Moelis & Co. is preparing for a rebound in dealmaking once the Federal Reserve stops raising interest rates and there’s more clarity on the US economy.
(Bloomberg) — Moelis & Co. is preparing for a rebound in dealmaking once the Federal Reserve stops raising interest rates and there’s more clarity on the US economy.
“When it comes back, the M&A market will come back strong,” Chairman and Chief Executive Officer Moelis told Francine Lacqua in a Bloomberg TV interview at the Qatar Economic Forum on Tuesday. “We think we’re unlevered and we have a great opportunity to build the company in this downturn.”
Still, Moelis expects the Fed to continue to be aggressive for the time being as the inflation rate is likely to stay higher for longer. On the same theme, former US Treasury Secretary Steven Mnuchin said while the Fed may be “pretty much done” with interest-rate hikes, it could perhaps raise once more.
The US economy will definitely slow in the coming months as a result of higher inflation and rates, and “it will be a close call whether we call it a recession or not,” Mnuchin said. He also said President Joe Biden and House Speaker Kevin McCarthy were “moving closer” to a deal on the US debt-ceiling.
The first day of the annual QEF event featured speakers including Hungarian Prime Minister Viktor Orban, who said his country didn’t support European aid for Ukraine because it couldn’t win the war with Russia. The chief executive officer of Qatar’s $450 billion wealth fund said he sees growing opportunities in the world of private credit.
NOTE: The government of the State of Qatar is the underwriter of the Qatar Economic Forum, Powered by Bloomberg.
Key Highlights:
- Saudi Energy Minister Tells Oil Speculators to ‘Watch Out’
- Moelis Preparing for M&A Rebound Once Fed Stops Rate Hikes
- Wealth Fund QIA Joins SoftBank, BlackRock in Private Credit Push
- Mnuchin Says US Is ‘Moving Closer’ on Debt Deal as Talks Drag On
- Qatar Warns Europe of Gas Shortages in Switch to Renewables
- Poland Is ‘Quite OK’ With Zloty Gains, Finance Minister Says
- Standard Chartered CEO Sees ‘Reasonable Stasis’ in World Economy
- Rwanda on Standby to Receive UK Migrants, President Kagame Says
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Some Firms Questioning If They Should Be In China, Moelis Says (3:40 p.m. Doha)
Some company boards are likely questioning whether they “can afford” to be in China given current geopolitical risks, according to Moelis.
Firms now have to consider how many assets they want to hold in China given the possibility they would have to exit the country in the event of a political escalation between Beijing and Washington, Moelis said at a panel discussion alongside Temasek’s Chief Investment Officer Rohit Sipahimalani. “I don’t remember that being on the agenda in my first 30 years in this industry — and now it’s definitely a conversation,” Moelis said.
Sipahimalani said regions outside of the US or China camps will benefit in such a geopolitical environment.
Media Mogul Chernin Sees Successor for Disney CEO Next Year (3:30 p.m. Doha)
Walt Disney Co. should have lined up a successor for CEO Bob Iger by this time next year, but the search for a replacement will be “very rushed,” former News Corp. executive Peter Chernin said.
One of big challenges for Iger, who recently returned as CEO of the entertainment giant, is deciding when to offer the ESPN cable channel directly to consumers online. That will be “a pretty challenging transition,” Chernin said, adding that the advertising revenue and fees from cable providers that ESPN gets would be “pretty hard to replace.”
Twitter, meanwhile, has yet to prove that it can build a successful subscription platform, said Chernin, who previously served on Twitter’s board. Celebrities who creates shows on Twitter, such as recently-fired Fox News star Tucker Carlson, are making a trade-off, he said.
“Could Tucker get 4 or 5 million paid subscribers? I’m not sure,” Chernin said. “You certainly don’t have anything near the reach you used to have. You’re getting paid but you have less influence.”
Qatar Wealth Fund Joins SoftBank, BlackRock in Private Credit Push (2:55 p.m. Doha)
Qatar’s sovereign wealth fund sees growing investment opportunities in the world of private credit, joining the likes of SoftBank Group Corp. and BlackRock Inc. in touting the $1.5 trillion market.
The $450 billion Qatar Investment Authority has been “very active in the credit space” over the past two years and is keen to do more as companies with good business models struggle with the double whammy of high interest rates and low liquidity,” CEO Mansoor Al Mahmoud said.
“Normally, an institution like us, who are very liquid, have a very long-term risk appetite for these type of investments,” he said. “I would advise for the next one year that the credit space is an interesting place to deploy some investments.”
