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tv   Bloomberg Markets Middle East  Bloomberg  October 25, 2016 12:00am-1:01am EDT

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>> oil falls from a 15 month high. >> a boardroom coup. the boardroom is toppled by ing.a's $100 billion join >> more guidance and we could possibly see three hikes next year. >> saudi arabia's record bond sales are being felt across the world. a.m. across0
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the emirates. angie: and i'm angie lau. we are watching asian stocks rise, along with industrial metals as we see the play across the markets here. when it comes to the u.s. treasury space, some interesting things are happening from saudi arabia. yousef: i would elevate that, promote it from interesting to very interesting. most countries in the emerging markets have curtailed back the scale of the selling and liquidating of the u.s. treasury, with the exception of saudi arabia and china. the fire sale is still happening. this chart shows you the extent of what has been happening here, on the chinese side and the saudi arabia side.
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both of those countries are trying to use some of those proceeds. saudi arabia, a decline for the seventh straight month. $123.7 billion at the end of january. since then, a 25% decline as it tries to address the 11.4% budget deficit projected by bloomberg. what is going to happen though, after this bond issue? it is going to change how they lock in those gains from the u.s. treasury. china has the biggest decline in 23 years as it tries to prop up the yuan. what are you looking at, angie? angie: we are doing a quick check of the state of play in the markets. mumbai has been trading for 20 minutes now and it is fractionally lower, but we are watching tata group shares dropping in this drama of its
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chairman abruptly ousting the chairman of almost four years. this is a very rare display of discord. the hang seng is down fractionally, but the weaker yen is boosting the japanese shares there. how about you? yousef: in the middle east, we are just two hours away from the opening of the emirates markets. that kicks off at 10:00 a.m. local time. this is how the index closed. let's break this down a little bit further. we have a mixed picture for dubai, abu dhabi, and qatar. we will take you to saudi arabia and games for the fourth straight session telco is driving those gains. 139 out of 143 companies have so far reported games of 1.3%.
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also, egyptian stocks are under pressure. of course, that story coming out in terms of stockpiles decreasing to the point where people cannot buy sugar anymore. also, weak volumes there, just half of the three-month moving average. now, a fall at the open in mumbai after the unexpected toppling of the group chairman. rareoardman coup is arare sign of discord. what is going on here at tata? as you mentioned, the biggest conglomerate has just sacked its chairman and they will does not know why. there has been no official reason given so far. we know a few conjectures. the chairman of the trust has said he was behind the ouster.
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we know that six out of the nine board members voted against him, meaning he lost the confidence of the board. by, as is anything to go bunch of stocks have reacted negatively, which means the market does not like what it is seeing. this is a period of uncertainty and unexpected from a market standpoint. there is a search committee now, that has been given four months to find a successor. we know this group has been taken in a direction of looking at costs, all the things the stock market pretty much likes. this is now a period of uncertainty. angie: what happens next event, and who is likely to replace him? >> that is a difficult question
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to answer. the process has been put into place to find a successor. tata has taken over as the interim chairman. this is not clear if the board is unhappy with the performance of the mystery, or if it was a clash of cultures. we do not have any clarity on this. there have been some names thrown around in the local media, that we will have to wait and watch and see how this unfolds. mumbai, key meetings are taking place today and tomorrow and we are keeping a close watch on that as well. angie: how would you compare the difference then, in the leadership styles? ta led anow, ratan ta very different tata group. he was the chairman for nearly 20 years. he was heading an expansionary
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group. now, all of this was at a time when this was a different world. this was post 2008. the words that were used under his leadership were consolidation, returns on capital. other entities were not particularly doing well. he was looking into a return on capital and profitability for the group. as i said, stuff the market really liked. what were the reasons behind this ousting? what did mistry do that did not fulfill, that led the board to making this decision? right now, the market reaction is what one has to be keenly watching out for.
