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tv   Bloomberg Markets Middle East  Bloomberg  June 28, 2016 12:00am-1:01am EDT

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rishaad: brexit continues to unsettle the markets, korea announces new stimulus while japan repeats its readiness to act. rishaad: crude oil is having its biggbiggest loss since february. a 25 year deal to operate the biggest oilfield in qatar.
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rules.: new aviation is 8:00 across the emirates. rishaad: it has just gone midday. welcome to "bloomberg markets middle east." yousef: what a roller coaster it has been. scrambling.are we have had several incidents where they have adjusted their calls. let me put this in perspective with a chart we have put together. this is a 14 day relative strength indicator is that the u.s. dollar. it looks like the british pound
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could be catching its breath, albeit briefly. it helps us measure the velocity. is it overbought? is it oversold? it has gone under 30, so assign it could be oversold. tooould have fallen too far fast. rishaad: absolutely. recovery. a bit of let's have a look at the middle and and how we see markets the monday session -- end the monday session. we have to buy coming on at 10:00 local time. emirates telecom.
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qatar just down the fraction. helping to pull back -- this morning, jpmorgan came out and upgraded the stock to neutral. kuwait on the way up. real estate responsible for that. let's take a look at egypt, cairo, tel aviv. we did see a partial gain for turkish stocks. we do have the israeli market down despite a reconciliation taking place between israel and turkey that would help some of those energy stocks. help the israeli market by the end of the session.
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what about the trading day in the asia-pacific? focus.n is very much in yields across the region. japan is,k at where -29 at the moment. thegovernment released auction results for the two-year option. what do you have? lower than the investors got in fairly low yields. everything from the two-year all the way to the four-year hitting record lows. demand still quite robust despite the fact you have these yields. the hope is somebody else buys at a lower yield. so far, it has worked. on -- markets, 30 minutes 30 minutes into the afternoon
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session. .here is your pop yesterday 15,000 seems to be the line in the sand for investors. a lot of that has to do with dollar-yen. we heard from the finance minister, the prime minister that they are watching this very closely. word.tly" was the broader markets are looking like if we talked to her three hours back, you would see mostly red. have some of these policymakers coming out with a fiscal stimulus of their own. responding to the fallout we are right in the middle of from the brexit vote on friday. yousef: we will keep a close eye on that. thank you, david.
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sources tell bloomberg u.s. will hold talks with qatar and uae. officials met with u.s. airlines last week to discuss possible violations of aviation treaties. american airlines, delta, and united have complained they got more than $40 billion in state support. --ia reports in a ron say iran. oil minister is quoted as saying the government will approve a new contract that is designed to attract investors quickly. singapore airlines is expected to take on middle eastern carriers within weeks of the government relaxing aviation
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rules. it is expecting a surge in demand from the world's fastest-growing air travel market. it is considering buying or leasing widebodied planes. brands effort to offload a stake in its chinese business has hit a snag. one of the potential bidders -- the interested buyers include a chinese private equity firm. they disagree with the $10 billion valuation. global news 24 hours a day, powered by over 2600 journalists and analysts. this is bloomberg. rishaad: britain has been stripped of its top credit rating. a fresh blow to the economy after the brexit referendum.
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reaction. idea of the s&p yesterday lowered its grade two double-a from triple-a for the u.k. siding the risk of less predictable and effective policy framework in the u.k. both have negative outlooks. moody's investors lowered its outlook on the u.k. to negative from stable on friday. this decision from s&p came a day -- came on a day where money was moving. investors that the bank of england will be forced to cut interest rates to prop up the economy. today, we have david cameron heading to brussels for a
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two-day summit with other eu leaders to discuss what is going to happen from here. cameron will not be there on the second day of the summit. we are seeing the impact already on this separation, the u.k. from the eu. it will be about when the article 50 will be triggered. >> i've spoken to chancellor llande, president how and other leaders. the british government will not be triggering article 50 at this stage. when he to determine the kind of relationship we want with the eu. -- we need to determine the kind of relationship we want with the eu. >> he will be expected to talk about how he will trigger this article 50. he has made it clear he wants to pass that on to his successor.
