Transcripts For BLOOMBERG Bloomberg Markets Middle East 2017

Be the worlds biggest ipo. Tata sons votes cyrus mystery off the board. It is 7 00 a. M. In doha. I am yousef gamal eldin. Shery i am shery ahn. Waning, off seems to be safe haven plays, easing and that section, cold and the japanese yen reversing that rally earlier. Investors right now looking for cues on where to go. Taking a bit of a breather. The trumpfueled enthusiasm , and if you look at that data when it comes to consumer confidence. Caught myf things attention and the folks at goldman sachs. Initial hopes for that pro growth drive in terms of fiscal policies, initial euphoria, but since then this massive gap between the soft data and the measures of real economic activity. That is the whitest in six years, that exuberance is probably peaking. Goldman sachs cites the Retail Investment preference for stocks over bonds has almost fully reversed. This tells the bigger story at play here. Confidence may be starting to wane, as well as the reflation trade. Functionhe gg on the bloomberg. Trading flows in fx markets have been erratic. Traders seeking fresh cues. The dollaryen was closely tracking treasury yields. Now we are seeing sovereign bonds in asia following treasuries higher, the australia kept cash rate steady at 1. 5 , the yield losing seven basis points, but we are hours away from trading in the middle east. What you watching . Yousef absolutely. It looks like we are gearing up for an interesting day. A mixed picture for the most part, moves to the upside in dubai. In abu dhabi, we expect interesting numbers from the company. N saudi arabia, up low volumes, pressure, report sales were car weakening in egypt, the lowest 456 years. Kuwait had been standing after the massive selloff and profit taking, 20 in less than 60 days. That market taking a break. Shery thank you. Lets check in on first word headlines from around the world. Franciscos Court Hearing on tuesday, considering the trump administrations appeal to reinstate the travel ban, saying that the decision to suspend the ban was vastly overbroad. The European Central Bank President has criticized donald trump, saying rolling back financial rules would be worrisome. To the european parliament, mariota drug he hit germanyinst claims that is taking advantage of an undervalued euro. The European Central bank has not intervened in the foreign currency market since 2011, and that as part of the intervention to stabilize the yen. Rishaad the aussie Dollar Reserve Bank of australia cash rates on hold at 1. 5 . The decision was foreseen by 27 of 28 economists. It eases the impact of slower economic growth. Inflation remains below target range, but cutting rates could feel overheated home prices in sydney and melbourne. Israeli Prime Minister Benjamin Netanyahu has tried to drum up support for harsher sanctions on iran. Characterized iran as a menace and welcomed President Trumps imposition of new sanctions following missile tests. Theresa may says she recognizes concerns over iran, but the 2015 nuclear deal remains vital. Benjamin Netanyahu Netanyahu will meet trump next week. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Chinas lending for january may have exceeded the previous monthly record according to sources citing government data. Tom mackenzie has more on this. We are expecting authorities to curb financial risks. What are we hearing . This is true and likely to raise eyebrows and questions over this deleveraging process that chinese policymakers say they are embarked on. Officials telling bloomberg that new loans may reach or exceed yuan in january 2016, and of course it raises questions then about these attempts, these policy statement saying we are going to tackle leverage, the bubbles in fairies asset classes. Credit expansion is double gdp. Anothergdp is 264 , so worrying sign for many looking at this. To actions, point including telling banks in the First Quarter to take strict control of the loans, and also rates raised. This will be a concern for some. We have got important data fromign exchange china, psychologically critical 3 trillion mark in focus, what are economists forecasting . Right. Ats it has become something of a gauge as to how much pressure there is on the yuan. Now the estimates are for it to be around that 3 trillion dollar level. It may, slightly above the previous month, that is because capital controls are having an impact and the yuan is stronger against the dollar, and the euro and yen are stronger as well. We are expecting that data to break, the number 3 trillion. Yousef thank you. Tom mackenzie there. Lets cross over to one of our top stories, the largest producer of lng looking to expand further, Qatar Petroleum. , one ofmore importantly the most powerful people in the global gas industry, and rarely gives interviews come up here is what he had to say. The successes and learnings areave in qatar significant. We think we can leverage to expand internationally. We would like to see that in the next 510 years, Qatar Petroleum becoming one of the leaders in lng in the world. Would you say there is more appetite for investment this year compared to 2016 . Inwe will invest much more the past, specifically the upstream business and gas and oil sectors. Any specific preference for geographies, africa, south america, anywhere else, or are you looking for Economic Opportunity . We are looking for the most economic barrels, external investments come a investors to come in, and we will be going jointly with some of the most Reputable Companies to do that. You have spoken about your experiences through the Economic Cycle in lng, and when you look at forecast from the iea, this glut in the market will persist past 2020. Isnt that an opportunity to follow the opec lead in terms of Touching Base with major producers like the united states, australia, maybe accelerating this