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we will have to wait and watch. you, joining us live from by. let's get you some live crossing the bloomberg, breaking news from schindler holding. the company manufactures elevators, if you recall, including escalators and moving walkways. swissler, now 81 million francs, and revenue 75.5 billion swiss francs. the nine month net coming in at 586 million swiss francs. let's check in on the headlines around the world now. reporter: > the chicago fed president is pushing the federal bank to explain how data will guide the pace of rate hikes. during eighta speech in chicago, evans said policymakers should
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respond to new information about the economy using data. there are three rate hikes expected by the end of 2017. >> i think the most important part of our communication is thely around not, "when's next increase," but "what are the terms of the subsequent increases going to be." reporter: wells fargo is trying to move on from its fake account scandal. it escalates a campaign featuring online and newspaper ads, as the bank tries to convince customers that is putting them first. wells fargo was fined $185 million last month for opening millions of unauthorized credit card accounts. sources say twitter is planning hundreds more job cuts, to be announced as soon as this week. of the8%
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workforce might be let's go. this comes after disney backed out a potential bids. an announcement could come before third-quarter earnings are released on thursday. twitter is trying to control spending as sales growth has slipped. early voting has begun in florida, two weeks ahead of the presidential election. underway.voting is early voting by mail has been going for weeks and nearly 1.2 million registered voters have sent in their ballots. voting is also underway in texas through november 4. the election is november 8. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. is bloomberg. rail: shares of japanese in tokyo have surged
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after the third-biggest ipo in the world raised $4 billion. chris cooper is life for us at the tokyo stock exchange. a pretty positive reception, chris. yes, it has done very well. what they have a on is the growth strategy and the dividend. the dividend is proving very attractive for the individual investors in kyushu. it is almost 3%. they also have discounts on train fares. they did a lot on the island of kyushu, but they also sold one quarter of the shares overseas. the investors overseas were impressed with how they were expanding away from the railway business. the railway business has not been profitable area for them. instead, they have gone into real estate. they have hotels, restaurants,
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they have residential buildings, and lots of shops at their train station areas. that is the profitable area of the business. yousef: what have investors been saying about the future prospect here? well, they are mixed. one of the problems facing jr kyushu is it is based on an island. it is got 13 million people, but the population is shrinking. they have to support their train lines to remain profitable. it has a couple of advantages of the moment. torres him is booming in japan. -- tourism is booming in japan. passenger figures are up again this year. kyushu itself has had millions of visitors and this is set to expand. they have taken advantage of that through their hotels. they are offering jr kyushu
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passes for the area. they are also looking at southeast asia for expansion. we interviewed the chairman recently and he said he is looking to southeast asia for possible hotels, residential buildings, and offices. that is what investors are keen to see. yousef: chris, good to see you. let's get the latest now from the markets, see where the action is at. here is david. david: in equity markets in asia, it is obviously mixed. many earnings are coming through, just to give you an update on the latest from the markets, looking at the outside moves. when you look at the markets in south korea, down 0.5%. there is some concern that china wants to reduce the number of tourists going into south korea. that is a local report. that is weighing on that area of the market.
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a lot of china dependent stocks. over in singapore, we just heard from the monetary authority of singapore, the mes here. they said we could actually see a recovery in the economy, given the fact that perhaps, we will see global growth. the worst might be behind us. we are looking at session lows on the moment. in india, we have mentioned declines there, down about 2%. away from the equity markets, a lot of the focus has been on the currency market because of the dollar strength. that is playing into the dollar-yen, the highest level since july. that is helping things along when it comes to tokyo. have a look at where we are with the offshore renminbi. one other thing about china i
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want to mention, have a look at how some of these contracts are trading on the mainland exchange. 6%, the, look at that, highest level this year on the back of more steel output. that is a space he will want to watch very closely. theef: still to come on program, we will hear from one of the biggest investment banks in the middle east about its u.s. expansion plan. angie: the opec secretary-general is visiting baghdad later trying to resolve an oil output deal with iraq. we will have that story for you, next. this is bloomberg. ♪this is bloomberg. ♪
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yousef: welcome back.