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a successor would come in on september 2. eu leaders are split on how to deal with the u.k. will they take a more hardline stance? or do they, like angela merkel, give the u.k. a little more time ?ntil, say, september these are the issues that will need to be hashed out. the way to sum it up is that the eu is holding all the cards, but the u.k. will press play. rishaad: let's have a look at what is going on with the fx markets. what have we got? >> we are seeing sterling gain for the first time since brexit. you can see it rising, up 6/10 of 1%. -- 1.33, one dollar 33
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. not much of a rebound. sterling dropped below the level that suggests it is oversold, back up to that level right now. seeher we will continue to a rally, we will have to wait and see. brexit,t the news of the pound was down -- when we got the news of brexit, the pound was down against all other currencies. finally, just to see how the equity markets might open up. 1.1%.utures are up rishaad: thank you very much. the french producer replaces to run the offshore oil field that accounts for more
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than 40% of qatar's daily output. what does that mean for total? >> good morning. expanse itshis production base and expanse its footprint in qatar. it willthe pipeline -- totalent 10% of total's energy output for the year. invest $2 billion over five years starting in 2017 studyntain production and
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how it can expand correction. mersk,s, -- four this is a catastrophe. it was a blockbuster in every way. they will not do anything dramatic in terms of replacing it. it will be a much smaller oil producer. yousef: run us through a few more details on what the plan is for the oilfield. they did a fine job of building up this field into the argest in qatar, but it is difficult and complex geological field. they have horizontal drilling.
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the main focus is to maintain output. you will not hear about qatar and total adding another 100,000 barrels a day. it is really keeping the barrels that exist, but the total ceo says the contract has been designed in a way where they would be rewarded for the extra barrels. any new output from this specific field will be more lucrative for total. yousef: we will see how it all develops. later in the show, spreading its wings. we will look at what singapore airlines india unit is doing to be doubt its competition. -- to beat out its competition.
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the pound rises for the first time since the u.k. voted to opt out of the eu. more analysis of next. ♪
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rishaad: welcome back. we have been focusing on the british vote to get out of the european union. this all continues to weigh on investment -- investor sentiment. markets are oversold and he is betting they will make a comeback seen. but we think the market is trying to -- >> we think the market is trying to digest this. we were expecting by midweek we would see a rally. that thishe fact thing has been oversold and likely much overdone. it does appear the brexit will .e at least relatively orderly
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most of the damage will be done to the u.k. while the eu will fill some affect -- feel some affect. rishaad: dominik schneider says there are some downside risks i had. >> overall, i would not say there is panic in the fx market. we are trading 1.5 versus the u.s. dollar. is there room for more to go? there is still a lot of uncertainty. that brings a lot of downward pressure on the pound. could we drop below 1.3? possible. cameron hasid rejected calls for a second referendum. >> this really is not the
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mandate for a major constitutional change. -- the government has done what the government has done by delaying article 50, it buys time. maybe looking at november before article 50, the .esignation letter, goes in that is a lot of time for things to be discussed. if i was a betting man, i would brexit atld not see all. yousef: the pound rose for the first time since the uk's decision to leave the european union. see what do you make of this rebound? is it here to stay? does it have further to go? >> on friday, at one point we
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132 -- 1.32 to 1 to 1.32.ow we are back given the size of the shock that is hitting the u.k. economy and will continue to hit it, the fact that britain has a current account deficit of 7% of gdp is not something funded without a major collapse of the currency. i still think there is more ahead. i would not rule out the dollar against the sterling going to 1.20 before this is over. is shaking decision things up a little bit when it comes to central-bank policy. how does this play into the euro-dollar?
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>> the euro-dollar has been remarkably resilient. i am surprised it is trading .gain -- trading above 1.10 the impacts have not jumped the channel into the eurozone. the national governments are staring over the cliff and seeing the car crash that is unfolding. they will do all they can to not surrender to those pressures. i think the contagion risks can be contained. at some point, we will have periods of angst. rishaad: we do have a radical change in britain's terms of
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trade. it is not necessarily bad news for some groups, is it? >> absolutely. we have seen the likes of the banks and builders and airlines being the hardest hit. that is completely understandable. you will see the likes of tourism operators and educators potentially seeing the benefits of inbound tourism. cheapercation will look compared to the likes of the united states or canada. as far as the broader economy is concerned, we will have a significant deadweight on the economy for lack of business investment. employents cannot expansionary fiscal policy here. some of the export sectors will do well.
