Saudi Arabia, Credit Suisse Middle East, Bloomberg discussed on Biz 1190 Overnight featuring Bloomberg Radio
Your opinion that the markets will stabilize by the end of the second quarter. So does that mean for you looking for that it's that it's mission accomplished for OPEC? Or is there a consideration or concern that you might even need to go below the one point two million barrels a day, excuse me beyond the one point two million barrels a day of cuts in this first half. I think we've proven I've said it before it happened that we should never really look our hands off the wheel. You know, the market is is very small deviation from balance shocks the market. And I'm not talking about prices. Only investments the corporate plans and business plans. Get shaken and turned upside down. After two or three weeks of. Downtown. And so I think it's important for the producer's producers will join us to really stay focused on keeping supply and demand nearly balanced. Once we bring in the tourists below the five year average and keep it. But if we leave the market to its own devices. Then then we lose control. And therefore, I would never say I would never say mission accomplished because I think the miniature say that you dear off and get off the pathway. Sure and Saudi Arabia has done more than its share in the cuts on a way of guaranteeing their success. Have you gone below ten point two million barrels a day of production in this period? Which is your Europa Clement. Our? Non-opec? Limit is ten point three three. And we've brought it down to ten point two in January. I believe targets for February is below that it's approaching pinpoint one. But there could be a small adjustments in the domestic demand. So we will we'll find out in February. But under all conditions. Saudi Arabia is going to be well below the voluntary cap that we agree to for the full six months for the first six months. There is no intent unless unless unforeseen conditions. Bring us all together. Like, we did six months ago in June of two thousand eighteen to lift. To the targets of the cups. We to deviate from our commitment. We also had two major acquisition of chemicals company. We did not know that it was sabotage because we've heard about waiting for different opportunities of which saboteurs one. And we finally went opportunities arose with with PI fully figured out more synergistic. The one with mortification opportunities. We jumped on it. And we're talking to finalize the deal. So that is enough self-generated cash. It's not enough by itself would go into complementary to with the bond and other. Catamarca market tools that we have loans. We could we could. I think it depends on what is the payment terms. I mean. Ultimately, I. The payment doesn't have to be a bullet payment on on one day. So when negotiating with? On what are the payment terms? That are good for them. And also good for us. That's that's part of the negotiations that are taking place. Once once those terms are completed that would determine whether whether this bond program needs to be complemented with other borrow the payment terms that extended over longer periods of time. That would allow us to do a lot to pitch from subject to cash. I mean is that a possibility of face purchase where Perenco takes a bit of it now. And then additional no. The way I'd like to see is crucial. As soon as we close we still have to go through anti trust and other regulatory steps. But as soon as I've done, we we would rather just get get all of the shares, but we could have seller financing included to allow us to pay over time. Meanwhile, Saudi officials are talking to businesses to see how the government can adjust to economic reforms after rapid changes hit the private sector. Hard Economy Minister, Mohammad wage we spoke to Bloomberg. Andrea. Do admit that some of the reforms does that we've been into us with tough on some of the markets. However, we now really engaging with consecutive dialogue with the private sector to see how the government can make switches changes here and there to achieve some objectives. For some additional context the Credit Suisse Middle East, managing director. Welcome back to the program. Thank you. Let's start with the oil component of the story. We had also the folks from ACB Brent crude forecast for the next two years because of stronger-than-expected US shale production. You listen to the Saudi energy minister does that change? We used to add on. I think Saudi has been very vocal in terms of the message. And they're very strong message is that they will manage supply. They will stabilize the market. They're just not gonna let the market operate on speculation, which I think actually marries rose with with our views. If I look at credit Suisse's view, where we're forecasting advice to stand on the sixty five number for the next four months. No, right. So all all steady as more or less. We'll stay on the oil. The other component is. Of course, the announcement of these deals a lot of deals thirty seven deals. In fact, was fifty three billion dollars. And another twenty nine were also announced that those are valued at nine hundred and sixty million dollars or part of this infrastructure fund, this vision that they have your response to it perhaps a bit more positive than what we've heard on this show in the last few days. It's quite a bit of skepticism with the latest details. Is that skepticism removed for you? I it depends on how you look at it. Okay. So I think the market speaks for itself. So if you look at like any infrastructure related stocks yesterday cement being what have you has outperformed the market yesterday, and it was mainly driven by region and Dokan investors rather than foreign investors. So what I'm trying to say here is that if you look at local investors, they actually believe that they're excited about them. They know that the country needs infrastructure investment again when it comes to announce the mega projects, obviously, it's always over overtime and foreign investors on the country would always be a bit more skeptical. So again. You wouldn't see foreigners jumping buying cement stocks, actually, see local market investors driving that how long is it gonna last? It's always depends on delivery. Right. So if you actually see these invest investments materializing again, it doesn't have to be with the same size because mega projects are always announced in bulk. But it takes time to to phase out. But if we actually see the execution on the ground than argued that the action's needed in Saudi then I think it's going to continue to be positive for the market. We've seen a lot of announcements from the Saudi Arabian authorities. It's almost getting a little bit too much. According to some investors in terms of some of the sectors that you like you to date we've broken down some of the best performing sectors on the Dow looking at banks looking at food and beverages. I mean, he's a double digit returns in less than a month. Is that the wheel new direction of twenty nineteen what I should be looking at. Well, let's not forget that a lot of this is positioning ahead of MSI inclusion. Right. So and if you look, for example, like pet cams results were not that. However, actually, still the stocks perform, and is what I'm trying to say here is that regardless of what's actually happening on the ground in terms of the strength of of those companies with the strength of the earnings the event, the independent that's taking place in terms of influence and the positioning this taking place ahead of that is is is much of a stronger wave. Let's put it this way. So I gotta think be sectors will still continue to outperform Saudi will outperform the rest of emerging markets. It's up ten percent today as gonna continue that into MCI at least until the end of Q two. We had you a property names. Getting absolutely hammered smashed the last six months on the Dubai index. And then you have this latest report from L, and they're saying, you know, what we're seeing so much supply coming into the market possibly more downside for property prices. Evaluation play here for for these property names that make them attractive. The property names are cheap. But the Schieffer reason and argue actually they gonna get cheaper. So regardless of the numbers that we've seen from the property report. I think the market knew that. And that's why we've seen this underperformance significant on performance for the past six months or more. And actually think is going to continue if look on the ground to supply, and demand dynamics, it's very obvious. That is more favourable look at prices again without without even going into details or numbers, I still think we still have a long way to go in terms of the downton abbey say prices, and let me draw your attention to the other story out of Egypt. I know that's been high on your radar the central Bank governor spoke to Bloomberg just a couple of weeks ago. And he already warned that there will be more volatility different pound. And now we're here we've seen quite a bit of movement on the exchange rate advancing the most in almost two years is he going to widen out that band even further you can allow for more movement on the currency good. Good question. So a lot of people argued that the currency was somehow managed again, we've seen reserves reach. A very healthy point. But the the the the reason I would be bit worried about the different power have always been very vocal that I thought they did print is going to be extremely stabilized. He's for for for the post, and he did, however now we've reached a new cycle when you need to shift from let's say the the short-term trade with a treasury Bill rate into actual investments. I d is that hasn't happened yet. So the private sector or Reagan foreign investment hasn't really come into Egypt. I'm talking X oil and gas because it would always be distorted by oil and gas but gas we haven't seen that shift. So if that continues with it actually affect the currency, assuming that we have a free market and the central Bank does not intervene. The answer's yes. But the question is would be central Bank, intervene or not always very catching up with you. Thank you very much for coming on the program better. Use the Credit Suisse Middle East managing director. All right.