Africa. The president orders his finance minister to quit and investor roadshow. Its 7 00 a. M. From kuwait city. It is 12 00 noon here in hong kong. We look at asian markets this tuesday. Very decent session. We are looking at a dollar flat. Makes. Ssentially im looking at the bigger picture. Have a look at my bloomberg chart. 7142 on your bloomberg. Pace, even if we do consolidate over the next two or three days, we are still on track for the best quarter for asian equity in the last seven years. If you take japan out of the a contest out of the equation. Nothing is going to stop us now. Take japan out of the equation. Nothing is going to stop us now. Yousef the impact it is having on the middle east and africa. The state of play in the last 24 hours, just under two hours away from the emirates markets. On the saudi. Me a lot of pressure on financial and utility specifically. They are dragging to buy down. That stock is still in focus. Properties offering some support for a blue dobby four of the i. Bby abu dab gold is still desk Still Holding at the onemonth high. Fed officials on the output for interest rates. The other story is the South African rand holding onto those losses, down as much as 2. 9 . The worst performer among the fear that the president ordered that international roadshow canceled. Also still fairly ranged with inventory. David lets get you all of to date here on first word headlines. Stuff happening around the world. Sophi ridesharing app may take a investment. They must include apple, alibaba and chinas fund. They made tried new investments to protect their stakes. Moneynot clear if the new would come by itself or from its 100 billion fund. Southern shares have given back. Uch of their early gain they are selling a Minority Stake to american airlines. It will issue 217 million shares worthricans in a deal 200 million. This shares started well before falling back on the return from a threeday suspension in shanghai. Relations between the top carriers in the u. S. And asia. They have been invited to invest in saudi aramco. The chairman says the two companies are talking about investments in a aramcos ipo, which is expected to be the biggest ever seen. Aramco ceo travel to china in part of the trade delegation. The keen met the president. Billion worth of agreement. Than 26 hundred journalists and analysts in more than 120 countries. This is bloomberg. David of course we will be talking about the aramco story later on. Before that we have the southern in thefund planning both u. K. And the u. S. , ready to spend billions in the process. London with a 400 person delegation. A ticket today investment form there. Longterm opportunities outweigh. U. K. Has always been a very important market for us. The number one destination for our investment. The already have more than 35 billion investment in the u. K. Additional parts in the pound in the next 35 years. These investments will be through the festivities. Our main focus will be ,nfrastructure, technologies and some real estate sectors. Are making this announcement in the same week that the u. K. Is going to trigger article 50 to start the brexit process. There any scenario, any kind of deal that britain might make with the eu, or is there not a deal before the two years is up that would make the u. K. Less appealing . The way we look at our we want thes investment in u. K. And europe during the financial crisis. Most of our investments are longterm investments. We are not looking at shortterm upsides or john sides. Or downsides. There have been reports that you have been discussing a to beral free trade deal activated when the u. K. Does leave the eu. Is this indeed in the works, and are you working on it to be ready . We work among the gcc community. If there is anything it will be among the gcc. We will have the discussion with the gcc. You have made a big commitment of 35 billion to the u. S. By 2020. His excellency has already said that 60 of those investments are underway. Has the election of donald trump changed anything for you . I know you say you are not impacted by politics. Putnce we announced it, we a course of five to seven years. We are really ahead of our schedules investing more than 50 . Have done it the last two or three years and we have been outperforming. I think the way we look at it is more about economic and financial qualities over the year. Will you look at 5 billion pounds in the u. K. Versus that 35 billion in the u. S. . Does not look like a huge amount. What do we have in the u. K. Considered to what we have in our country. A lot of the single investment destination we have said that we have more than 35 billion investments. If you top up this with another we canake it 40 plus, compare this to what we have in the u. S. Elsewhere globally, how much do you expect to increase your investments . We have always been very active and pursue opportunities. Have good diversification. We do not want to only focus on one country. We are building active globally. East, we are looking at north america. We are looking at opportunities. We are keeping our eyes open. Great conversation there. Later on in the show, we are going through all the red tape and speaking to the man leaving the overhaul in the state run banks. That is in about 30 minutes from now. Bank Board Chairman is next. This is bloomberg. Yousef this is Bloomberg Markets middle east. David i am david ingles here in hong kong. Lets check out on the Energy Process right now. Just under 51 bucks here on your nearest contract. 