tv Bloomberg Markets Middle East Bloomberg November 6, 2016 11:00pm-12:01am EST
opec says it is confident it will agree to an output quota. hsbc numbers crossing the terminal. let's get to stephen engle's. i am not getting them up on my screen. you might have to read them there. you want to shout them out to me? let's get the latest from the markets. relief rally a ahead of the election. why? it all started with that big drop last week. flowing out of risky assets. this morning, the fbi letter cleared hillary canton for a second -- clinton for a second
time. investors and for risks. a very good start to the week, coming off a steep decline, markets got sold off badly last week, now getting a decent bit. new zealand, 2.5% of. 2.5% up.day -- the best day in months. gold-mining stocks falling. were still getting a decent day at 1.3%. .5%, which brings me to the subplot across asia, a massive drop among hong kong property names, 4.5%. apart from that, a good day to start the week. but nowump the gun now, it is out. hsbc third-quarter earnings. what is the latest? >> we are getting better pretax
profit. of $5.59rter pretax billion. we were expecting 5.2 $9 billion consensus estimate in the third quarter. , 13.9%,er numbers here better than we are expecting of 12.8%. it looks as though the basic numbers that have just come across are better than expected for pretax profit. again, there are one-time charges for the sale of their brazilian unit, $1.7 billion. ome into the net income. trimming $5 billion in annual expenses globally. they had some headwinds with weakness in the british pound.
that's affecting some of their businesses, and here in china come the weakness in the yuan and slowing economy affecting those numbers. bottom line here is adjusted pretax profit in the third quarter of $5.59 billion, the consensus estimate was for $5.29 billion. perhaps we can get a check on the stock as well. it was up pre-results. it is paring some gains right now. dollars, also traded in london and the united states, up about 1%. 1.65% been up around before the lunch break. like every is a bank other bank, deed retrenchment. -- the retrenchment.
retrenchment. >> some $44,000 have been 44,000 jobs have been reduced as a result of cost savings. we had all the noise about the possibility of shifting headquarters, which did not come to fruition, but they are moving a number of jobs to this part of the world, so it is a bank in flux. we saw what happened in brazil includinghe scandals, switzerland. this is a company downsizing its global footprint and weathering a number of different global challenges, including of course what happened in the u.k. thank you very much. the latest breaking down hsbc numbers.
i it wasn't for the fbi memo, call it the election risk radar. let's have a look. some pretty tremendous moves. the mexican peso rising the most. it's the top performer. that is your chart. valor-yen, there is still a risk and reward. some say with a trump victory you see 100. rallyve had this relief in terms of risks and a proclivity for risk. the real risk is this, the federal reserve, and will it raise rates. where would the probability of a hike in december go with a trump victory? 2-year note's rise by five basis points overnight. gold, three straight weeks of gains for the pain of politics.
today, we snap that. gold could top $1400 on a trump vehicle -- victory. a real relief rally here. angie: that relief rally notable today. as you said, that u.s. dollar-mexican peso on the rise after the fpi reaffirmed that hillary clinton's e-mail use s secretary of state was not a crime. this is as investigators shun haven assets like the yen. we have not seen the market follow this closely every poll ahead of the u.s. election. yearslly speaking in past, it has been generic moves, is right now, what does volatility in currency markets portend after the results come
in? i think it is telling you how binary market reaction may be come wednesday, and based on the 2008 in 2012 elections, there is a reasonable chance we will get the election called for one candidate or other during our early afternoon session on wednesday. the price action we have seen is telling us most of what we need to know. the other currencies likely to suffer most in the event that hillary clinton is the tories are those that have found the strongest safe haven characteristics, and that is clearly the yen, this was franc, and the swiss to some extent the euro. 20 peso went from 18 to against the dollar when donald started to narrow the gap. it has come back now.