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you are watching bloomberg. angie: i'm angie lau in hong kong. let's check on the latest headlines. the 28% jump in the fiscal fourth quarter profit. to $1.93 rise billion with visa. visa expects net sales to increase up to 18% in the upcoming year. shares have gained 7% this year. yousef: apple's supplier is gaining after the company's profits beat forecasts in the third quarter. shares are up 2.6% there. there has been a rally in chip prices. this came in at $642 million in september. this beat the average estimate of $580 million compiled by bloomberg. angie: revived plans for the ipo hotel unit.
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this comes after the chairman apologized for the corruption that paralyzed the group. a potential $4.5 billion and weg appeared in june do not have a time frame for any listing. yousef: oil is stabilizing with about $50 per bale with the opec secretary-general on his way to baghdad. mohammed barkindo is looking to resolve the deal in output after be sayiraq says it should exempt from planned cuts. how do these issues make it more difficult to agree on planned cuts? >> there have been many issues that have been put up. there is basically the dilemma that everybody is in favor of the cut, as long as the other one is cutting. people like iraq are saying, we should not have to cut. they say they need that income to fund the war.
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they say, not only should we not cut, but we don't believe the numbers that opec have are w rong, it is much higher around 4.7 billion barrels a day. they have these two issues to comb over. mohammed barkindo will be hoping to make some progress on that in his latest show diplomacy in baghdad. yousef: iraq is not happy about how their barrels are being counted. how do you determine individual production levels? that formula is what is being discussed at these meetings. do we have any insight as to what that formula could look like? >> we hope to get insight this week. iraq has invited journalists to baghdad, so they could explain the methodology. we did not get that much new detail on that. they have said, this is what we are using domestically and this is what we are exporting, so
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this is how we got to the number. that does not take us all the way to understanding the discrepancies. these are called the secondary source numbers that opec uses. we spoke to the uae secretary yesterday. they will come with their numbers and present the numbers and the methodology and as the uae minister said, he hope that will provide some clarity. they can then use that to talk in vienna next month. angie: will we see a decision in vienna, then? >> now that there is an agreement to make this cut, there should be something. it just depends on how durable that agreement would be, and how long it would last. somebody else we have spoken to says the gulf three, the saudi arabia, uae, and kuwait, could
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handle most of the cuts themselves by taking the production off the market. those three, along with qatar, they met with the russian energy minister in riyadh. they are trying to get russia onboard to make some cuts themselves. these talks are going on in course. again, perhaps those big three could take a big brought of the cuts. but of course, they will want to bring other members in. it remains to be seen who gets an exemption, who cuts what, and what level they decide. opec has a lot of work to do in the intervening month before that meeting in vienna on november 30. ola, thankhony dipa you. opec righting about now and a possibility of a deal. how much is that going to change the fortunes of the region?
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>> how much is that going to change what? yousef: how would be potential deal affect the fortunes of the region? >> i think that right now with the dollar being more stable, we have seen some strengthening of the dollar, but going forward, we expect the dollar against the euro to remain in this range. they should keep the oil price at a reasonable level. i do not think that the interest rates in the u.s. are going to go up that much. we think that if the dollar strengthens too much against the euro, we would see a backlash. ween are developing -- we are now looking at this banking system in saudi arabia, and stability of the u.s. dollar against the euro, and whether more stable interest rates are good for uae banks. the earnings were not good, but
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excitations were low also. for the moment, in this context, a stable old price and a relatively stable dollar against the euro, i think the appreciation we have seen of the petering out. tourin i think that will be a good thing for the region. angie: stay with us. we will talk about the implications of a potential rate hike within the region as well. this is bloomberg. ♪
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yousef: still with us is luciano jannelli, the head of investment strategy for abu dhabi commercial bank. you are concerned about where the fed is at and where it is going to do. we heard the recent comments from charles evans, possibly three rate hikes in 2017. we are currently at 70.9% in
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terms of the probability of a rate hike at the december meeting. where is your mind at, in terms of where the fed will move? >> i think they can pull off a rate hike in december, but i am not sure they can persist with that through 2017. we had an announcement for four hikes in 2015 and it was one. fordot plot said four 2016, and we have not seen that. 2017,it is saying two for but i am not sure we will see that. the dollar has not strengthened that much and we have problems, particularly in china. of course, inflation is picking up int h the u.s., and we are having a bounce in economic growth, but we had four very weak quarters and a strong
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dollar would be enough to have a disinflationary impact. yousef: much more is coming up on "bloomberg markets: middle east haslinda: these are the first
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word headlines from around the world. the removed and of chairman much mistry has caused falling otu. -- falling out. soared.u the government sold 150 million shares, the equivalent of $25 per piece.
