tv Bloomberg Markets Middle East Bloomberg March 27, 2017 12:00am-1:01am EDT
♪ >> will hold at about $50 per barrel just barely as producers consider extending the cuts. time is needed to drain the global glut. a the japanese yen hitting high. we have a lot of data out of china. the dollar is going the other way, putting pressure on middle eastern markets come as well. there will ben
struggle. is putting short sell in the mix. it is 7:00 a.m., bright and early. it is 12:00 noon in hong kong. we look at markets this monday. we have seen better start to the week. have a look at my bloomberg. obviously japan is getting hit the most. we just talked about the yen pushing toward 110. you're getting a lot of equity indices getting offered up. 1.4%. the losses seem to be getting better if you could describe them that way. have a look at the currency that is the market story today. dollars off substantially. randy was up. up.ingo is
there also getting a selloff of commodity space over in china. the only one up over the 1256.ity space, 1% up at let me wrap things up at a look at the bloomberg dollar index. 200 on the below dollar index. does this give us a preview of things to come when it comes to the lawson momentum -- loss in the momentum? that is one element of the story in terms of reversal of gains. the other reversal we have seen in the oil markets. we were 20% up after the agreement late last year and now goes losses have been given away. the monitoring committee of opec has been trying to check the holes of compliance. there -- pulse of compliance.
they are excited about the level of conformity. 6% compliance from opec, going the aunt of the call of duty. from a non-opec perspective which includes russia, 64% compliance. they say don't worry about it, it will come up very fast and structural issues need to be worked through. complaints is happening but the work it -- market is not responding. time, in termses of the inventory data. here is what the president of opec said to say -- had to say. >> i think we're moving in the same direction from the discussions taking place yesterday. momentumo build on the that has been covered in the last two months. from all indications, we expect ofsee very high levels conformity in the subsequent months. this will inform the decision
for the duration of this decision. yousef: it is important to underscore that opec have called for recommendations about a possible extension of the agreement. again, a formal meeting in april and in may. low seasonal demands and rising non-opec supplies is clouding the efforts of opec. i also spoke with the russian energy minister. here was his take terms of the possibility of an extension. that in orderided to make any decisions like this or recommendations, there needs to be a ministerial meeting. david: it is time to check in on some of the headlines around the world. korean prosecutors are seeking a warned for the ousted president. she was questioned last week
about the scandal that forced her from office. she has pressured -- she is accused of pressuring businesses. the scandal has embroiled some big names including james wiley. sanctions on 15 american with allegations they support terrorism. this comes with after the u.s. freshd fresh influence -- sanctions on iran. it includes a wide range of companies, including a major arms manufacturer that are not known to do business in iran. president begins his visit to russia on monday. he will be in moscow for a two-day trip. he will meet at vladimir putin on tuesday where energy and transportation will be discussed. they have held eight meetings over the past four years. goldman sachs is said to be in the early stages of talks for a
saudi arabia and equities license. they're looking to take advantage of the kingdom's reforms and may require a license to invest in saudi stocks. it is also said to be one of the pitch anided to advisory role in aramco. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david? these third-biggest brokerage $2.5 billionraise -- $2.12 billion. we don't know what the price might be. our editor'sid, here right now. i guess we have to start with why hong kong and what will they use the money for? >> like a lot of companies
before them, hong kong is a great launching pad for international expansions and brand building. it will allow them to move out of their core brokerage operations. say hello to yousef. yousef: the biggest ipo so far this year. it sets the tone arguably for the remainder of the year. what is the outlook for hong kong ipos? just $1.5e've had it kong thisles in hong year, not a great start but the outlook is good. we're expecting large fintech deals from china. we are not sure when they will rise from hong kong. -- price from hong kong. david: we are waiting for pricing. on thisu for joining us
is when bloomberg reported that american misreporting -- preparing to make an investment of $2 million. it will be through china southern's shares. china's -- group is buying a stake, adding to a shopping's reign -- spree that tops $30 billion. for two parts of the state. a comprises just under 10% in 30 days. h in a is broadening its portfolio. david: an insurance company is looking to diversify overseas. the company will put money with private equity funds that invest in sectors such as food, maybe even health care. an -- the- ping
dollar has a client. yousef: kuwait has been hosting the opec monitoring committee meeting the last 48 hours. kuwait is front and center in the tumultuous world of oil prices. the question is, in terms of where levels are, what does that do to the kuwaiti economy? minister, ioil spoke to him on the sidelines of the meeting, he said they will be in good shape if the prices hold up at $55 and $60 per barrel. here is what he said about the wii balance of inventories and the overall efforts of opec and not opec trying to rebalance the market. >> we are not surprised right now. -- not surprised right now that the prices have fallen back. they have fallen down because the storage has not moved yet.