basis, i don'td think he gets all the way back to 18 and the context of a stronger dollar. it's probably going north of 20 in the event we do find that donald trump has been big tory is. been victorious. happens if trump is ,ictorious and the yen rallies the market has two things to deal with. a stronger yen and the tpp. how much of a rally in the yen could you see, and could that fade? tpp, the market is assuming this will not go ahead, even if hillary clinton wins, in its current form.
it is unlikely the u.s. congress will approve that package. the much bigger issue is how strong with a safe haven the. -- haven be. 100 in we would not see the event of a trump victory. at what points might the boj be ordered to come in and stabilize things. somewhere between 95 and a hundred. given where u.s. yields are likely to head and how risk markets are likely to respond favorably to a clinton victory, then something around 106-107 by the end of the week is eminently plausible. it is a very binary outcome. angie: that's it. 48 hours. is this short-term enough to
overshadow what is key to currency markets, which is central-bank action? central banks, i don't know they are the force they once were, certainly with respect to monetary policy, and central banks have been the largest player in fx markets, particularly as fx reserve started to accumulate, and they have been one of the biggest buyers on the other side with respect to china and oil producers who have seen revenue crimped dramatically. in that sense, i don't think they are key, but this monetary policy divergent story will come back with a vengeance in the event risk markets are able to respond positively to the election, and that's why we think the u.s. dollar has modest appreciation and ahead of it.
think again if we don't see risk off out of the election, number that one ther stands in the fed's way, that's probably the payroll report. i think those numbers would have to be exceptionally weak to derail the fed from moving in december. what the fed will do will be key, and in the event of a risk off move under donald trump, i think the market would drastically scale down its expectations for the fed. would that be good or bad for the dollar? and a risk off move, traditionally the dollar comes quite well. hold those thoughts. ifhave a lot more to get out you in terms of what happens with emerging-market currencies. stay with us.
emerging markets and much more to come. let's get across to haidi lun with the first word news. haidi: good to see you. china has ousted a veteran finance minister, replacing him. the nation's top legislature announced the change and a one line statement without giving further details. worked for-old has three years as vice secretary general of the state council. china has ruled that anyone who supports independence from hong kong cannot hold public office. the decision by the standing its secondas only unilateral interpretation of hong kong losses the return to china. it came hours after police scuffled with protesters following the biggest anti-beijing rally in two years. property stocks plunging after downgrades. home prices are expected to
plunge after a surprise move. property executive see prices falling between 5% and 8% as buyers and sellers hit the floor running. the government announced the plan to raise the stamp duty to 50% for all residential purchases. theresa may says her brexit timetable will not be altered. exposed deep political divisions in britain with conservative newspapers blasting high court judges. the reason may says the government has a strong case to re-appeal the ruling. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> saudi stocks with their longest rally in years. the cash squeeze and the nation's banking system dissipating. we will take a look behind the
manus: welcome back. you are watching "blommberg markets: middle east" live from our dobby. i am angie lau in hong kong. a media briefing after china's top legislative body ruled that those who advocate independence cannot hold public office in the territory. hong kong's chief executive is speaking right now. we are standing outside with more. he has been speaking and says china's interpretation of
article 104 is an important part of hong kong's constitutional and legal system. the hong kong government supports the interpretation and will implement it accordingly. he also condemned the two people young inspiration, the young activists who change their oaths. china has stepped in to interpret hong kong's basic law. to cause waves as china interfering in the affairs of hong kong.