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this is the largest railway sh are in more than a decade. jr kyushu makes most of its money from real estate. the ongoing search for yield helped propel the emerging market borrowing in u.s. dollars to a record last week. hit $25r bond issuance billion. hit $7.5d-setting sale billion. pakistan says at least 48, and possibly 50, police recruits have been killed after gunmen stormed a training center.. -- a training center. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world.
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this is bloomberg. it is 12:30 in hong kong. yousef: it is 8:30 in dubai. anna: and it is 5:30 in london. let's talk about what is coming up during european programming. we will focus on the globalization story, the rise of protectionism, and what this is comprehensive the economic trade agreement that is supposed to be signed on thursday between the eu and canada. but the ability of the eu to do big trade is in the spotlight agreementss the ceta continue to flounder, being blocked by one region of belgium, stopping the belgium government from approving their deal. the belgian prime ministers said they had not been able to get the approval. justin trudeau, the prime
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minister of canada, said they are still working towards the thursday deadline. both are pledging to continue to work, but at this time, both still say the other side has worked to do to make the agreement come through. the french speaking region, then to last half o thf the eu withhold it support is less than population, but they argue they need more time to negotiate what these deals will do to employment. this is tying the hands of the belgium federal government. they are, in theory, in favor of this deal, but are not able to approve it. we are continuing to watch this story between now and thursday. a lot more talk within the globalization front. yousef: nothing short of dramatic.
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we have also got the big juicy chunk of earnings to get through. anna: we have got a few corporate's reporting. we got some numbers from syngenta this morning. we are continuing to monitor these big chinese businesses, very much in the spotlight. syngenta is the subject of a $43 billion takeover by chem china. the eu has until friday to decide whether to approve the deal without any antitrust strings attached, or whether to extend the probe into this business. we look at numbers from sin reportsa, and get business.software we will speak with the ceo, coming up in "daybreak: europe."
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yousef: plenty to look forward to, as always. let's cross over to saudi arabia, where the bond sale last week was not just ever the biggest in the middle east. it was a record in emerging markets. ramifications are being felt across the emerging market. live to abu dhabi and tracy alloway. tracy, obviously a huge chunk of last week's bond sales. give us some context on these numbers. tracy: if you look at dollar-denominated issuance from emerging market countries last week, it hit $25 billion worth, the largest amount on record. obviously, a big chunk of that was the $17.5 billion sovereign arabia, butom saudi
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that does not tell the entire story. we had $7.5 billion coming from the corporate side, from debt issued by companies. specifically, we had $3 billion coming from high yields, junk rated, indebted countries alone. four of the highest weeks on record, in terms of em bond sales, have all happened this year. really, a huge appetite for emerging market debt at the moment. angie: how long can the intense appetite we have seen for em debt continue, tracy? tracy: right, so it has been continuing pretty strongly recently. in fact, if you look at em spreads last week, despite the huge amount of new supply, those spreads data pretty similar levels. we did not see investors asking for additional risk premiums.