1596 we make our way all the way up to 52. As we make our way throughout the year, 52 bucks. We have swelling u. S. Inventories. They are public link considering an extension of these outputs. Bp ceo said he sees the oil market stabilizing. It is going to take a while for the inventory. The price will go up and down. Riyal foren saying 55 the next 5560 over the next five years or so. We still think that because we still think the supply and demand is working out. You have seven projects coming online this year, only one is unconventional. What happens to deepwater for you guys . It is according to where you are in deep water and what type of development. We just f i beat our sanction. That works with very good economics at 55 to 60 range. We stay there for a little while, it will not affect is that much because we believe the prices will come up. We do not think they will jump up, but our projects coming on are very solid at low prices. They are about 35 better on cash margin pieces. The average of the current one, even at these prices. What is the breaking point . If you were to go bit. Ly below 45 with that worry you . I would be a bit concerned. If it were to be there for a wild, we would select our capital programs and our potentially more depressed men spirit we would do whatever we need to do to whether that and keep the Balance Sheet strong. Most of the investments we are making right now are quite strong. Extend does ins production, what do you think happens to the oil price . I dont know what would happen immediately. It could be a bit negative on a narrower term. We believe supply and demand will balance. Significant inventory drops will start showing up. Right now u. S. Crude inventories have been out. For the rest of the been up. For the rest of the world to have been on a draw. I have been sitting on these meetings and you can hear providers say that they will rise. What kind of cash pressure are you expecting . In this 55 60 world we are talking about, i would be concerned to see massive massive inflations on cash cross increases. See somearting to inflationary pressure. Most of the rest of the world, we are not seeing the inflationary pressure. There is still excess capacity in the service specter sector utilize. Hopefully we can plan better so that we do not get into the inflationary spike. Yousef lets dive deeper into the saudi aramco story. The government is moving on the amount of tax inflations on corporate profits from saudi aramco. For what is expected to be the biggest ipo today. Lets get more on the story with bloombergs energy reporter. Great to have you here on the show. Give us some context about how the government can afford to make a move like this given the fact that they are basically foregoing gev amer government revenue. Morning. Of all, good the issue here is that the government still owns or will still own after the ipo, 95 of aramco shares. Will obtain some dividends. Is theer thing realities. Today, aramco pays 20 of revenues. They did not mention anything about the realities r oyalities. After the ipo, when the shares shares will go. The other question becomes what else is still left in the process towards listing the company . Lets recap a little bit. The issue they say around 2. 5 of taxation. The Oil Companies are treated separately. Yesterday we did not create anything about that taxation of the investors who are going to buy the shares. How will they be taxed. This is something they will consider in the future. What is out there now for the ipo . Focusk they will need to on where to invest. They need to consider other things. They have a reserve audit that is completed. They are trying to finish the mandate. We have seen the finance ministry moved to assure the public in terms of the impact this could or could not have in saudi arabia. What is thees story behind that, why are they so concern . This company as a sole source of the governments revenue. If there is a perception that they world lower aramco at 85 to 50 , people will be concerned with the why are we giving this money away to shareholders, presumably important shareholders. There is an element of concern. Sure the moneyke will not going taxation and makeup for other means. Saudi aramco is a big company. Yousef great to have your michelle, good to see you. There is still great to have you on the show, good to see you. There is still more. We will get some context on him and talk more about the latest comments we got from the Federal Reserve officials about the road ahead when it comes to interest and we will talk to him trump as well. This is bloomberg or it bloomberg. David you are watching bloomberg. Im david ingles in hong kong. Yousef lets expand a little bit on the saudi aramco story. There is no two ways about it. This