as we said earlier, there are reasons why the storage has remained as high as they are today. we will see the differences in the third quarter or later in the second quarter. as we stated in our press release today, it was very satisfactory for the committee, overall it is very good. we are urging other countries to follow suit and hopefully that will happen soon. >> can talk about inventory, which inventory do you usually look at? u.s. inventory? what levels are you targeting and what would you like to see? actuallye were hoping at the beginning, that the u.s. inventories would slowly come down. not drastically, but slowly come down. however, because of the
maintenance nowadays, because of the slow season in the first quarter, we have absorbed the fact that those countries are not going anywhere. on the other hand, they are decreasing slowly. what we are looking for is a five-year average of inventory. that stands right now at around 285 above the five-year average. once the amatory starts to go down, -- once the inventory starts to go down, we will be toward the five-year average, hopefully at the end of the third quarter. >> you are not concerned about the rebound in u.s. shale? the inventories might come down, but it might come back online in the united states more than it is now. >> i've always said that cutting , ifmillion barrels per day you calculated with regard to an
increase of about 1.5 million ,arrels per day in 2017 subtract that from the amount, expectation of an increase of supply for non-opec countries, i think we are on the way of consuming that excess in storage. >> where do you see prices going in 2017? what range do you expect them to land? averaging $45were in 2015. they were in the lower $50 in 2016. $50 to if we can retain $55 in 2017, we will be good.
yousef: let's see how it affected sentiment across the middle east, it definitely dampened some of the initial momentum we saw late last week. you can see it was a mixed picture across the board. none of the regulatory changes really reflected any sense of euphoria. you are looking at a change in the cycle and saudi arabia. look at dubai. stocks driven lower after news of the deal. abu dhabi dragged down. we will get into that later on in the show. david: absolutely. unbridledexactly optimism when you look at dollar bulls. the collapse we have seen of the republican health care was a shot in the arm for dollar bears . we will talk about where to find the currency market, next. ♪
♪ >> i started the year with the , and ofon of two moves course these are not set in stone plans, these are just one forecast at a time. they are not a commitment. i would have adjusted my into three moves. i think the strength of the economy justifies that. yousef: you're watching "bloomberg markets: middle east ." i'm in kuwait city. david: and i am in hong kong. we were talking about the currency market and the adjustment we are seeing right now as far as the fed is concerned. we all know what they get there, they raised the rates of core of a point and released forecast showing that hikes may be twice more this year.
dollar of course is that 84 pessimism,over whether misguided or night, president trump ability to push through the economic program of his. all of these things come we with steve about. steve, did your view change on your projections of where the fed will go with rates after what not happen in washington on friday? to look atave adjusting the script a little bit because of a lot of the reasons we like the dollar are not evident right now. coming we are trying but to realize in the capitol hill landscape is getting policy through for the trump administration is not going to be easy. we considered obamacare one of the rubberstamped deals getting put through only a month or two
ago but right now it appears nothing is going to be rubberstamped. that brings in a question a lot of the more important policies as far as the deflationary trade around fiscallves policy and tax reform. david: there's a push it into 2018 and how does the fed react? because when you look at just aredollar index, we essentially back to levels of a few days after the u.s. elections. i am wondering with all of these long dollar positions close-out, are we back to square one? think the position is a lot cleaner. this is why we are not seeing such a big blowup after friday. the market took it rather calmly. there was a pivot from the administration toward leaning on tax, but how that is going to play out, they are going to have quite a tough road ahead convincing the market that they
are going to come out with something concrete that will get through congress. however, getting back to the fed, i think the fed had taken a prudent move of sitting back and waiting to see how this policy front would lay out and right now what they seem to have -- right now they seem to have the upper card. i think it is prudent given the heightened political risk in the u.s. right now. on but note is still as aggressively as we had projected a week ago. one way we can measure the reflation story is the u.s. 10 year yield. research notes that influences are in there, as well. steve: you would think the yields are going to move lower, and this would be the general accessible in the landscape, but
however it goes is going to be predicated on getting back to the economic landscape on the -- in the u.s.. we have gone through a vote that says, we are not going to kill obamacare, but does that change the entire landscape of the u.s. economy? i don't think so. i think we have to get back to square one again and address the data points coming out of the u.s.. i think the strong undertone of the employment sector and how the inflationary, minor inflationary aspects through wage growth start to play through the economy. i think those will still continue to provide support, the underbelly of support for the u.s. economy. longerhe younger -- yields are abating, i think there will be some level of appetite around this 2.25 level. i don't see them moving below there to rapidly. yousef: let's cross over to europe and talk about the resilience we are seeing in sterling. how long is that going to last and how do you trade the euro in