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the overall picture for the u.k. economy is pretty dire. rishaad: when one of those countries which could see tourists coming in vast numbers is japan. particular cross been affected so badly in your view? >> the last six months or so, and the safeyen that is one of the reasons the euro has been resilient. japan is the world's biggest saver in terms of the proportion of the money it has outside of japanese borders. when we enter these periods of
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relative stress, the japanese yen tends to be the main beneficiary. abenomics is not , that is playing into the mix. i am looking forward to the latest inflation numbers. it could be the catalyst for more radical boj action in july. the brexit referendum, and i think the yen will remain very strong. yousef: we will see if that materializes. stimulus speculation. we are live in tokyo. the boj says it's ready to act.
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a controversial casino on the sydney harbour. criticsd sympathy for of the development. approval is subject to an increase in public space and a higher number of affordable apartments. thailand's prime minister says he will not quit even if voters reject his constitution. said -- the former general toppled the government in a 2014 coup. werend's soccer team
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beaten by iceland. win.-1 knockout round iceland is the smallest nation to qualify for an inte
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rishaad: 1:30 in turkey. 90 minutes for the trading day done and a bit of relief for the moment for the topix, up by one quarter of 1%. ♪ rishaad: you are back with bloomberg markets middle east. hope of further stimulus after the brexit vote. tokyo shares reversing a steep
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17 billion dollar physical package. japanese bond yields extending their record lows. ound rising for the first time since the brexit vote as investors look at for higher yield, snapping demand for the dollar and yen. after touching a 31 year low on monday. that is this by david cameron ruling out a second referendum and the agency being cut. rishaad: media reports in iran says it will be issued as soon as next month. the prime minister is quoted as saying the government will observe a new contract that is designed to attract new investors. up to 15 oil and gas deposits will be offered in a first round.
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in hong kong, beijing and singapore. i'm rishaad salamat. yusef: i'm yusef. anna: i'm anna edwards. good morning, everybody. let's talk about what lies in store for david cameron today. he makes his first trip to brussels since the referendum. this was the first time he sat around the table with those eu leaders that have been rejected by the british public. david cameron will sit down to dinner tonight. he is on a different page in terms of the timing of the divorce between the u.k. and the eu. even as some on the eu are stopping in terms of the timing. the eu leaders themselves have been split on our hard to come down on david cameron and his team. the pound touching 1985 levels.
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stocks in the u.k. suffering their worst two days, friday into monday, since 1987. be thereeron will not for the second day of eu meetings because they want sometime to talk about the u.k. yusef: is this for real or is watched bits and pieces of david cameron's appearance at parliament. what was the key take away? anna: he is definitely ruling out a second referendum. that was around the internet, but david cameron ruled it out. he said he is setting up a new unit at treasury and foreign office officials to work on the brexit. there are some people talking about whether there could be further concessions in terms of immigration regulation, freedom of movement from the eu and whether that could lead to another vote.
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the scottish government will be holding an emergency debate today. some people are suggesting the scots could block this. urgeon believes there has to be some consent for this to take place. things could change, but for the moment, this is going ahead. rishaad: thank you. iranian media says developing the country's oil field will be as soon as next month. the government would approve a new contract that is designed to attract investors quickly. let's get to antony. we heard a lot about the opening of the oil market, post sanctions. it has been really slow here, more slowly than the government expected. antony: that is right. what has been happening is iran has been working to increase its production from oilfields that
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they are he had an development. production in rent down during the period of sanctions. it is bringing those fields back online faster than many analysts expected, but the next phase of its development which is starting these contracts and bringing in foreign oil investors is moving slowly than the government said. they had planned several conferences to invite international investors, tell them about the fields, prevent the contract. going back to 2014, they have been planning this and those conferences have not taken place. the first one was in tehran as opposed to london where it was scheduled. they did introduce some of the general framework of the contracts, but we have not yet seen the finalized deal yet. they are still working on that with the government in iran. it still has to be approved. there is a lot of domestic opposition and the framework is the key thing to show the international companies can they be profitable into iran.
