we need this? aret of times there different organizations working within these companies, maybe working with cross purposes are trying to do the same thing. i think in the lower oil price environment, it is about rationalizing that is saying, let's do one land and make sure it works. manus: much greater mind than mine. the accelerator and decelerate or affects of this. this will be a huge project on delay, and that's got a trickle-down effect in terms of
money that is not going to flow into the real economy. like saudi, the big announcement in terms of making huge redundancies and asked patriots and locals. abu dhabi. in reporter: it is a $2 billion project. they will need the gas in the future. the question is, which project will win? i think i'll be dobby will be in the import market, and other countries will be out there -- i dhabiabreu dobby -- abu will be out there in the import market, and other countries will be out there. manus: thank you. the uae-based company gulf capital has bought 100% of a food distributor. we are joined by one of the brokers of the deal, the ceo of
gulf capital. welcome to bloomberg markets: middle east. this deal, how much is it worth, and we also know that it is fairly sizable, so put it in context for us. looking to invest in the food space of saudi arabia, one of the fastest sectors of the economy that is non-oil-based. one of the best ways to play the growth and consumption was to acquire a company like this one, the leading food distributor to restaurants, hotels, casual dining. the company has spent over $100 million. at that'm looking turnover. this is the biggest one in the middle east. what did you pay? disclosingre not what we paid, but it was attractive. manus: upside of billions? guest: no. typically, we manage our own $4
billion. our equity checks are between 75 million dollars to $150 million, so that gives you an idea. in terms of momentum, we've got the national food deal , blackstone and amari are all said to be viewing that. did you join the bidding? did you put in a bid? we are a market private equity firm. we focus on smaller deals. actually, one of our exits -- manus: dr. kareem, i will hold that thought. we have breaking news. rish, taken away. postel -- aeropost in, a big clothing brand the 1980's and 1990's, filing for bankruptcy. we had news in march that the company was looking to possibly sell and restructure itself.
those talks came to nothing. this came after a rough fourth quarter as well, a rough his goal position the company was in, years of losses. this is what we have at the moment. sales down 6.7%, probably the last straw. the straw that broke the camel's back. manus. manus: thank you very much. let's return to the chief executive officer of gulf capital. we were trying to squeeze some news. let's go back to this conversation. i know you have done the deal. i want to try to get a sense of what is on the agenda for you, and what interests me is this. a lot of the sovereign wealth funds are under a little bit more pressure. do you think we will see more ipo's coming from those? are there going to be opportunities for selling that you might be interested in? guest: i would say a lot of
assets are for sale, nothing is off the table. if the crown jewel is being lifted, you can assume assets are going to come. it is definitely a buyers market, and we expect many more deals to come in the next few years. manus: when you read this story yesterday with the ceo saying, look, we are getting ready for have you saudi aramco, had a rise in the interest level of people communicating with you? are people more focused on the region in terms of opportunity, buyers and sellers, in your business? guest: you take the deal we just closed, i would have never dreamt of closing 100% acquisition in the food sector of saudi arabia. deals.seeing many more i think business owners are realists. ofot of people own big chips the table and diversify away. devaluations have come done. 2016 will be much more productive for private equity.
in theso we have food family, so we are able to feed the people of gulf capital, but what are the other areas? i was hearing about the opportunities in terms of technology. we are also seeing the rulers talk about technology all over the press. is that what the biggest opportunities are for you? where you want to take the business? food, logistics, all these sectors are growing larger, but we are also being optimistic. we are hunting for energy assets. i think i'll will come back sooner or later. manus: you have to name your price. guest: the beauty of private equity is that we have capital. i can't tell you in this timeframe. to focus on growing companies ahead of the rebound. manus: the negative interest
rate global story. everybody is chasing yield. everybody is chasing the opportunity. are you seeing more aggressive competition from the likes of kkr, the other big players, blackstone? are they pushing up their prices? guest: to be honest, there are more options within the larger sized deals, and the big boys are coming from the u.s. and europe. blackstone acquired a stake, and kkr invested in the company here, and that is good news for local private equity firms. me, we welcome them, because we are a been market firm, and we like to sit with the big boys -- a midmarket firm am i am we like to sit with the big boys. manus: thank you so much for joining bloomberg markets: middle east. up, a fugitive
-- we aree are black back here with bloomberg markets: middle east. to that rally we were talking about just a few days ago, it has evaporated into thin air. reporter: and then some. we are entering 1:00 p.m. here in hong kong. that a lot ofure people in the middle east and europe will be waking up too, are waking up to at the moment. this global selloff is extending, at least for this benchmark. japan is still close, by the way. we are looking at the sixth day
of the climb. big story, yesterday the double dose of stimulus coming from the government, that seems to be dying down. we are down 1% for the benchmark in australia, about an hour left onto 5300hanging barely. we will see if it holds on. this is what you want to watch the next few days. we are going for an eighth or ninth straight day. it gets confusing. in malaysia, we are going for a night -- this is going for an eight straight session of decline. at southeast asia, we are coming from an earnings standpoint to begin with. you have these elections in manila. we just got the gdp readout of indonesia a few minutes back, 30 belows back, missed it, 5% growth. later this week, we will get trade numbers out of malaysia, expected to show a softening from the last month, february.