latest move because of the change of the taxation regime is a major shakeup. He is the chief Strategy Officer at the investment fund. We have had powerbrokers on this around the week. How does this make you feel . Hadow in the past you have doubts about the execution or the ability to execute on what is a very ambitious program. What is your read on that . I think that they are trying the work for aramco, which is a key ingredient for anybody who wants to make a fair evaluation of the ipo. Give someto visibility on what will be the fiscal regime for the next 1020 years. Welcomed, in that sense removed a degree of uncertainty of this matter. More generally, the aramco ipo is not only is not the typical ipo. Change in how saudi arabia is run. How state assets are used. This will bring about change in the governments, not only of aramco, but of the wider saudi arabia involvement with the institutions. Government saudi must be watching very nervously at those oil prices, and hoping that those inventories begin to clear so that oil prices can move somewhat higher. We heard from them the last 24 hours, they said eight to nine months to clear out. How convinced are you at the efforts to rebalance the efforts and where d. C. Price for it prices headed . Theo the rebalancing of markets through production cuts is always a difficult pass, because there are people and countries that try to cheat on their production. The cutsu can say that are effective, it takes a long time to set up a supervisory scheme, or a compliance mechanism. The the record is russians do not seem to be too eager to keep their words. It will take another round probably of negotiation. They will have to assess the experience of the first few compliancehe agreement. A think that the normalization of the oil markets will take some time, as everybody else more or less said. There is no doubt in the long run, the existing large conventional fields will be fully depleted. Slowly depleted. The investments have been lagging. Disconnecte the between demand and supply. David here in hong kong, i just wanted to pick up on what you mentioned. This is not a typical ipo. In a lot of ways, when you look at what they are trying to do with aramco, it is very this part of the world back in the 2000 with the chinese banks. They were gearing up for those massive ipos and waiting for the chinese carwash to come out all sparkly for investors. I am just wondering, what is the next week adjustment what is the next big adjustment after this overhaul . Is there more steps before we get into ipo shape . Fabio i think that the key element is the reserve do gelatines dude diligence. That is what this ipo is all about. The price of shares would be determined by the evaluation of the reserves. It has to be as accurate as. Ossible that will determine whether the ipo is successful or not. Just very quickly here, on the broader picture that has been a lot of doubts on this trade. Donald trumps run into in congress. At the end of the day, for investors outside of the u. S. , when you hear things like health care, tax reform, do these things matter . Is that a largely domestic story in the u. S. . No, it has global implication. What we have seen last week is that the most powerful sores in politics is not change but inertia. It is very difficult to change things at the stroke of a pen. A president has few powers than most people understand, because they have to deal with congress, special interest, lobbyist, a hosts of other sources pulling them in different directions. Reality been a great check for the administration. The reflation trade, which has been incorrectly called reflation trade because it is hold trade on a massive change in the u. S. This has proven a little bit optimistic. Yousef this is an ideal point for me to jump in and torn terms of article 50 and the brexit process. How that divorce settlement will actually play out. How is this going to affect the u. K. Story and europe story, very very quickly. Is going to affect much more of the u. K. Than the rest of europe. It will not be a simple divorce. No divorce is ever simple. In this particular stage, you have the eu institutions, the government, the scottish government, then you have 27 parliaments that have to approve in some way this agreement. I dont think we are looking at among this. Time that is all we have for. Thank you for joining us. Coming upomist or it on the program we will be talking about the trouble we saw in iran yesterday. This is bloomberg. Is 12 30 and hong kong, these are the first word headlines around the world. The president says uncertainty over inflation and and federal to rate hikesmean would be an f this year. He told bloomberg he would support three hikes if he gains confidence in the forecast. To the extent that i gain more confidence in the forecast i have, that would be a good indicator that i could support three. Be the right number if there is a little bit more uncertainty or any moderates concerns about whether or not we will get that. Things will really take off as we continue storm growth and inflation really picks up. President is in russia for talks on economic