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there are some things that could knock that appetite coming up. we have china's offshore yuan rate. meanwhile, we also have higher interest rates in developed markets. that could end up impacting demand for emerging markets. angie: thank you for that, live out of abu dhabi. lucianot back to jannelli. picking up on- about, we was talking .6% up on a one-day basis. what do you think the implications are? sorry, a did not get your question. -- sorry, i did not get your
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question. angie: sorry, we are having technical difficulties with you. let me repeat the question. the saudi bond sale is driving up the equity excitement in the twtadawa index. what are the implications of this? do you think this trend will continue? >> the dollar index, you are referring to. yousef: she was referring to the tadawla index. >> i think that has bounced back. you should put this in perspective because it has corrected massively this year. it is one of the biggest underperformers this year. but i think the keyword for the region is really short-term stability. i think in a situation where we
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now see some saudi government able to put again, some -- to beef up deposit in the banks and with, you know, the oil price remaining stable, i do think there is a good chance that we could see some pickup in the tadawul, as long as the dollar does not strengthen too much, and as long as we do not have too many repercussions, in terms of too strong dollar triggering again concerns about china and commodity prices. we have seen a decent bounce back and this bounceback in commodity prices was in the cards. there is a bounceback of growth in the u.s., and in advanced economies right now, which does not change our medium of the long-term outlook. but right now, i would say the tadawul could pick up a little bit. yousef: outside of saudi arabia
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and the region, perhaps some of your interesting calls have been related to markets like mexico. we are showing you the strength and gains of the peso. you are also bullish on mexican equities, right? >> yes. we are overweight with the global equity club. forre of course, scrambling you know, technical opportunities because as long as the dollar does not depreciate too strongly, we cd see destabilization. the underperforming part of that has to do with the presidency. therefore, we took this call on mexican equities. this is the same thing we have done with u.k. equities.
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even if you have a global markets correction, the pound could go that much lower. you could have locally positive returns. we are looking for a defensive plays within a bearish stance, and neck the gulf it's that perfectly. luciano jannelli, it is always a pleasure. new york bound, next. we speak to the chief investment officer of an ejection and then egyptianopposite of an -- officer of an egyptian investment bank. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. angie: i'm angie lau in hong kong. let's check the latest bloomberg headlines. the knotted emirates biggest lender -- the united emirates
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biggest lender posted a loss that missed estimates. the industry has been struggling with slowing loan growth, but the dubai bank says it has enough capital to meet responsibilities until next year. yousef: the supreme leader of iran has accused opec of using cheap energy within the united states. noted western accusations in the 1973 oil crisis. he said the same countries, and opec, are again using oil as a weapon. angie: egypt's financial woes deepen further. pound and a the spiraling inflation has made basic foodstuff unaffordable.
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cost saving measures before the $12 billion imf loan. yousef: one of the region's biggest investment banks is expanding into the united states. the office will be opening in new york. joining us live on the line is the bank's newest ceo. let's kick off then, with the demand you are seeing from u.s. institutional clients for brokerage services. what is that looking like? >> good morning. as a recent example, as you know, saudi arabia recently offering,heir bond which was $17.5 billion. $70aw a demand of almost billion for that paper. in addition, we also hosted our
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conference, which had our highest turnout ever within institutional investors. karim, we have seen the saudi bond sale, and the relaxation of stric restrictions for foreign investments. >> this gives credibility. berating ofen the re- the -- seen the re-rating of the saudi banks. the interest in the region has definitely increased. rngie: what are you clients in the u.s. looking for, specifically? looking fory are visibility, obviously, value,
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growth potential in the region, given that this is a region with 350 million people in the population, significant spending power, health care, insurance. they are looking for opportunities in these sectors. what about the u.s. dollar strength? are you worried about that? as they look for emerging market spaces, a lot of this is coming to asia. are you worried about that flow that moves it away from the frontier markets where you are from? >> absolutely. that is definitely a concern. however, we have investment opportunities in the region that would present returns that would
