tv Bloomberg Markets Middle East Bloomberg September 26, 2016 12:00am-1:01am EDT
incredulity over whether central banks can continue. >> the live debates start and it is the first day meeting of the unofficial get-together in algeria and they will start to buy corporate bonds here this week. let's talk about the oil flip and some of the markets changed. this has been trading and this is dipping. this is as saudi arabia opens the door to a future deal to limit this. leading declines and we're waiting to hear from mr.
quarters of cs say that they would have operations in the wake of brexit. more than half the respondents think their ability will be saudi arabia is ofecting funds in the form deposits and they will have a purchase of agreement. donald trump and hillary clinton debate and the first some of it is too close to call. real clear politics says that 198 votes.nton has
trump andads bloomberg is broadcasting the debate on twitter. this is bloomberg. claims that with there could be action. the oil minister says that saudi .rabia is prepared to cut what are they proposing to cut here? >> there are things they are looking for is tempering expectations and the likelihood going to be heard
and they are prepared to cut with a bit of a caveat there. showing a change in a softening in the policy. >> you look at the market market is aand the little skeptical going into this meeting. >> it was not really surprising, given the history of the talks. we had the initial talks this year and they were talking about the potential phrasing and they
did not go to the table. going to happen and saudi arabia has tempered expectation. there's a lot more chatter going into this meeting and you can expect a lot more talks. is the unofficial meeting and unofficial responses. marketou for putting the in context for reporters. let's talk about the financing and we kick off with goldman investment with the global financial firms. this this week. stephen engle has more on this.
this is the next piece of the jigsaw. we are learning from people familiar with the situation that they would close their singapore training -- trading unit. there are about 10 people. they're keeping some in quantitative research. is greaterredemption than $2 billion this year. and they are going back.
>> according to people familiar with the deal, the jobs will be cut from the investment banking here and you put the crosshairs on hong kong. of the about a quarter dealmaking in this part of the world and the equity marketing's. -- and the equity marketing. had some bad connections with the bond sales and a company under investigation.
>> absolutely. a lot of financials here. thank you for that. let's get the latest from the markets and there is a selloff. >> we have seen better starts to india joins on hong it is not a lot. you look at the volume and it does not exactly inspire panic. that being said, it's those you a lot. and you down clearly have some of the prices moving out. you have yields coming down. and wes data coming out have exports coming better than expected and this is something
to watch. that being said, there is nothing to indicate that this will do enough to lift the sentiment. the action is in the currency markets. i bring up this interesting note here and they are saying to expect the downward pressure and marketsintensify with and rate hikes. they are offering up the and if i bring chart, you understand the the streak will clock in today.
you can get more on this news and you will see this in the region and you can watch all of our reports online. >> later in the show, a chinese yuanrty boom threatens the . soaring property prices present another challenge for the currency. opec is not dead yet. you -- we will bring you this interview next.
it is as high as everybody will be here. thinking,ng to the this is not a confrontation. do you agree? decide to transform the meeting and it could result in a decision. >> is that correct? >> the hope of our jury a is to reduce the production and stabilize the market quicker to give the ability to investors who make the decision and we need to be clear and cover the market. >> you think they will lose their credibility? >> every time we say opec is losing credibility, it is like a
>> welcome back. you are watching bloomberg. >> i am manus cranny. borrowing costs and keeping it drive for what some are calling a rate increase. are out of eight economists and laying these ground for a widely anticipated devaluation. will reopen the office that has been shut since 2010. water, agribusiness, and
-- >> reopening an online brand this week. was in diningd and clothing. decline withto a credit rating. chiefbring in our bureau for you right now. benjamin, you spoke about the rating before the decision. what did he say? president ono the thursday and he told us that he would not care and that the rating was downgraded. i think he does care and they do
care. that is a view in turkey ratings are based on intangibles with political stretches, rather than fundamentals. >> talk about the market reaction. the lira is weakening. how much is already priced in on this downgrade, versus what we saw in the summertime? >> it is a big question and .nvestors did have time moody's announced this and it was three days after the attempted coup. so, they had time to get up. flows were $100