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as you said, the prime minister said they could go ahead and try to tender those first fields. that really remains to be seen as they have been going slower than expected. rishaad: there is something. what are the key oilfields iran has to develop and what are they looking for from international companies? anthony: they have put the focus on what they say are shared fields, fields on the border of iran and other countries. they have got a couple major fields in the western part of iran, just at the top of the persian gulf that borders iraq. those fields are interesting because iran wants to get the oil out of those fields before the iraqi side develops it. those shared border fields are priority. there is an area, the west of karoon area and the border with iraq, those fields are
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priorities. what they need is to bring international companies in who have got access to financing. that is one major thing. and access to technology so they can bring in new technologies that will allow them to pump more oil and recover the oil in place in those reserves. that is what they need to get from the international companies. rishaad: it will be fascinating to see whether iran can reach ambitious reduction targets. thank you, anthony, our middle east market reporter. yusef: the pound is rising for the first time since the u.k. voted to leave the european union. sterling was up against all of its counterparts apart from the aussie dollar. a 31 year low on brexit. tracy alloway joins us from abu dhabi. do you think this might lead to another round of valuations? tracy: this is the question everyone is asking themselves
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right now and we saw some hint of it yesterday when china unveiled at the u.n., showing it was down since august of last year. we have had those safe haven inflows into currencies such as the u.s. dollar, the japanese yen and that puts pressure on emerging markets currencies and peggede on the currency to the u.s. dollar. it is really not good for emerging markets. we have seen talks of how the central bank will combat that, including potentially china using the brexit to widen the trading range of the u.n. and prepare for even a bigger devaluation going forward. rishaad: the winds of currency wars comes and go over the years. yusef: how tangible of an impact will this have on the markets? tracy: if you remember, one
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of the things that helped us escape the big selloff earlier this year was the idea of a new shanghai accord or gentleman's agreement between the world's central banks to maintain currency stability, especially the dollar versus the yen and the euro. whether or not you believe that theory, there was a lot of debate about it. the idea that helps markets rise starting in march, april. the idea that that is potentially breaking down. we get the isolated country's move to competitively devalue their currency, or a currency war would be very worrying. however the good news is we have seen a little bit of recovery in the past. we have seen some of the dollar rise and off a little recently. that will be good. rishaad: thank you very much. no prices have been dominating the ecb forum. mario draghi speaking about the
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decision of the european union. liquidity to maintain stability. it is a vote that is front and center, isn't it? >> very much so. this is a monastery at the center and this is a 14th century monastery built as a sanctuary but there is no getting away from the impacts of the financial world. mario draghi, the central bank president, gave opening remarks yesterday. he did not want to dwell on the issue of the vote to leave the union but he did say he was not happy with it. mr. draghi: let's set aside the questions we have for our british friends. for all of us in europe, the european union, and indeed, for the world at large.
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tried to aside -- i find the world that describes our feelings -- word that describes her feelings -- our feelings. i think probably the best word would be sadness. elliott: mario draghi giving the keynote speech later this morning. happyay have felt because italy beat spain in the euro as well. rishaad: a long time since they have done that. what else did he say? elliott: there are plenty of other things on his agenda. that has changed somewhat since the u.k. vote, but everything else comes back to the british vote to leave the european union. as you said, the european
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central bank has said it stands by to provide additional liquidity if needed. the ecb may boost its corporate bond line program -- buying program. 5 billion euros worth since it started. he may be talking to his fellow eurozone bankers about the move towards a closer european economic and monetary union. talking about things like a eurozone protection scheme that has been thought of. even a eurozone-wide treasury, but that is something that will not come in place until structural reforms have been carried out by various members, until the deficit is down and until the germans are happy. yusef: thank you. we will crossover throughout the day to get the latest updates from portugal. korea has announced a new $17 billion stimulus package, including an extra budget to
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calm markets. thees erased and losses of yuan after the announcement. let's get to our bureau chief, peter, who has been following this story closely. how much of a factor is brexit in all of this? peter: it seems to have been a major factor. when brexit was announced last friday, the yuan posted its biggest drop since 2011. as soon as the stimulus package was announced, to jump back. when they were announcing the stimulus package today, the finance ministry warned the increased market volatility. theyffect on the economy, were not sure how to quantify it so they are very worried about it. as a result, the stimulus package. yusef: what other factors prompted the stimulus?