the meantime? sterling has been a conundrum because obviously as landscape,e brexit it is going to get obviously messier as things actually start to pick up. my view is not this is going to be a long process. has at think sterling great deal of upside, especially when you factor in some of the comments coming from some of the bank of england members that are leaning on a little bit of a dovish side. i think they realize this pickup in inflation has a lot to do with the evaluation of the from oiland the uptick prices in the past. i think they wanted to be guarded on this before they start to move monetary policy in any direction. i still believe the monetary direction is going to remain fairly on hold in the u.k., and therefore i don't know if there is that much upside in the near term. yousef: with the u.s. dollar
giving back some of those post-electoral gains, does that change your view as to how to navigate the emerging market basket? that has been one of the biggest surprises i think in 2017. arguably, we were going into 2017, the landscape looked dangerous, we were faced with multiple interest rate hikes and only certain baskets that may benefit. we are looking at traded then they weigh on the currencies, but but it seems like the less the fed reserve board came out with last week, that seems to have lit a fire under a lot of the emerging market currencies and the asia-pacific has seen a lot of appetite come into undervalued equity plays, especially in the korean sector. we have also seen it in india on the back of some favorable political outcomes. i think that is telling us investors are looking to take
riskier appetites as the federal reserve board looks to take a slower path of moving to a slower path of interest rate normalization. david: your point there, i just wonder what is your short-term bottom on dollar one? this has been through the floor. do we see 1100 this week? dollar-yen inon the next three days -- few days? think that will be the near term floor and i think we are in -- within stopping breath of ¥110. given the added features we have to navigate through the dollar-yen space, i think that is more likely in the next couple of days. we saw more it, on the back burner. we are seeing some repatriation flows as the fiscal year ends in japan. i would be surprised if the 110 barrier doesn't get taken up
sooner rather than later. ford: steve, thank you joining us. talking of course on his -- the big drop in the u.s. dollar as we get ready for the new trading week. one thing we would like to bring to your attention is our interactive tv function. you can see previews and see charts. you can bring it up on your tv screens. it can be part of the conversation by sending us instant messages during our shows. of yousef: let's get you a preview of what is the come. the strategy to boost oil prices, how it is affecting one of the world's biggest refiner's side of things. this is bloomberg. ♪
>> it is 12:30 in hong kong. these are the headlines. at least two people were killed and many more were wounded when three projectiles hit a busy market in the northern iraqi city of mosul. the area is about two kilometers from the western bank of the river tigris where the so-called islamic state remains in control. the east side of the rebel was liberated earlier this year. aypt is expected to post deficit of 10.7% of gdp for the fiscal year which ends in june. the prime minister says the deficit should fall below 10% of gdp in the next fiscal year. the government reports fourth-quarter gdp on thursday.
angela merkel has strengthened her position ahead of the general election with her conservative party easily winning a vote. the result is a disappointment for the social democratic leader, whose party saw a jump in the polls when he took over. std saw its share fall marginally. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david? david: thank you. let's get a check in the markets. we are on the break in hong kong. juliet is back. we are talking volatility. >> we do have a down day. and failurerepeal of the repeal on friday. your particularly thing that in the u.s. in this is spirit then you have dollar weakness and yen
strength. these markets have been lacking volatility for quite some time. today, you are seeing it back. getting a little bit of need coming through. the volatility index on the mckay has been around 20, that is the highest in two months. in australia, you are seeing stocks of around 2/10 of 1%. volatility of around 13 in hong kong. reading of 14. as we look at the nikkei index as a whole, you are seeing material players leading clients across the region today. the materials sector off one point 4%. you have weakness in developers in hong kong. it seems like there is 11% rally we have seen so far this year is starting to peace out. having a market hong kong in particular, some of the stocks
we are following today, symantec coming through. -- projecting up year-over-year. you have china southern air after trading resumed and it is in talks with american airlines. kaiser group, the integrated real estate company coming online for the first time in two years. look at that pop. 63%. on the lunch break in hong kong. to one oft's get back our top stories, crude oil and some of the progress or lack thereof on the opec monitoring committee meetings. russia was leading the charge from the noble -- not opec front. 64% for non-opec. nobody is worried, they are convinced they will get it up soon. the other question becomes, do you extend this agreement?