ties and the syrian conflict. He met with Prime Minister and is scheduled to meet with Vladimir Putin in the kremlin today. Radio,ng to a ranney and officials from the two countries have signed a Nuclear Power deal. They are also expected to sign deals and energy and construction. Chinese producer has spoken for the First Time Since the share collapsed on friday, saying that plunge was unusual. He met 23 predators a day before the crash. Demandked them not to immediate repayment of loans. The company also has been late in making some think payments and shares will remain suspended in hong kong. Some of the world top miners have halted productions and thousands of people have as a major storm battles cleveland. Torrential rain of 250 kilometers is expected to see the most powerful system hit australia since 2011. It is a category for storm. They have declared a catastrophe. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am looking at u. S. Equities futures and they are higher at the moment. Lets get some perspective on what is happening in the asian equity. We were saying on Bloomberg Radio earlier, what a difference a day makes. We are seeing a lot more calm coming back into the markets. Volatility is easing. Australia asx 200 leading the game. Some significant gains coming through in commodities today. The oil prices up by over 1 . We are seeing banking and mining stocks leading the charges. Singapore is looking good. The nikkei in japan is up by 1 . Good movement coming through in that index. Having a look at the regional index as a whole, you can see every sector is tracking it. The materials sector, you are also seeing movement coming through in the likes of health care that hit hard on monday and friday. Real estate is also up by 7 10 of 1 . At have a look at stocks we have been watching this session across asia. China is in focus after investing 200 million by h shares. The two airlines have agreed on a code ship. Mantra in sydney rising the most. They could be interested in the company that has accommodations. Hong kong jumping to a 22 mark high after a result estimate. I think the story of the day is that we have seen bollettieri volatility ease and buyers come back into the markets. Absolutely, in most parts of the markets, to follow through on what you said, there is calling coming back into the markets. When you look at what happened with the South African currency, have a look at my bloomberg. It was the worst performing currency across emerging markets yesterday. With the South African currency, have a look at my bloomberg. It was the worsthave a look at e there. , it movesdollar ran all the way back to the day of the u. S. Election. They came after the president unexpectedly ordered his finance minister home from an investment roadshow. Gordon,ow talking about who was told to cancel the offensive the u. K. And u. S. Without getting any sort of reasons. A reporter joins us from johannesburg. We have to talk because we do not know the why, but we can talk about what is happening generally speaking. How is a market reacting . Quite right, we do not know why. The president issued a one line statement yesterday confirming called for indeed the finance minister and his refugee to return home and cut short a roadshow to meet investments investors and agencies. The markets did not like that, especially given that no particular reason was given. We saw the rand reversing some of its gains. It is up 2. 9 lower yesterday. Banking stops stocks took a hit. Government bonds also phil. The yield on those rising about 33 basis points. Certainly showing that this is an unprecedented move. A lot of Political Uncertainty as to where the finance minister will keep his job or certainly t this is an unprecedented move. It job. Yousef part of the reason we saw the rand move as much as it did is because there is no recent president. They dont call their finance andsters to let it all goal come back. Is it outlandish to begin thinking about a scenario where there could the a dismissal of the finance minister . Certainly not. We have had a lot of speculation over the past 18 months as to whether the president will be theng changes in the finance portfolio has been headed up and top of the agenda whether he will be replaced or dismissed. What we do know is that, overnight, the top six leaders met. That eventually also put speculation as to whether the president was discussing any changes to his cabinet, or whether or not the finance minister will keep his job. We will be keeping a close eye on that. David out of johannesburg. On the update you guys story of where we go from here if he does keep his job. Lets talk a little bit more about what is happening in the aviation space. Information about Qatar Airways and they are moving ahead with a push in terms of operating in india. The ceo says he is confident that qatar will be able to old the domestic carrier. They plan to five for that license very soon. They would need about 100 aircraft for those ambitions. Rival,g after the gulf 24 stakes in just airways. We have also had news around never ask airlines. The ceo is speaking to Bloomberg Television about