Investors are looking to an end of five years of declining revenue. Yousef also, Blackstone Group and cbc Capital Partners among the likely bidders for staying the emirates. This is Bloomberg Markets middle east. Manus i am shery ahn in hong kong. Let us take you to the markets right now because they are mostly in the red. We had japan closed on holiday but they are turning slightly more positive. Shery Industrial Metals just losing ground. In theighed on australia aussie dollar and australian stocks. Aussie dollar right now unchanged, but it was one of the worst g10 performers. Of course, just hit by that route in metals. Iron ore falling the most in three months in china. Yieldthrough the 10 year is losing ground. We have hsbc as well with firstquarter earnings out. Atre adjusted protect profit 5. 94 billion. That would be a beat of estimates because adjusted pretax profit was expected to we are hearing they came in at 5. 94 billion. Now, their Dividend Per Share is also at . 10, and of course, firstquarterts dividend that was maintained at . 51 per share. . 10e hearing that it is Dividend Per Share. Pretax profit beating estimates of 5. 94 billion, compared to the estimate of 5. 3 billion. Also, we have capital ratio as well at 14. 3 , which is higher than the First QuarterFourth Quarter ratio. Waiting on the revenue. Bloomberg survey suggesting among analysts looking for a figure of 12. 6 billion. 9 decline. The profit number coming in precut profit of 5. 94 billion. That is a beat in terms of expectations. Onare looking for guidance possible further stock repurchases. If you look at what Deutsche Bank has been saying, a return to growth, that is what will be important. Theseld be telling you details. Have aof 30 analysts hold to you are looking at stocks having outperformed on a oneyear basis. At what theing stock has done compared to the ftse all share bank index. That underperformed. The hsbc firstquarter net at 6. 7 9ncome billion. That is the figure we were looking for there. Shery also slightly higher from 6. 9Net Interest Income, billion. 6. 79 billion. N at they will continue to remove low return riskweighted assets. Their costsaving Program Remains on track. Costsaving was one of those things we were expecting to keep coming down. Costs to keep coming down in the First Quarter. They were saying that costsaving Program Remains on track. Also reduction targets set in 2015 have been exceeded hear it again, Net Interest Income at 6. 79 billion. Also, their capital, firstyear ratio of 14. 3 , which is slightly higher than for the at 13. 6 . Arter we will have more details of hsbc. Right now, we are hearing from the ceo, saying this is is a good thing this is a good set of results. Yousef we have not heard anything about the size or tightening of any further stop purchases. You will recall that capital is being released from hsbc, shrinking u. S. Business. The expectation was that as much as 2 billion could come in the second half of the year. For now, let us cross to this part of the world, under two hours away from the emirates market. That is dubai and abu dhabi. Index. I here is the pulse, the beat, the melody. You can see Downside Pressure in line with what is happening in the oil prices. Really come around what is going on with activity and materials. Lots of Downside Pressure. We did see bright spots when it comes to industrial, when it comes to selective real estate stocks. We did see a major bright patch in egypt with capital inflows. Those gains reported. Some of the key risks we are watching for you on our risk radar. Copper. We spoke about what is happening in the metals complex. What is being factored in as what is happening with demand in china, concern about that. You look at what is happening on the supplyside side of the equation. Lots out there. Spread gcc bond spread over treasuries, shrinking just a little bit further. 1. 9 . South african rand holding relatively steady against the u. S. Dollar. Let us check in with the first word headlines from around the world. Here is deborah miao. Has attackedkel rising protectionism. Addressing the be 20 business arm of the g20, she said there may be shortterm benefits. Merkel did not name any Single Person or country but pointed to the difficulty of making progress at the g20. President trump won the white house, campaigning on the slogan america first. Russian president Vladimir Putin is pushing his plan to establish safe zones in syria, which may include an end to bombing raids. Deborah he held talks with erdogan in sochi. Thanks to the role of russia, turkey, and huron, it was possible not only to achieve a ceasefire between Syrian Government forces and armed opposition, but to bring them to the conference table in astana. Talks,ay of the astana we are trying to reach the goal asfortifying the ceasefire soon as possible, but something was are spending their time trying to sabotage the process. We know very well what those elements are doing to provoke the field and to eliminate the green buds of hope. The most obvious example is a chemical attack. Deborah the two leaders made progress on ending a trade standoff to list sanctions. Tomatoesons on turkish are inspected to last for three to five years. Peace in the beer purity government have agreed to thee state institutions and army under civilian leadership. This came after talks in abu dhabi. They also agreed to jointly fight terrorism. After l into turmoil was toppled. An independent report says the u. K. May have to accept the Free Movement of people from the European Union for years because introducing controls will be too complex. The institute for government think tank says successful implementation of new immigration laws by the 2019 exit deadline is unfeasible. Thousands of new Civil Servants would be needed to deal with residency applications. Global news, 20 four hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im