i sat down with alexander novak. possibility, i inld like to remind you that the declaration of corporations signed in december, there is an option, there is optionally to extend the agreement is -- if they decide to do so in six months. we have decided that in order to make any decisions like this or any recommendations, there needs to be a ministerial meeting. we have asked the opec secretary to prepare more materials on the state of the market and to communicate to members. done in april, we are going to have more data, not only this analysis and research or data on uniformity at how markets are reacting, inventories are reacting, what is the production in the u.s. and other non-opec countries and that will give us much more information to base a decision on.
then at the ministerial meeting, such a decision could be made. i think it is too early to make conclusions or statements today. especially considering that all participating countries have presented today. this opec needs more time, more looking into and research done before the meeting. morning, theyhis are saying if a deal is extended, you're looking at $60 a barrel higher this year. there is complexity with a reduction of inventory. hereke to an oil minister, is his view. >> i think come the spring, when people start to move a lot, gasoline demand, the refinery turnaround is over, we will see some positive inventory reduction as we expect.
the extension of the agreement, in my opinion is highly likely it will happen. the results of the meeting in kuwait, plenty of meetings to look forward to over the next couple of months. david: reality check right now. we are looking at west texas down a third. the most active contract and brent down about a 10th of 1%. this may play out for the world's biggest refinery, will more than double plans for be spending for the first time in four years. to talks joining us now more about this. sinopec reported earnings in 2016. what is a seeing now and where they district -- distracting from what was a good year?
some of the earnings from that came from selling off a large pipeline unit, which helped boost them a little bit. at the end of the day, the earnings were up for the first time in three years. now they're spending will be jumping 44%, that's the first time in four years. they were joining their rival in china should that looks quite good. shortly after putting up a statement, in the first quarter we see income more than double again. up 150%. a rebound in oil prices. it might be falling down a little bit right now. the way it works for them, they kind of hedged because they are a massive refiner, when all comes up it will help their upstream sign -- side.
if it falls down again, they can always make a little bit of a donis -- bonus on refining. chinois, they came out with a dividend that was bigger than the market was expecting. wasink at 17 since, it twice what the market had forecast. we are kind of thing a nice surprise in the market shares today. yousef: is this a hall of giants? we have petrochina outstanding. what are we looking for exactly in terms of numbers? we have petrochina later in the week, they are the biggest one in china. arned they't -- w would see income dropped as much as 80%, which is their worst earnings on record since they went public. but what everyone is focusing on, what they are going to do with their dividends. out and give out
bigger than expected dividends. sinopecointed out that put out 65% of their earnings into the dividend. all of these numbers are coming out much larger than expected. the real focus will be on what petrochina will be doing. we know what their income is going to be, we know how they have been treated by oil prices, but how are they going to spend their cash? that is what investors want to see. are they going to be rewarding investors and evening the money back to the government, because they own a large stake, or will they be making overseas acquisitions? for petrochina coming on thursday, dividends will probably the main focus for everyone. david: thank you for that. petrochina on a break right now. flat.c is kuwaitup on the program,
♪ you are watching bloomberg. i'm in hong kong. yousef: and i'm in kuwait city. let's talk a little bit about the other side of the story when it comes to kuwait. crude oil has been one story, the other has been the regulatory front when it comes to its stock exchange. the capital markets authority is trying to extend the settlement cycle, following suit with other countries and is part of the world. for foreign investors to come in. is part of the plan to attract more capital. to our reporter. we are playing catch-up a little bit with the rest of the gulf. every but he is making a run in
terms of find get more -- trying to get more foreign investors. >> that is true. -- day after saudi announced it is curious to recognize how everyone is just trying to online their markets here in the region to practices we see everywhere else. for kuwait, this is emblematic. we've seen a lot of activity in this market this year. regulatory's -- regulators have been very vocal in terms of bringing some ideas to make the market more dynamic, to improve infrastructure and trading. it was not known until now that -- they wanted to do it by april. there are several different measures and improvements that should come along after that. the regulators mentioned the
implementation of products that are not offered here. there is a big plan next year to segment the market in different categories and levels so you can actually separate companies in a more fairway. all of this is happening. i just want to ask you on this, you can come up with all of these complex and sexy product derivatives, we are also talking mups settlement cycle bringing it to cheapest three -- two plus three, but there is a lack of liquidity in the market. to the have any measures to address that problem? yousef: david was making a
valid point in terms of liquidity. if there are no transactions, you don't have anything. that is the point the regulators are trying to address, as well. they're having constant conversations with local brokers, point investors. just to bring mechanisms that will increase liquidity. we have seen kuwaiti officers yesterday about allowing shortselling and al qaeda buying -- shortselling and all kinds of buying and selling. they are trying to bring in foreign investors and convince the investors in the region, there are so many high net worth investors here, to actually be part of the market. yousef: it has been great to see