moreon and you may see adjusted. they were not getting out. this did come as a bit of a surprise. >> everybody questions the validity of this. what did he have to say with regards to policy? pressure hascal been a big issue in the last couple of years. he has strong views on the economy and one of them is that the interest rates should be lower. has atblic pressure least dissipated. so, i think this will be a big story in the for seeable future. pressure on the
that is a beautiful live look at the imperial palace. after the biggest weekly gain in japan we've seen in three weeks, today we see a different story. you can see the broader topix index, falling for a second day. the top stories on "bloomberg markets: middle east." oil is fairing its biggest drop in two months after claim saudi
arabia has offered to cut production. the energy minister said they will reduce output to january levels, 10.2 million barrels a day, 500,000 barrels fewer than in august. opec members will gather on wednesday calling for a collective cut of one million barrels a day. manus: goldman sachs could cut about 1/4 of its investment baking jobs in asia outside of japan. the bank will hack 75 jobs across the region later this year because of the slump in fuel. and investment is said to have closed its trading desk. 15% of the workforce was dismissed last month. funds.as tudor >> reports that 40 of the
shipments have been unloaded. them to looking at purchase hanjin. hanjin declined to comment while hyundai merchants are supposedly considering all measures to bolster the business. it is 12:30 in hong kong. guy: it is 8:30 in to buy and 5:30 in london. china, sky high prices. they could present the latest challenge to the yuan. how does that story tied together? let's talk about this. bubbles, now we are going to talk about a housing bubble and the spillover effect, not to the banks, but to the currency. talk me through it. >> good morning, manus. chineseseen a gain in
housing prices. u.s. housebout prices, they represent 5%. have started to push into the u.s. housing market and other markets around the world. in that scenario, where investors are chasing the differential, it would put downward pressure on the currency. the thinking is, policymakers would probably let the currency be sacrificed. property market is much more important to the economy. they think they can get better bargains elsewhere and put downward pressure on the yuan. manus: the irony is not lost on anybody. forgive me, i have had seven days away. here we are on the way in. we had a lot of encouragement
from the banks. here we are. are we going to see curbs are policy haltingway, or the sale of assets? >> it is a tricky one because this is a bit like the stock market last year and there has been a lot of policy action behind the house price gains. as we know, real estate structure is a huge modifier. it is important in every economy, not just china. they wanted to see prices going up, but they might have gone tii faroo far. we want to see more curbs. we do not want to see any panic buying. curbs that don't choke off the wider economy. that will be the difficult part for them. there will be more rules, but not enough to kill the entire market. manus: well, let's see how this one plays out. always gereat to get your
take on the matters in china, enda curran. yet another reason why 2016 is not the year for saudi stocks. the pipeline is drying up. our emerging markets editor for the middle east joins us now. why is saudi's ipo picture so striking? stark,, the numbers are to be honest with you. we have had two ipo's announced in 2016 so far, putting us on course for the worst initial sales since 2004. now, of course, we are seeing ipo's sales slowdown across the emerging markets, as ago from onk on to riksk off to risk again. this is striking because saudi arabia historically, has been
isolated from slowdowns because of the limited nature of forieg foreign investor participation. the ipo pipeline tends to be very robust. this is the worst year since 2004, making it worse than the post-financial crisis period. angie: but what is behind all of this? >> well, we have talked about it many times. the impact of lower oil prices in saudi arabia has been quite significant. , the worstitself performing market in the gulf performing counsel this year, down 13%. saudi arabia has tried to encourage foreign investors into the market. we have seen the rules loosened, but it does not appear to have had a big impact. low oil is having an impact across the economy. so, government has less money to
spend. we hear from people familiar with the matter that some $20 billion of the project will be scaled back. after all, why would you want to associate with the company if your benchmark index is down 14% this year? angie: a kind of explains what we're hearing about a possible deal with saudi arabia coming to the tail anble and saying, "maybe we should cap here," especially when it impacts domestic market so much. could we see any rebound here? >> any prospect of an improvement in oil prices will always help saudi arabia. another factor we should mention ipo,e impending ramco potentially the largest ipo in history.