the impact of the latest travel ban. Affecting the longhaul carriers ambition, and more importantly, the traffic flows. Have a listen. Cumulative set of demandthat have affected for travel. We are dealing with those. With regarde orders to the travel bans and more recently, the laptop dance. Bans. Top we will be watching demand for those cities very carefully. More recently, we have had in upgrade in the visa requirement and those traveling outside of the visa areas. Taking together a number of things that we are looking at almost twice a day to make sure there is no diminishing and demand in that premium cabins, economy cat them cabins, etc. There is an etc. There is something going on, i cannot tell you until middle of next people are making plans to visit the United States during the current course of the summer months. It always does not help, but we have to wait and see. Yousef i will put this delicately. Do you sense that this is more than just a security issue . The reason i asked the question is, u. S. Carriers have been lobbying aggressively the Trump Administration against gulf carriers. I find it interesting there is not complete overlap between the united aids in the u. K. The u. K. Had left the uae off the United States in the deep and the u. K. The u. K. Left the uae off its list. First to cross over in the commercial world and start taking sides on these particular issues makes no sense to me. I do hope that that has not been the case. I do think the United States had a clear and present threat and they reacted accordingly. On that particular issue, i would say, if it is as they suggested is and it is a concern, it should be applied to the Airline Industry universally. In other words, if there are concerns about activities of terrorist groups using laptop devices that we already know about, these devices can be carried on see any airline and any aircraft anywhere. That needs to be looked at carefully. The notion that they should be confined to, indefinitely to these countries prescribed by the United States is a worry. Made moreeds to be universally. As in deeds the liquids and gels were, the shoes. As far as the United Kingdom is their own they have judgment, they make their own calls in regards to what procedures they are requiring for the Security Officers at the airport. There are some upgrades of detection onand holdhand baggage and checked baggage. They have not said if they had to have all of these devices put in the hold. There is some type of concern in this part of the region, for the time being. These things have to be dealt with. We notice that the germans dont seem to be too concerned about. His others are still on the fence of the decision. We are waiting to see how that works. I would not believe that if it becomes a universal. Concern, astill on global concern, that all airlines will be faced with the same restrictions and those carried in our regions are facing today. David that was emirates president. Coming up, we speak to a man who is known concern, a global very few people can handle that. Live from the conference, next. This is bloomberg. David you are watching bloomberg, im david ingles in hong kong. Yousef lets get you up to speed with the latest is this headlines. There is really companies that pioneered irrigation in the 60s. They are considering an ipo according to a spokesman. Around one and a half billion dollars. Aroundthem netafim 2011. 8000 peopleround and had sales of 50 million last year. Petroleum is betting half a million dollars. Aramco plans to invest the money in developing and oil block. They expect the cost of oil to , which is that area trying to revive rely on the oil industry. The middle east aluminum producers said to have impacts good aluminum is working with bank of america, Goldman Sachs and jpmorgan for it shale at share sales. They hope to raise around 3 billion and said the company could look to oversee stocks as well. In addition to the uae listing. Day ofit is the second the credits with Asian Investment here in hong kong. Speaking to some bigname guests all morning. The is the busiest person on she will get even busier. She joins us live at the event. David, thank you so much. With our next guest, he is one of the few little figures in held officials accountable. Banks board. Indian nice to have you. Give me the outlooks of the things of india. Is from the highest of the Major Economies in the world. What does that tell you about the health of the sector . We did have a problem. The problem of clearances coming in. Being very the verse the banking situation. Because of the steps taken by the government and the Banking Community by themselves. We are edging out of the problem. We hope that the biggest problem that we carry no we will soon be able to resolve this problem. She was saying that she expects more balance because of. He weaker Economic Growth do you think of this is a problem that will get worse before it gets better . Vinod . One very good thing we activeen able to do is assistance for the reserve bank of india. This problem of stress that banks carry on their sheets has been able to be recognized. We have a finding figure