deborah mal. This is bloomberg. Yousef just a reminder that we will be speaking to the cfo of hsbc to shed further light on the latest figures. The ceo. A good set of results. You can follow in on the blog for insight. Let us get to the cio of falcon private bank. There is a conversation to be had about what went on at the fomc. Great to have you on the program. Not very exciting, arguably. When is it ever from the fed . When it comes to the fed funds and what is expected, you can see at the moment that that funds are pricing in just one more height in 2017. Let us get your topline read out of this statement. Guest it seems we are at an equilibrium state with expectations on interest rates. I think we saw, you know, potential further rate increases lead to reduction in auto sales. We saw a little bit of a disappointment last week and i think the fed is cognizant that fast,y go too far, too they could jeopardize further expansion of the u. S. Economy. Therehat said, we think is a broad resilient recovery that remains underway. Yeah, let us get the latest lines out of hsbc one more time, because they are saying that incremental savings have been realized. 0. 4 billion. They were realized in the First Quarter of 2017. Now, remember, the adjusted pretax has beat expectations. We have not yet heard of any new buybacks, but of course, continuing the conversation on the fed, hsbc of course, from the european perspective, is one of the most geared global lead to interestrate rises, and the yield curve has flattened, and they hope when it comes to the Banking Sector in europe and the rest of the world, how much will this fed rate hike go in for this year affect their bottom line and their margin . David the rate hike in the u. S. Is as we said, telegraph and expected. It cannot be absorbed too much too fast. U. S. Economy, global economy, is moving towards synchronized expansion. The asian markets are potentially starting to discount aroundce in sanctions korea and other markets, so there is potentially Slower Growth being built into the asian markets, but we think europe is now going through a recovery. It has dismissed the notion of the french exits, and we still remain optimistic that economic expansion would be continuing globally. Yousef what some of us were hoping to find in the fomc statement were any clues about the reduction of the balance sheet. We did not get any indication of what they are going to do with the 4. 5 trillion dollars of holdings. How do you expect that to pad out . What kind of real impact will that have . David they are going to slowly unwind that. They will not do it in a dramatic or aggressive way. Whatdo not want to disrupt was an effective program. With that said, we do think the probabilities of rates moving towards the upside is higher than moving to the downside. There is also discussion about issuing a 50 year bond the other day, and to us, and to most investors, that makes a tremendous it makes a lot of sense because the u. S. Has an enormous need to improve its infrastructure. For those of us that have traveled around the world, especially here in dubai, and you go back to the united states, it is clear, it is evident, it is really appalling how pathetic the infrastructure is. Offset a 50 year bond to an investment in a 50 year Infrastructure Improvement makes a lot of sense, so i would imagine, given where rates are, that they should go ahead and do that, issue longterm bonds and use the proceeds to further expand the quality of u. S. Of the structure. Yousef hold that thought. We have plenty to get through. David pinkerton. That us get you a little bit of a preview of what is to come. Joins us to mckay discuss the banks earnings beat your it is about half an hour from now. Shery the ugly mood in europe. The french president ial debate turned personal. David pinkerton stays with us and gives us his take, next. This is bloomberg. Shery this is Bloomberg Markets middle east. On bloomberg tv and radio. Im shery ahn in hong kong. Yousef i am yousef gamal eldin in dubai. Very quickly come hsbc now saying they are contemplating a share of buyback as and when appropriate. No figures on timing on size. And you are looking at Deutsche Bank, one point 5 billion of stock to be bought back in the second half. Up to 2 billion according to some estimates. Let us keep a close eye on that. Let us get back to david pinkerton, cio at a bank. Let us talk about what is happening in europe and the french election, specifically with the latest president ial debates. What were your Key Takeaways here . David it was clear after the first round of the election in that the market was relieved that le pen would not likely be the victor, and even now, she is kind of backing off with some of the comments she made previously of, you know, france leaving the that clearly,ink if the polls and the current baked in expectations are such prevail,macron will there will be sort of a slight rally, but most of that is baked in already. If she surprises the expectations and prevails, then that would be a more remarkable selloff, but you know, our expectation is that macron wins this sunday and we are off to a expansion for the european economy and equity confidence. Yousef what is this going to do to risk and risk spreads when you look at the key Asset Classes and mainland europe . We have seen the decline in volatility, moves in the spread between french and the bund. Mean, the european economy has kind of sort of failed to really thrive and catch up to the states of accelerated expansion the u. S. Is in. Most of that has been hampered by all of these Political Risks and uncertainties. As we clear through those uncertainties, we hope that european expansion will then be released from what has been you know, it has been captive to some of these Political Risk premiums. Once these are cleared, we think that equity