with that in the pipeline, i think they are aiming for early 2018. it is entirely possible that other companies just want to wait in the wings and see what kind of impact that has on the market. being same time, saudi is proactive. they are trying to develop a market where smaller companies disclosureand the requirements will be somewhat lower. at least they are taking positive steps to draw more people into the market. angie: sam, we appreciate it. our emerging markets editor for the middle east. in dubai.tter ub manus: let's bring in our chief economist. you are down there in dubai for us. let's talk about this oil market, paul. the price of bread this morning,
what a $6.25. -- the rice of brent this $26.25. >> in the near-term, clearly saudi is resuming its swing production role. but at this stage, i think we would be cautious about expecting substantial shifts in the oil price. i think there could be a little bit of upside over the next six months or so. but really, it is more as global demand picks up that we will see the oil price moving, rather than necessarily getting the supply constraints coming through. manus: what is your view, in terms of global demand? everything the saudi's hoped would happen two years ago has not. we have got thae frackers back in the u.s.
what is the best case scenario at ubs? >> it is sort of mediocre. it is not collapsing. but, if we look at global demand, china is growing all right for the time being. it is not sustainable growth, it is growing. u.s. demand is a little bit more solid. european demand is starting to improve after a few weak years. so, we are seeing growth in the global economy come up. it is not run away success, though. what we are really looking for, in the nearer term, as we get price hoveringil near $50 a barrel. if we look very long-term, because there has been less investment into the energy sector as a result of the very low oil prices, longer-term, you $e probably looking at $75 to barrel, but that is
years down the line. see whatul, let's happens at the unofficial meeting. paul, stay with us. that is paul donovan, ubs global chief economist. angie? angie: checking in on first word headlines from around the world. thanks, manus. reporter: israel has been assured by both the u.s. presidential candidates that two way ties are unbreakable. benjamin netanyahu met separately with both candidates. his administration would recognize jerusalem as the capital of israel. iran is reported to have begun mass production of ballistic missiles.
the newest rocket is powered by a solid fuel engine with a range of 750 kilometers. thethe missile will come into service at the end of the current iranian year, march of 2017. this coincides with the start of the iran-iraq war. mitsubishi says its delayed passenger plane could finally go to the states later today. this comes after that mrj made a nearly three-hour test flight on sunday. the plane has been dogged by problems. customers are hopeful to receive the plane before 2018, which is two years late. workers face their first full scale strike in years. last month, the unions rejected a tentative wage deal, which
could have reversed 10 consecutive quarters of falling profit. that was the first time that unionize workers had voted down a pay deal. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. manus? manus: thank you very much. the fed is not ready to hike rates just yet. the bank of japan has ended its policy, easing for longer. what next for global central banks? what does it mean for the global economy? this is bloomberg. ♪
shift to the yield curve is appropriate. >> since he took over in 2013, his easing of monetary policy has worked. to a appreciation of the currency and a further .ncrease in the equity prices of course, the positive impact of easing is now coming to the final stage. the performance has been quite good. angie: central bankers will remain in the spotlight this week with governor kuroda speaking this afternoon and the fed officials commenting this week. we asked j.p. morgan asset management what to expect. >> there has been such confusion over central-bank policy over the last nine months. anything that pointed to the fed lining up the market for a rate hike would be very much welcome. we have seen september pass
without too much market action. janet yellen is indicating they are on pace for a rate hike in december. in our view, that would be very much welcomed in adding to that stability. manus: standard chartered says growth in asia is outperforming the rest of the world, but there are still threats out there, including central banks. >> you do still have risks to be watching out for. most of which could be surrounding whether the fed will be delivering another hike in december, whether not the u.s. presidential election opinion polls will be smiling even more in favor of being -- will be ofnging even more in favor being uncertain. we will get confirmation later.