this has been going on since last week. china has stepped in to make , preempting and undermining hong kong's legal system. one of these lawmakers who did do the of was wearing a banner that said hong kong is not china. leung saying hong kong has been and will always be part of china. this difference is what sparked protests in hong kong overnight. yes. this case was in front of the courts last week. that has sparked protests on sunday. on the evening, we saw
policeers scuffling with in the western part of hong kong. there were hundreds of police deployed. they used pepper spray to push to stopse protesters a them from reaching police lines. they were chanting hong kong independence and holding yellow enbrel is, a symbol of pro-independence. police say four people were arrested in those scuffles. that followed what was largely a peaceful protest earlier in the day. that protests all 13,000 people joining it. police have said it is more like 8000. it was still one of the largest protests we have seen in hong kong since 2014, where we saw protesters blocking the streets for weeks and weeks. still though, the demonstrators
had been protesting in the afternoon and some of them split off and went to the liaison office. from: i will pick it up here. well done. thank you very much. let's return to our guest. he is the global head of foreign exchange at nab. the u.s. election comes down to swing votes and -- swing states and voting. where does the bid for emerging markets come? >> i think emerging markets and journal will suffer a significant selloff. looking at the way the currency has behaved, we have seen most emerging-market currencies
trading in that risk on-risk off frame depending on the perceived volatility -- possibility of mr. trump winning. of thefed is out equation, there is still a risk that in a severe risk off and barman, the u.s. dollar could -- bidet a been against against emerging-market currencies. we will see the yen getting a safe haven bid, but in general emerging-market currencies will selloff. withomplexity will come respect to opec and the possibility of coming up with some production deal. we will see a lot of oil sensitivity and things like the git will be sensitive. oft will add another layer complexity to the emerging markets story in the wake of the
election. if clinton is victorious, we will see the dollar moving ahead , but sentiment towards emerging markets, the reduced threat of increasing protectionism, is something that will play well for emerging markets. briefly, a look at sinceund, the this week 2009. youp in the white house, are still thinking that kind of level? >> that is the kind of level. manus: quick answer there. is the area. the fundamental issues have not gone away. the market has been short and the news negative, that's why we have had this rally that has a little bit of further room to go. manus: thank you so much for joining angie and myself.
manus: welcome back to "blommberg markets: middle east" . i am manus cranny. let's talk about what the algerians are saying. y are saying there is no turning back. i we getting closer to the agreement? that is what opec would have us think. the secretary general has been saying there have been no ultimatums of people trying to increase production and everyone
else cut. it is more likely than not that they will find an agreement because saudi arabia is hungry for a deal, russia is hungry for a deal. bring the price of and ease fiscal pressure for those countries. algeria is saying there is no turning back. they will continue talking for the rest of this month. they are all here, opec, non-opec, will it be a good conference? >> we have representatives from all those groups here. what with the price be? what will happen if opec makes a decision? are those companies going to jump back into the market? manus: we will be on the move, looking in chasing. stay with "blommberg markets: middle east". we have a special guest for you. what does he make of his
business? where is the price of oil? this is bloomberg. ♪ wow, x1 has netflix? hey, drop a beat. ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked ♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪
angie: 12:30 p.m. in hong kong. these are headlines from around the world. shares, u.s. futures, mexican peso, all on the rise after the f the aiken arm that hillary clinton's e-mail use was not a crime. such as the yen and gold are falling the most in a month on signs that donald trump's campaign is faltering. be estimates. pretax profit rose to $5.6 billion. they are trying to maintain revenue by trimming $5 billion in expenses.
hong kong traded shares are currently closed for the lunch break. hong kong's chief executive says the territory will immediately of the ruling from beijing, barring anyone who supports independence from holding office. only its second interpretation of hong kong law since 1997, coming hours after police scuffle with protesters calling the biggest anti-beijing rally in two years. hong kong property stocks plunging after downgrades. home prices are expected to plunge after a surprise move. property executives see prices falling between 5% and 8%. on friday, the government announced plans to raise the stamp duty to 15% for all residential purchases. global news 24 hours a day powered by more than 2600 journalists and analysts in more
than 120 countries. this is bloomberg. let's get the latest from the markets. for that we go to david. david: everything is being trade by this risk on given the fact that that fbi letter was seen as boosting hillary clinton's chances and tomorrow's election. this sums up what has been happening, moving out of safe havens into risk. s&p futures back above 2100, the mexico peso gaining, set for its biggest one-day pop since february. there is also money moving out of gold. we go, muchthere weaker against the u.s. dollar. we are now closer to 104. silver, similar move down.