a lot of risk investment to take into consideration, a lot of celebration. was supposed that to pan out this year, oil, a stronger dollar, a rally in chinese equity, all have basically disappeared, and this is what we have. futures are down, the dollar is gaining for the first time in a few days, and the euro is down by about one/10 of 1%. manus? manus: david, thank you very much. breaking news, day two for the roundup of breaking banks. -- of european banks. is 920 4 million euros. the estimate was 765. international retail and financial services is a considerable lift versus last year at 300 million.
in terms of a target, what are they going to do? they are targeting additional costs. first-quarter net income comes in at 6.2 billion. global banking and investor solutions comes in at 454, below last year's number. for commodities and currencies, this is the big one for a lot of multiplayer's. it is down -- it is up 17%. that is bucking the trend relative to some of their peers. it is a zero-sum game. there are winners and losers. ficc q1, stock up 17%. cost of risk, let's dig into this cost cut a little bit. next story.o my additional cost cuts, we will dig a little deeper and get that. the big number for this is ficc, up 17%. up 11%.rvice revenue
let's move the agenda along and focus on fugitive indian tycoon vijay malia, who says he doubts he will face his debts. he signed his upper high seat just hours before he was expelled by lawmakers. let's go to mumbai. a very good day to you. what exactly prompted his resignation? reporter: he has resigned to avoid being expelled. let me explain. for him. two cases up one, a group of bankers want their money back. he is the defaulter and those banks billions of dollars. second, the government has dumped in a fugitive because of kingfisher airlines. more importantly, there is
another big one, the investigation has got a warrant against him because it alleges that a large part of the funds that were supposed to be used for kingfisher airlines were moved abroad to buy property. -- mallya is re-freezing -- is refuting this and does not expect a fair trial. quote, i am and i facing a trial by media and a lynch mob mentality is too apparent. at this point in time, he needs to appear to face the law. manus: where are we on the potential for the settlement? has it been accepted, rejected? the potential here is quite considerate, isn't it? it is, 1.3 $7 billion, as
i mentioned, and this is a group of large banks in indiana. to settle, but banks have rejected it up front. they pretty much say this is not acceptable. secondly and more importantly, understand the context. india faces a large, bad loan problem. and bank of india are coming down on rich businesses who have defaulted on their payments. isn in that context, mallya supposed to face his bad loan problem. this is literally a problem of perception. mallya is known to have a flamboyant lifestyle. he is not giving his employees salaries when his copy shuts down and not paying back banks, not helping his case either. richard malia will have to face the music soon. our bloomberg editor in
manus: socgen has just delivered their numbers for the first quarter, niners 24 million euros will stop -- 924 billion euros -- 924 million euros. net incomest-quarter for socgen. profits rose in the retail unit. the retail and financial services income comes in at 300 million euros, up from last year at 148 million. the equity's revenue, however, slumped 73%. we have seen a drop in their
equities. equities revenue down 37%, excuse me. commodities and currencies, this is interesting. this is bucking the trend slightly. fic revenue up 16%, 689 million euros. that is additional cost cuts. controlling cuts, this is a theme we have had from all of the banks across the region, deutsche, barclays, etc.. socgen is not telling any different of a story. they are going for 220 million euros of cost cuts. they will implement that by the end of 2017. onse are the top headlines socgen. much more to come. let's get back to rishaad in hong kong. rish? rishaad: thank you, manus. hours before the opening in the emirates.
how the world is performing this year is speculated that the commodities. that is why you will see this fic figure coming out strongly. it comes about as we get people flocking into anything but the , egg futures as well. also, you were talking about how the move into commodities in china is perhaps just the start. eggs, you mentioned the and with that in mind, take a look at this. steel bars. who needs equities? steel rebar futures are knocking it out of the park, out -- up 38%. eggs are up 27% in china. they really do.
bake prices in the united states of america are down 27%. volatility, to put it in context, it has the lowest in almost a year. eggs, rishaad. back to you. rishaad: yes, absolutely. we don't talk about eggs while realizing there is a market for them. that doesn't for this edition of "bloomberg markets: middle east." we will take a look at more detail of what is going on with the equities session when it gets underway in middle east. and you are going to be involved in "countdown" coming up in three or four minutes from now. also toyou are looking body das as well? -- adidas as well? manus: adidas is coming up. we will break down the socgen
and the ceo of france's second-largest bank said it was not an easy quarter. economy and the oil price on china, that environment is very special. i think our government is pretty strong. nominationd trump's is all but certain after his competitor exit the race, following a crushing defeat in the indiana primary. and tony blair on brexit,