about the stress that we carry, but the bigger issue is how to resolve it or it it. 70 growth wont we begin to pick up. The government has taken some very effective steps. Hopefully in the near future we will be able to welcome it. We talk about Capital Buffers theuse it is estimating india lenders will need about 90 billion in Additional Capital just to meet the targets by 2019. The government has announced 2 billion, which is quite a sizable gap. How is the union banks aboard going to address the issue . Government is committed that government will be in an issue position to provide more importantly, there are other avenues that will be deployed. There could be capital that could be used to ensure the regulatory amount performs. Include raising your buffers as well . More stability and Pricing Power if they need to dispose of it. Givingthings have been given that ability. Bankovernment of reserve of front has always committed. If the bank has a joint lending for him, we have a problem in agreeing, they take the resolution to the oversight committee. Once it is seen by the oversight committee, there resolution process, the procedures have been followed and it gets cleared. Than to accepteasier or approve that process of restructuring of maybe a haircut or a onetime settlement. Does india need a bank . They needhem saying some kind is safe fund manager to help with stress assets heard assets. Vinod the debate is whether we do need a back bank. If we have a back bank will it be in the public or private sector . More importantly we have tried createred that if we do the bank, it will be capable of resolving assets. Whether the economy has the appetite to do it or whether there are people who are able to arege those assets, there people with the amount of capital willing to invest. I guess, very soon. One question when it comes to consolidation, we have 27 state controlled banks in india. Six are underway for consolidation, do we need more . Government has taking a very good step in consolidating bank of india. Entity would be far more. We do face a question when there are large numbers from all the banks. They probably will not be able what is onrd with the Balance Sheets. The government is , they will take up the issue. The india banks Board Chairman from the Asian Investment conference. We still have plenty more to come on the show. We will talk about Virgin Atlantic. They are headed towards a loss this year. We will break that down for you. About 125, 68. This is bloomberg. David you are watching bloomberg, i am david ingles in hong kong. Get you some of the key stories we are watching for you ahead of this opening of the trading day. Starting off with the National Bank of abu dhabi, this bank is in the middle of a merger. Company ine first the gulf, the first issuer of green bond. That could give up on a little bit of fraction. Are, of structural changes and have been happening. We spoke about saudi aramco throughout the program. These are big changes. A reshuffle of state finances. Digests thatow it traction, or lack thereof in the oil market. Absolutely, we are down to the reopen here. And edwards us right now from london. What is top of mind right now. we are focusing in on the brexit story once again, a day before teresa may, the prime has her plan. The brexit secretary here and bring in has been weighing in on how big the divorce will be for the u. K. When it decides it wants to leave the eu. The brexit secretary saying that the sum britain will have to pay will be nothing like the some that have been mentioned by eu officials. He is referring to the 60 billion pound bill that the president has talked about. Could be a stumbling point for the brexit negotiation before they have really got underway. Eu will respond within 48 hours or so. Parliament will be voting on whether they should push forward with their Scottish Independence bid. At 5 00 p. M. U. K. Time. Airlines have had a tough time over the last year, what is going on a Virgin Atlantic . Na they are facing a couple of difficulties. One is the weakness in the pound. The other factor is the increasing capacity coming on from competitors across the atlantic. Lowcost competitors. This is something the company is trying to brace for. They are bracing for a loss. The pound andn that cutprice rivalry across the to take mean think have action themselves. There is only so much they can do for fuel and aircraft. They are designing and to take shorter holidays. Whats that story in the Airline Sector as well. Really looking forward to that at the top of the hour. Daybreak. That is all we have for Bloomberg Markets middle east. The story is still one that called higher. David daybreak europe is coming up at the top of the hour as you mentioned. Anna Charles Evans sees to u. S. At rate hikes. Manus u. K. s at david davis has the eu accept payment nothing but like the sums european officials have suggested. Today the Scottish Parliament votes on whether to pursue another independence referendum. Anna Credit Suisse weighs options in an interview. Ceo says he is looking at other ways to raise capital besides lifting parts of it swiss bank units