capped new zealand, just its best day in over a decade. australia, 1.3%. let's break down a straight to give you a sense of where the biggest gains are coming from. financials, 1.6%. take your pick. let me shift gears to hong kong. we are on the lunch break. hsbc and focus when things reopened. i'm curious to see what happens to this group of shares, financials, property shares down the most in at least 10 months. there we go, 4.6%. down, -- now break it down, everything substantially
down in the city come where brokers say it will hit transactions and prices hard. to see what to wait happens. probably speaking, a good start to this week ahead of u.s. elections. manus: thank you. oil has a bit this morning. the secret number is $50. can we sustain that level? what does it mean for the oil industry? joining me now is claudio descalzi from eni. opec, non-opec, you and your cohorts, capital expenditure is the one big subject. how does capital expenditure look for you in 2017? will you join the cuts are cut more? 2017 will be a low capital
3%confirmed growth of looking forward. price for the company is about $50. manus: let's talk about the marketplace. there will be conversations. we are going towards the opec meeting on november 30. could the market rebalance this year? >> i think that we are very close. the first six months, supply-demand was 1.7 billion barrels -- million barrels, so we are getting closer. be the year of rebalancing supply and demand. manus: you are getting more efficient. you have a lower break even. what is the message for investors today in terms of the
dividend? how secure is the dividend in 2017? at sign said, normally we talk about the dividend at our strategy presentation. confirm is that $50 is ok. we are going through a better time. somethingce come but that can be maintain the next couple of years. looking at our breakeven price, that is enough to develop and continue to invest and develop our core business. that is all i can say. manus: good. we will take a positive message. , whatkinds of numbers would an opec cut mean? do you think we can get to $55
and sustain that level if opec cuts? how much do they need to cut to support the market? it is important for our financial investors, but they would like to know that somebody is taking care about the markets. just operatingre on the fundamentals. we can give assurance to our investors that we have a floor. that is quite important that we without the internal market. manus: the exemptions, iraq, a
an, gc that is the solution to get cuts underway? members know opec they must be there and they have to be in the market. at this point in time, we have consensusmore general among all the producers keep an eye on this market. manus: let's talk about eni. exxon recently bought a stake in mozambique. can you confirm that? >> i did not say that. manus: can you confirm? >> i cannot confirm. i can just confirm that we are negotiations,in
so i am positive about that. that atbe disclosing the beginning of the year, not before. manus: abu dhabi you are here in abu dhabi -- you are here in abu dhabi. can you update us? >> there is no update on that. here because it is the key place, key country, key area , and all companies were here yesterday and today to discuss the future. it is quite an important area net. -- important arena. manus: look at shell and bg numbers last week. mode, were in acquisition
wouldn't it be gas assets you are more interested in or oil assets? >> we are not in an acquisition mode. sowant to grow organically, we have been very successful in exploration. why we wantreason to continue to develop and continue with exploration. strategy on research because the cost is lower. , have you plan to partner with iran? >> i don't know. country in terms of oil and gas in general. we have been there for a long time. we are still there.
now we have to understand the contracts. a lot of there are good fields and we have a lot of good relationships, so we will see. maybe 2018. we have to understand the new contracts. , forgiveaudio descalzi me for putting words in your mouth about a deal. >> no problem. ,anus: that is claudio descalzi ceo of eni. many parts of the business moving. of opecout the ability to sustain the market at $55 to $60. back to you. angie: we always try to nail down some key points from guests, don't we? coming up, egypt prepares to finalize the $12 billion imf loan.