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compoundingrexit is a major issue which is the sluggish economy. exports have fallen for the 17th consecutive month in may. is growth and manufacturing third of last year's pace. corporate restructuring, making companies downsize, cutting jobs. they wereay, as announcing the stimulus package, the growth forecast was for 3.1% to 2.8%. so already conditions are not good. brexit is compounding that. yusef: we have been trying to get our heads around how central bankers will react in the coming weeks to the brexit market impact. projectionsee the for an interest rate cut here? peter: i think it is increasing
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significantly, particularly because of the stimulus package. many analysts believe there will be another cut. there was a cut earlier this month which was a surprise. nobody expected it except for one analyst. this time around, considering brexit, the revised economic forecast, there is a big chance that there will be another rate cut in the second half. yusef: we will see how it plays out. korea's $17 south billion stimulus plan. coming up, as india's air rules are relaxed, singapore is broadening its outlook and expectations. we will hear from the aviation risk and safety advisory firm about what it means for the gulf. that is only here on bloomberg markets: middle east. ♪
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rishaad: you are back with bloomberg. i'm rishaad salamat in hong kong. yousef: a quick round up for you of the main stories from around the world. shell toyal dutch operate qatar's largest oil field. they will take over next year and run the field for the next quarter of a century. vidal plans to invest $2 billion over five years to maintain production levels. it makes up more than 40% of their daily output. rishaad: turkey is entered a six-year rift with israel and draws a line between the diplomatic disputes. says het erdogan regrets the shooting down of a russian were playing in december.
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hope the deal between turkey and israel will continue for the welfare of both countries and the palestinian people. two-way economic ties will develop in a different way. i would like to thank everybody, including president obama, who contributed to this agreement. yousef: turkish airlines has been targeted by short-sellers. almost 14% of sucales available for trading, betting they will fall in value. that is the highest are turkish air making it one of the shortest developed carriers, that was after it surged. rishaad: french authorities a e inquiring to the egyptair crash saying there is no evidence it was related to terrorism. they do not support the fears that the plane was brought down deliberately. investigators are inquiring
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before analyzing the voice recorders. india is in the process of releasing -- relaxing the rules of their aviation sector. is the chiefnce executive of the aviation firm. he joins us on the line. thank you for joining us. let's start up with the rules changing india when it comes to aviation. how so and when did they become fully implemented? me.: thank you for having i think what they are trying to do is progressive. interestingot of policies made. trying to make it more easier.
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t does not mean they will work around the red tape. problem, but some hoping in the right direction. the opportunities are endless. rishaad: mark, the thing is you have a lot of bilaterals in place. that is how the aviation industry really works. a lot has to be done. will they be able to sort this out? what is going to happen is they will get it up and running and there will be this bilateral access. the only solution india has is we need to go to open sky policy. the government needs to figure that is a priority because what we have now is trimming around the edge.
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a lot more needs to be done and bilaterals need to be on an open sky basis. we have heard from leading industry experts and officials before the brexit vote that they would prefer the u.k. to remain in the eu for the sake of the industry itself. how much of an impact is brexit going to have on aviation? mark: well, it is interesting. everyone is coming up with a doomsday prediction on brexit. we have to understand aviation and manufacturing, especially a lothe facilities at ge, of the large manufacturers -- the exit from the european union, we may see an impact.
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exit does take place, we know what the impact is. for the moment, it is a wait and watch. i think everybody coming to loading analysts -- everybody, including analysts, need to be cautious. we hope it does not affected too hard. yousef: thank you very much, mark martin, ceo of martin consulting. coming up, record lows across the board for japan's bond yields. we will show you what is providing the downward pressure, next. ♪
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rishaad: welcome back. let's take you to the market
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action as far as the asia-pacific goes. we areas equities go, feeling some of the losses. david: down as much as 1.2% on the benchmark. just about technically flat at the moment. the market getting some losses. five minutes, it reopens in hong kong and china. equity prices have uncertainty remaining. before i show you what is happening, have a look at some of the yields in japan. we begin with seeing yields all the way down and then we have the results about one hour back showing fairly healthy, robust demand at a low yield in the two-year at -.3. what we have seen in the past 30 minutes is everything continuing to fall. you can look at the two all the way to the 10 year, -22. if you look at the longer
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yields, that is your market story. at some point and at this rate, do not be surprised if it is sold below zero because everything is below .1% with at .08, one of the analysts in japan telling bloomberg that demand is still robust. it will attract more people back into the market. equity markets looking like this as we enter the last half of our tuesday. it is looking much better than what we started the day out. down as much as 1% at one point. evenjapan quickly reversed those losses and up now. very heavy volume. rish. yousef: let's see how or whether they can hold on to those gains. thank you, david. rishaad: that is it for this
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edition of bloomberg markets: middle east. we still have these markets being affected by those on friday. e
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bestthink probably the word would be sadness. anna: the ecb president makes his feelings on the u.k. brexit decision clear. difficult. the outgoing u.k. prime minister prepares to go to brussels for what could be an awkward summit. as george osborne rules himself out to become the next primate corbyner prime minister, jeremy has a no faith vote. ♪ anna: a very warm


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