market confidence will return. We have already seen a decline in the euro versus the dollar. Over a longer period of time. For exports,mulus especially on the german side, so we think that all of these things are boding well for european shares. Which trade at a relative discount to u. S. Shares, which we all know it has been well commented on that u. S. Shares of in the top decile historic valuations. It is becoming quite rich. Shery cap. Good thing yeah, good thing you mentioned that, because i do have a chart on the bloomberg. If you look at this chart, you can see that all major global segment out of the u. S. Are actually trading at a discount. Does this mean that you are very positive about european stocks and there is more room to run . U. S. well, shares in the and in switzerland, for example, always are trading at a premium relative to other markets. They are also, you know, it is hard to compare markets to markets because every index is not comprised of the same industries, so the u. S. Command a premium because it has a heavy technology component, higher growth element, and some of the emerging markets and european markets have commodityoriented heavy factors. So they deserve a discount. You know, the notion of a ketchup trade for europe is one that everyone has been waiting tchupr a long time cat trade for europe is one that everyone has been waiting for for a long time. It is a great market. Shery we have been hearing about that for a few years actually. Talk a little bit about what is happening when it comes to exit negotiations, because may has accused e. U. Officials of interfering with the u. K. Election. How bad could this get . Will brexit negotiations risk breaking down . Quickly. Great question. That is tough to gauge, tough to forecast. There are so many dynamics, a lot of political posturing going in. Publiclys you heard are for negotiation purposes probably. We think it will proceed in an orderly way to everyones best interests. Ascribe that to be a huge risk for european shares. Shery david, thank you so much for your time. David pinkerton, cio of a private bank. The gulf equity markets have been stepping up their gains to lure foreign investors. There is plenty of opportunity in alternative assets. That, next. This is bloomberg. Shery you are watching bloomberg. I am shery ahn in hong kong. Yousef i am yousef gamal eldin in dubai. Let us talk a little bit about International Interest in gulf markets. We have been covering it out of saudi arabia. Of alternativee Investment Opportunities in the region. That is rising, and that is key. Tracy alloway joins us on the line from abu dhabi with more on this. Good morning, tracy. Good morning, yousef. I know you are excited. There is a wealth of thertunities right now in gulf, penned to saudi arabia opening up its markets. Tracy who better to speak about that than the doctor, ceo of golf capital . He is a huge player. Joining uso much for today. Let us start with saudi arabia because we did have that rare interview from the deputy crown prince where he was talking about some of the countrys economic plans, including domestic investment, the privatization drive. What does that mean for Capital Markets in the gulf region . It is what you mean a huge boom. It will open the markets again. There has not been much activity for the past two years. Wereu look at 2014, there 12 ipos, 10 billion. Last year, only for ipos him a 7 million trade. The ipo market are shot. Ipo like saudi aramco to open the market again. Tracy what about the dip in oil prices . We saw another fall yesterday off of the back of some of the u. S. Numbers. How do lower crude prices actually impact the private equity market in the gulf . To be honest, that is an opportunity for us here at with the drop in oil prices, valuations are coming down. Banks have we control the vacuum and provide Growth Capital or the liquidity. Tracy it is an opportunity because of growth, but when you talk to potential investors, what sort of concerns do they have about the region at the moment . Karim definitely the region is affected by the drop in oil prices. The gdp growth rate is going to drop, but with the governments are doing very well are diversifying, so you take the uae. 10years ago, it was 40 . Saudi as well. Them introducing taxation, doing the things necessary to balance the budget and keep on the growth coming. Tracy if we assume gulf countries, gulf markets are become really an investment destination thanks to this evolution, this opening up, where do you see the biggest opportunities, and could you start new funds to take advantage of the opportunities . Karim a huge opportunity today in the gulf as a consumer. We have the youngest population in the world and a very high gdp per capita. These consumers are spending a lot of money, so we follow the consumer. Anything that has to do with food, health care, education, these are very exciting sectors. Ecommerce. Early days. We have the highest penetration in the world, very high internet penetration, social media adoption, yet ecommerce is one of the lowest in the world. I think ecommerce account to only 0. 7 of gdp versus 3 for global outreach. There is going to be an explosion in ecommerce and we want to be invested in that sector. Tracy let me broaden it out for asecond because we did see giant of the industry say that politics is making the job of investing much more difficult. There is so much political uncertainty. Is that a problem for you as well . Karim if you look at the case of the u. K. , investors want stability and predictability. What the u. K. Have gone through is anything but that. Been regime change, currency collapse, dropping growth. That is making emerging markets look very good. I would rather be here in the gulf with stable leadership and growth, essentially. It is a good time to be in the gulf today. Tracy all right, thank you so m