you this morning. let's bring in ollie -- ali. yesterday, there were similar arguments to the kuwait story. talk us through what the changes mean in terms of capital inflows from foreign investors for kuwait. >> there are a couple of things. first of all, if we think of the stock market as more of a price discovery mechanism, you need to allow different participants to express their opinions and asset price freely. today what you have, if you find an asset attractive, you buy in it and stay long. if you don't want the valuation, you don't have a way to express it. the best thing you can do is stay on the sideline eared i think allowing derivatives or the introduction of derivatives,
shortselling, allowing more participants to take place would partially address the liquidity and also allow people to express their opinions whether they think the stock is cheap or expensive. this also helps the market here generally speaking, kuwait or otherwise. to move to more global norms. an investor when the come to invest in our markets, they see the same norms and products they are used to, it is not that it is unique and different and they have to learn how things are done, which is the case now. yousef: we've spent a lot of time with analysts and people who spend time with his day in and out, and devaluations will be stretch. us some context as to how this kuwaiti stock story stands in terms of your broader equity strategy. kuwait, keep in mind it has
been one of the better performing markets year-to-date, but it has been a laggard and two toed for the last three years. if you look at the different segments of kuwait, the average individual has to asset classes they would investing, real estate or equity. the money tends to full from equity to real estate and back. if we look at the kuwaiti market, i think the banking of comforts us a lot in kuwait. in my opinion, the kuwaiti banking sector is one of the most over provisioned braking
see, we are on the way because of the opportunities we continue to see in kuwait in the uae. we have trimmed our exposure a of thebit in qatar ahead upgrade that happened in mid-march. we look back in getting back into that market because we see opportunities there at the experts of saudi at the moment. david: thank you. thank you for giving us your take on where we are across the region are -- the region there. yousef.
yousef: there are some key traits we are watching for you as you warm up for that week is the oil story is going to continue to weigh, especially where prices are. we have some companies lined up with various announcements at the managerial level and in terms of actual decision-making and purchasing power level, you can see those are key ones to watch here it also especially when it comes to saudi arabia and some of the key companies there. david: absolutely. this is a developing story, in terms of allocation come a you that thean argument management space is underweight in that region. coming up on the program, we are going to be looking at what the french president aims to achieve when he comes to this part of the world and southeast asia. we will be talking about his itinerary next. this is bloomberg. ♪
♪ yousef: this is "bloomberg markets: middle east." i am live in kuwait city. david: and i'm in hong kong. the french president is in singapore. it is the start of his finals overseas tour. correspondentnal is standing by for us in singapore, and following all the developments. is his visit significant or simply symbolic? e'sthe timing of holland visit is significant when the world is increasingly, in protectionism and the u.s. is pulling away from asia pivot, he is looking to do just the opposite with his visit here. he is seeking to boost not just bilateral relations with andapore but also with asia
europe. if you recall, back in 2015, france was among major european powers that turned a deaf ear to the u.s. in its call not to join the asian infrastructure investment bank led by china. that.de was key in he said yesterday there was a need for singapore and france to show the way in international trade. france is already singapore's number two trading partner in the eu. level of that, high military cooperation and both sides work together on cybersecurity and on a side note, later today, singapore a flower off of him. danlikes of print sustained -- princess diana and elton john has had this in their visits to the city. he is headed to malaysia
and indonesia to wrap up the visit. what are we expecting? that while inear we know that malaysia is looking to replace to buy up toet and 18 fighter jet. malaysia has said it is down to two choices, french or a british made plain. hollande will be the first french president to visit in 30 years. that indonesia and france can share the same message of peace. the visit is a hit back at donald trump and what he stands for. david: and all about the
orchids, as well. a cross change over the weekend, " is means "daybreak europe coming up. few orchids, but the prime minister of the u.k. will visit scotland today in a call for unity as she gets ready to 50 which starts the countdown clock to brexit. that is a big focus for her this week. a lot generally on the political agenda in the u.k. and europe. we will get more details of the great repeal act and we are watching european holidays closely. we will have an interview, my colleague will speak with -- yousef: that is all we have for this edition of "bloomberg markets: middle east." it is a japan story right
anna: trump trade fades. will the president be able to get his agenda through congress? the greenback and u.s. equity futures fall. thes: a win for merkel in run-up to germany's general election. the chancellor secures her biggest victory in 13 years handing schultz a reality check. anna: the u.k. prime minister visits scotland to call for unity ahead of triggering article 50 on wednesday. manus: oil producers say they will continue -- will consider extending output cuts. we are live in kuwait city with the latest.