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compensate for higher dollar returns. yousef: so, just give us perspective in terms of numbers. in terms of the asset management business, how much do you have under management? and where do you aim to grow on that front? >> right now, efg asset management has roughly $200 billion on the gcc. the initial focus of the u.s. operation will also be on the brokerage and expansion into frontier markets. theou know, given -- out of $20 billion of assets focused on frontier markets, approximately 60% of those funds come from the u.s. it is a natural evolution for us to look to open offices in the u.s. karim: thank you,
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baghdady. ok, moving on to microsoft, where the ceo says he wants to see linkedin thrive, and is confident over the regulatory review on the acquisition. the companies are hopeful to close the deal. fitsla says linkedin microsoft's vision. >> i think acquisitions are tough. at least in my case, one of the things i'm very focused on is three things. there is a real fit with that sense of purpose. there is no sense of purchasing something that does not truly mean both of our strategic focus and who we are as a company, whether it is minecraft or linkedin. it fits who we are. and then, we can do something
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that is bigger than greater for not just microsoft, but for the constituents. i am so excited about what we are doing with minecraft. it is education. it is probably the best aid to introduce both boys and girls in middle school to education because of the open world nature. a very big part of how i think about it. that is what led to linkedin as well. we are a company that works with professionals all over the world. it is about productivity. about thisays cared deeply, how can they make every professional in the world realize their economic opportunity? for me, it fits with the mission and our goal is to make sure linkedin thrives.
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challenge hasory been particularly vocal, and with the eu. what is going on there? you have had a pretty good relationship. what has gone wrong? was it linkedin? did it come between you? >> to me, what we will do with linkedin, we want to make sure linkedin thrives. the existing programs that they have, they have a pretty open ecosystem, in terms of how we can integrate with linkedin. angie: that was the microsoft ceo. we heard reed hastings talk about the at&t and time warner merger and he says he welcomes competition. >> as long as hbo's and netflix's bids are treated the
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same, that would be the starting place. we want to make sure that to the consumer it does not give an unfair advantage to hbo over netflix. we love open competition. angie: coming up, turkey's first ipo in six months has been postponed just days before trading was to begin. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. angie: i'm angie lau in hong kong. turkey's first initial public offering in three years has been postponed. global tower was planning to debut on thursday. for more, here is our emerging i rkets reporter in hi stanbul. why did the ipo get canceled? >> the company said it was going
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to wait for better market conditions, essentially. upcoming risks, such as the fed, the u.s. elections, and last week's cyber attack have led to the decision to postpone the ipo. we spoke with the ceo yesterday and he said while there was stronger demand within european ,nvestors, demand int h the u.s. due to the cyber attack on friday, was a bit lower. so, they postponed. yousef: how have investors been reacting? >> investors that we have spoken to seem to think it was more of a matter of price. they were not willing to sell the unit at a steep enough discount. whether or not that is true, that goes to show how investors are still nervous about the situation in turkey.
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they are still assessing the impact of a failed coup and the moody's downgrade. moody's downgrade. they have one of the worst performing indexes. investors seem to think this is more about the investor appetite. yousef: what is the market really waiting for here? what will be the next catalyst in this story? >> they will be waiting to see when this ipo process gets initiated. software company running at the moment, for its secondary public offering. people will be watching to see if there are any hiccups there. if that is the case, a much bigger read across. for now, there are no signs that that is the case. yousef: let's leave it there. that is constantine, joining us
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live from istanbul. that pretty much concludes what we have for this program, for this edition of "bloomberg markets: middle east." angie: anna edwards and manus cranny will have the top stories from london. "daybreak: europe" is next. this is bloomberg. ♪
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anna: trade troubles. europe's ability to sign deals with the rest of the world was thrown into doubt. it is still working towards an agreement by thursday. meanwhile, a new poll shows that more than half of britons in controlling immigration is more important than maintaining access to the single market. happy to hike. chicago fed president charles evans says that three rate hikes may be in the cards by the end of 2017. you form welcome to

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