manus: welcome back to "blommberg markets: middle east" . i am manus cranny. .e are live in abu dhabi angie: south korea's newspaper a a hotel will be project in saudi arabia. wins saudi hotel contract. shares trading higher in seoul, korea on monday. a u.s. law firm has filed a class-action on behalf of of
investors. the law firm says they engaged in contact that could result in antitrust investigation. claim says u.s. prosecutors may file criminal charges against teva by the end of the year on price collusion. a 40% stake by the end of january, the ceo says the deal agreed in july depends on the ailing italian carrier meeting certain conditions. the italian government spent months trying to mediate between manus: oil is never
far from our mind. since 2014.rally full risk coming down. the banks have been dead. are we in a sweet spot for saudi arabia? great to have you with me. in saudi?a sweet spot >> we have seen a big shift. three weeks ago, we were talking about it being the second worst stock index. we were looking at interbank rates at their highest in seven years, since the wake of the financial crisis. we saw the cost of insuring saudi arabia and debt higher than dubai. things have been remarkably changed following the saudi arabian sale of $17.5
.illion bond the tadawul has chalked up 12% gains in less than three weeks. declined for six days running. sibor,we talked about .he market i just had that discussion with claudio descalzi. the entire situation is dependent on the price of oil, but we also have the election which could impact. what is the more important
thing? the price of oil or trump and the white house? we have to be clear. trump in the white house is seen as a danger to emerging markets and terms of risk off sentiment. policies are negative for developing nations, but saudi arabia is a close market for a very long time. last year or the two beginning to open out to real international investment. about moreently talk likely the oil price and the impact on saudi revenues is what counts. saudi is trying to diversify its economy away from oil, but the bulk of government revenue is still dependent on energy sales. you only have to look at brent today, but still
$46 per barrel. not ideal for saudi arabia, so i think they will be focused on that opec deal if it can be agreed, and hopefully for them increasing the price of oil. the bank stocks have been among the strongest performers. not just in saudi. we also have the egyptian story. these banking stocks are getting a nice relief. ?he bond market, any update impetus any additional on that in terms of investors? that really has bolstered the sentiments story, hasn't it? indeed.s it is the largest emerging market sovereign bond sale in
history. that has brought down the saudi interbank lending rates, a barometer for liquidity in the system. likes of one of the largest banks and saudi arabia gaining for 15 straight days in the stock market. that is the best run on record for them. liquidityre, the squeeze, easing of little will release pressure on the banks and they will continue to again, theongly, but backdrop remains the oil price. if we keep seeing depressed prices and the opec deal does not impact prices, saudi arabia still has huge work to do to get its economy away from that dependence. note, we will draw a line under this conversation. thank you very much.
angie: egyptian shares surge the decisione march as the to float the pound will pave the way for a $10 billion loan from the imf. this has done a runner in the markets when it comes to the , watchingyptian inflation grow as their pound devalues, but is this still the right step in the right direction? yes, good morning everyone.
actually, this is the right step. by alllong awaited market participants. program, whether it or done inwn cooperation with the imf everything onhink the agenda was needed in terms of building the net international reserves, in terms of trimming the budget deficit, and monetary policy adjustment. all of these reform policies were much awaited and much needed. manus: good day. what is the next most important state? inthat the central bank
terms of leaving the foreign exchange market alone? that is what people are telling me. they must be hands-off. >> exactly. i think the central bank has made it clear in all of its announcements on thursday that interbankeaving the and the market supply and demand to be in action, and i think we volatility, and market participants are testing their boundaries to understand what will be the backlog of demand. i think we will see the rate probably go up a little bit or overshoot to clear the backlog before it stabilizes again. we are hoping that foreign investors will then start to get interested.
angie: yep. we will leave it there. thank you so much for that. mumbai, where to theresa may is looking to strengthen ties with india as she kicks off a three-day visit, joined by 30 business leaders. what does this mean? we are joined live from mumbai. what you think? migration is going to be the key issue of theresa may's this it to india. sticking is the key point between the two governments. vote, there is a stated mandate to restrict the number of migrants into the u.k. india wants greater access for its engineers and students
♪ >> it is 1:00 in hong kong. shares are trading after the lunch break, extending gains from the morning session, up .7%. onc reporting a beat estimates. ceo stuart gulliver has been trying to maintain revenue while paring global operations. chief executives says the territory will adopt a ruling from beijing barring anyone from independence holding public office.