rebalancing a little bit . Isthe gas business completely different than the oil business because you have helen g, pipeline projects, Different Countries producing in different areas. , pipelinee lng projects, Different Countries producing in different areas. So you cannot do that, and what we see is this is a longterm business. If you want to be in the lng longtermyou need a perspective, and if you want to develop a project today and have the reserves to do it today, reduction will only come 710 years from now, so if you dont invest and plan today, you will not have the Gas Production available to you to make use of in the future. Have seen a remarkable recovery in the u. S. Shale industry, and thats bringing a bringinggs online and the u. S. Crude output back up, putting pressure on this opec deal. Do you think they should have been more aggressive about the amount of oil they are taking out of the market, or do you think him summer that they need to extend this further to help the rebalancing . Higher oil prices have done is encourage more producers to bring more oil to the market. The u. S. Gas and oil, the , the shale oiln and gas you have in the u. S. Is abundant, something we can bring on and off very quickly. I think the u. S. Has become the swing producer of our industry, and this is something we have to deal with and we expect it to happen for the longterm come up at this is something that is not worrying to me. I think there are ups and downs in the business that we have to as awith and move on, but business, which you need to control is what you can control, your costs and develop the best reserves you can. Closing question, a new administration in the white , toe, a volatile few weeks what extent does this disrupt your plans for International Expansion, the fact that you are looking at more protectionism possibly and more countries looking inwards rather than in bracing more and more Foreign Investment . For us, what is happening in the u. S. Is internal to the u. S. In theas investments u. S. , we will continue the same plans be had in the past because we see our investments are longterm investments, 2025 the u. S. Has always intoopen to investment being very liberal in that sense. I dont think any shortterm events or political events have anything that will change how are mine. There could also be upside for the donald trump story for natural gas . For the oilhappened and gas business, they have approved some of the pipelines that were on hold for some time, and i think because President Trump is a businessman and as a background, he will promote Foreign Investment and physicist and make it more inviting for businesses to come into the u. S. Yousef that was the ceo of Qatar Petroleum. He also told me that International Expansion would be in the billions of dollars in terms of financing and they would not issue any bonds. All of it will the self financed. He said money was basically not an issue. Stock exchangere operator looking for a piece of the saudi aramco action. We will flesh out the conversation for you. Nz for next, we ask a i the outlook on oil. This is bloomberg. Shery welcome back. Asias regional benchmark has turned a slightly positive, but individual markets mixed. Lets get the details from sophie kamaruddin. Asian stock rally stuttering today after a fourday advance. Trade near a twomonth high, gold near a threemonth high, Energy Shares the biggest drag on the regional benchmark. Ix falling,the top and the nikkei falling as well. Latestrs wait for the foreign reserves data from china, the shanghai composite down. 3 . Stocks paring losses with industrials leading gains. We had the rba holding on the cash rate at 1. 5 . The aussie dollar falling, but now reversing losses, up 6. 5 this year. We, look at the key kiwi jumping. , falling on the yuan in the onshore and offshore markets. Thanks. We are keeping a close eye on oil, Holding Around 53 a barrel. Of moreoff the back rigs coming online in the u. S. When it comes to the shale industry, and of course we have the report we are looking forward to from the iea which forecasts of build in crude stockpiles. Lets get more on this story, daniel hynes is a senior commodity strategist at anz. Read on theur ongoing build of inventories in the u. S. And what that means for the broader crude market. Look, i think when you go back historically, you tend to see a build at this time of year, so we are not overly concerned about it now. With the build up injuring activity in the u. S. , the market is extrapolating that continued build to continue, and i suppose derail some of the good work that the reduction in opec output in particular is doing inventories outside the u. S. , but for the moment, we dont see it as a significant issue, but clearly won the market is keeping a close eye on. Daniel, how confident are you that this deal will hold . Most of the movers and shakers on the ground say yes, it has helped a lot in the rebalancing process, but come summer, and you will have to restart it again because of the oil coming on lined and shaky Global Demand as well. What is your take on the health of the opec deal and where we are at . Look, for the moment, it does appear that producers are adhering to that Production Cut agreement. In fact, some have gone beyond the call and cut further. Certain the from our perspective, the way we see it playing out is this reduction output is less about making the this reduction output is less about making the market, bringing the market back into balance. It is more about accelerating the decline in global inventories built up over the past couple of years. That one point 8 million barrel a day cut extended through the first half of this year, then we think of the global inventory situation will be back to a more normalized level, so that will put the market in a much better position to i suppose with stand ongoing pressures