in the meantime, i think the markets will be able to climb the wall of worry, in being able to deal with a lot of those challenges. angie: that is the word from some of our guests today on central banks. we are still joined by paul donovan. the other thing we are watching closely is this upcoming presidential election. most notably, the first presidential debate that will be happening tomorrow night, asia time tonight, monday night in the u.s. what do you think that the ris k exposure is for geopolitics in that region? think one of the issues we obviously have got from the financial market perspective, financial markets are really bad at pricing political risk. they don't have much experience at having to price political risk over the last 20 years. now that we are seeing a return of political economics to the
global and financial stage, we are getting a lot of uncertainty in the markets. i think the important thing to remember about the election in the states is we don't have one election in november. we have over 30,000 elections in the states in november. because there is the senate, the house of representatives, the local government. the senate in particular could be important as part of the checks and balances of the u.s. constitution acting to moderate whoever is going to be president. so, i think markets are struggling somewhat to try to get a handle, not just on the presidential race, but also on what might happen with congress, with the senate, implications around the supreme court and policy there. that is one of the really big issues we are trying to deal with. angie: circling back to what we have been talking about, the impetus for all the market action. people are waiting whatever
result will happen in november. is this just the fed, or as everybody else as well? paul: i think politics will have to play some kind of reaction. issues around expectations of future growth, issues around the direction of the dollar, caught up in this, must have some kind of bearing on what the fed is thinking. but if think the federal reserve is gearing up for a rate hike. inflation in the united states is running at or above its 20 year average. it is only by hiding behind a barrel of oil that you can create a low-inflation image. i think the fed is a little late in moving. but once the political uncertainty is clarified post-november, the
fed is free to act. manus: let's talk about the policy then. if the fed is behind the cur ve, as you suggest. we will hear from kuroda shortly. from what you saw with the think, doesn't really give them more control? the yield targets, i mean. been manus, you and i have looking at the markets for quite a few years now. since 1999, we have had about 26 to 27 different big policy initiatives from the bank of japan. they last on average, about a year and a half. i am sure this one will be like the others and in 18 months time, we will be sitting around, talking about the latest initiative. i think this one will be as effective as all the anothe othr initiatives have been.
when we look at the japanese economy, the issue is not inflation at citation anymore. japanese consumers have the highest inflation excavations in the developed -- inflation expectations in the developed world. in that they are wrong, but that is what they are expecting. the bank of japan does not need to raise inflation expectations. it actually needs to lower them. what it needs to do is to get the wages up, and that is not a job the bank of japan can do easily, and certainly not by using the 10 year yield. manus: everything that japan does, the rest just hate. that worries me even more. >> there has been something of a shift here. forgive me for having a home country bias working for ubs, but i think many central banks have been following this with central-bank, who were the first to introduce negative rates, who have a balance sheet relative to
gdp which is far larger than that of the bank of japan of the moment. but i think actually now, as the swiss national bank is suggesting, "negative rates are not always positive." the negative rate environment we sabri much in favor six to 12 months ago is starting to fall out of favor now. they are not universal positive. manus: paul, have a great time in dubai. thank you for joining angie and myself. that is paul donovan, the ubs global chief economist. angie: coming up, no smoke without fire, right? can trust be won back after the recall? this is bloomberg. ♪
te-7 battery fallout disaster. what can they do here? >> basically, they are doing what they can already. the are doing a recall. they are trying to let people know in the future that it will be safe. they will have to spend a lot of money on quality control and of course, marketing, right? we don't really know why it went wrong or what went wrong, but they will have to spend a lot money to make sure nothing like this happens again. because a one off, people are willing to forgive, but if it happens again, it will be difficult to forgive. the key thing they have to do is to make sure it never happens again. manus: let's hope for their sake, the that publicity drifts away. in terms of the investment community, how are they viewing this problem? eededre more deep-seated worry? >> this could cost them as much
as 20% of their operating income. is ite real thing, manus, looks like investors are forgiving them. they took a bit of a hit a few weeks ago as it came to a head, a samsung shares have bounced back a bit. certainly, it could be better. but given the scale of the problem, the global nature of the problem, it was a very famous problem. he even had the faa talking about the risk of the note-7 on an aircraft. amazingly enough, investors seem to believe that consumers will forgive samsung and so, investors are forgiving samsung as well. angie: tim culpan, thanks for that. well, that just about does it for us on this edition of "bloomberg markets: middle east ." manus: well, angie, i am going to step away from here and step across the room.
manus: oil investors increase their short position at the fastest pace in about a year as they lose confidence that opec will reach a deal. at the algerian energy minister tells bloomberg that this time around, the meeting will be different. doha, iran was not present. they will be present in algeria. manus: labor pains. jeremy corbyn wins the leadership contest. division however, remains. we are live