and issues about potentially weaker demand u. S. Output over the longerterm. Its about repositioning the market for a sustainable level, which will Keep Oil Prices relatively elevated. Shery right, but lets factor in president donald trump. Some of his policies could lead to a boost in production in u. S. Gas and oil. What will that mean for prices, specially if you factor in a potential border adjustment tax . What will happen to brent prices . Yeah, look, there are so many unknowns i suppose within his policy, and it is difficult to get a good read or gauge on how things will play out in the been initially, it you could potentially see higher prices, particularly in the u. S. Domestic market, as that additional tax on Refined Products drags up u. S. Oil to that international standard, but longerterm, clearly the u. S. Beenor some time transitioning to a more energy sufficient status, certain the imports have been falling for quite some time. Accelerating,s longerterm, it is a bearish issue for the market to deal with. Shery right, do stick around. We want to continue this conversation on other commodities as well. We will be talking about the political bandwagon, gold enjoying a rise. All of that, next. This is bloomberg. Lets continue discussing commodities with our guest, daniel hynes, anz senior commodity strategist. Lets talk about gold now, paring some of those gains come up it still trading at that level, 1233. Take a look at my bloomberg, the recent rally taking gold above its 100 day moving average. The last two times that happen, we saw gold rally 10 in the following five weeks. Should we be expecting that to happen again . Look, technically it looks good, but the headwinds we saw a late last year and that have abated, has given the price leeway to push forward. From our perspective, demand is weak at the moment, and that will be an issue to overcome, but investor demand driven by safe haven buying has shown growth over the past two weeks, and we expect that to continue in the shorter term. Shery it is interesting you say that, because in 2016, etf flows led the rally and plunge in the price of cold, and when you talk about physical demand, this has not really picked up in the last three years, so how much amandas out there, especially countries such as india wear jewelry demand is high . Obviously,h, well, that banning of the 500 and 1000 affectedes have demand, and we are seeing falls of 1520 at the moment according to data we collect, so that is significant for a major consumer like that. For the moment, investor demand is making up for that, but not to a huge amount over the top, so it will be a slow grind higher for us, but for the moment, that physical market is certainly going to be a headwind. About otherel, what metals . Bloomberg intelligence said it tough to call for other metals like zinc. Has it run its course . Daniel , no, the stealrelated have good demand side environments or outlook at the moment, although clearly there are some concerns about what President Trump will do around u. S. , sots into the that remains a question, but certainly the stimulus measures and china will boost demand for those products. Thanks, daniel. That is daniel hynes from anz. We have singapore offering incentives for getting a piece of the action for the saudi aramco ipo. This is bloomberg. Is 12 30 p. M. In hong kong, 8 30 a. M. In dubai. Amnesty international saying bashar alassads government executed up to 13,000 prisoners. The Rights Group Said the killings happened outside damascus and most victims were Political Prisoners killed under what are called a policy of extermination. French president ial candidate fillion apologizing to voters for using taxpayer money to employ his wife and children. He emphasized the practice was entirely legal. With less than three months to go to the first round of voting, the front runner is trying to halt the slide in the polls. Polls wont make me change my mind. I took my decision. Nothing will make me change my mind. I am a candidate in president ial elections and i am here to win. Philadelphia fed president says march should be on the table for a rate rise from the fomc. He said that he still supports three hikes this year, with the pace to depend on the state of the economy and the fiscal policy of the new administration. He said the fed must ensure it does not get behind the curve. Togoing back on its pledge shut more than half of the countrys metal mines, gina lopez telling bloomberg the land must be given arrest. She insists the crackdown would get the backing of the philippine president , even if it hurt the economy or put all foreign investors. Time would be happy this cut,. Why should they come . You dont want those kinds of investors. We want investors who care about us and not the money they make. The government is supposed to play a balancing act. Rishaad you are watching bloomberg. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. We have the world of business covered. Yousef thanks. Been told by sources that saudi aramco has picked four banks for its first bond sale. Matthew, i just spoke with the petroleum, another example of a large, powerful, influential state owned gas company. When i mentioned bonds, he was surprised. They have the cash flow to finance whatever expansion they need. Why does saudi aramco need to issue a bond . Saudi aramco has a lot of thing on the cards. They are looking at doing at what will probably be the worlds biggest ipo. The government is restructuring itself and trying to diversify away from oil, and aramco in itself is trying to diversify away from oil as well. The company is looking at investing 5 billion into Renewable Energy companies, so some of this money they are looking to raise could go towards that, and also going out to the bond market is part of saudi aramco opening itself up in preparing to be more transparent to investo