StanChart’s Winters Calls Gulf a Magnet for Chinese Money (2:50 p.m. Doha)
Standard Chartered’s CEO Bill Winters described the Gulf as an “absolute magnet” for Chinese investors in a panel at the event. The amount of interest out of China in the Gulf is extraordinary, he said, noting the region’s vast sovereign wealth funds are part of the appeal.
On the same panel, Goldman Sachs’ global head of sovereign business Dina Powell McCormick said she was optimistic about a deal on the US debt ceiling being reached, albeit probably at the very last minute.
Poland Is ‘Quite OK’ With Zloty Gains, Finance Minister Says (2:40 p.m. Doha)
Poland’s Finance Minister Magdalena Rzeczkowska endorsed the zloty’s recent appreciation to the highest level in two years and said the government wasn’t backing the currency’s advance.
“We are not getting too much appreciation of the currency,” Rzeczkowska told Bloomberg TV in an interview. “We’re just getting back to the levels from before the war, so I think the situation is quite OK.”
TikTok ‘On Track’ to Have US User Data Hosted by Oracle (1:50 p.m.)
ByteDance Ltd.’s TikTok is “on track” to have all US user data hosted and overseen by Oracle Corp., as the Chinese behemoth struggles to win over critics worried about the national security implications of its hit video app.
TikTok CEO Shou Zi Chew said the American software company has begun a review of TikTok’s source code and is now the default destination for US user data. His team is also developing a European version of this local-hosting initiative, designed to allay fears of sensitive information reaching the Chinese government.
“The Chinese government has actually never asked us for US user data, and we will not provide it even if asked,” he told Bloomberg TV. “We will continue to invest to make sure that our data is as safe as possible.”
Ukraine Can’t Win War With Russia, Says Orban (12:03 p.m. Doha)
Ukraine can’t win the war against Russia given that the North Atlantic Treaty Organization isn’t ready to involve its troops, Hungarian Prime Minister Viktor Orban said.
Orban asserted that his government wasn’t part of the “mainstream” European Union approach to the war. “The only solution is ceasefire, and then after the ceasefire, peace talks should start,” he said in an interview.
Hungary was in talks with Qatar to buy gas in an effort to reduce its reliance on Russia for energy and for help to buy Budapest airport, he said.
Ukraine Can’t Win War Against Russia, Hungarian Premier Says
Iraq Plans New Licensing Round for Border Fields (11:57 a.m. Doha)
Iraq plans a new licensing round for investors to bid in energy fields along its borders, stretching from Syria to Saudi Arabia, within the next two months, Ghani said.
The country’s oil exports from the north are still halted as Turkey conducts maintenance works on the pipeline that was damaged by the recent earthquake, he said. Ghani reiterated that Iraq is committed to OPEC+ production cuts.
Qatar Sees Energy Transition Causing Oil, Gas Shortage (11:45 a.m. Doha)
Qatar’s Al-Kaabi said the global push toward cleaner sources of energy will result in a shortage in oil and gas supplies. Europe was only able to manage its energy requirements last winter because the weather was mild and economic growth slowed, he said.
Qatar is expanding production capacity at its North Field in two phases. Demand for liquefied natural gas from North Field East and North Field South is high, said Al-Kaabi, adding that he expects supply contracts for all of the additional supply to be signed by the end of this year.
Qatar Air Ramping up Capacity; Going Back ‘Big Time’ Into China (11:18 a.m. Doha)
Qatar Airways is ramping up capacity in Europe, Africa and going back “big time” into China, CEO Akbar Al Baker told Bloomberg TV. Ticket prices will continue to be higher, he said.
The airline is waiting and watching on new orders for planes beyond its existing orderbook, Al Baker said. The carrier is seeing strong demand for business class, with load factors regularly 95%, he said.
Saudi Energy Minister Issues Warning to Speculators (11:14 a.m. Doha)
Saudi Arabia’s top energy official issued another warning to oil short-sellers, just over a week before the OPEC+ alliance is due to meet.
“I keep advising them that they will be ouching — they did ouch in April,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the Qatar Economic Forum in Doha on Tuesday. “I don’t have to show them my cards and I’m not a poker player. But I’d tell them: ‘Watch out’.”
The prince — famous for telling short-sellers they would be left “ouching like hell” — returned to the theme at a panel discussion at the forum alongside Qatar’s energy minister Saad Al-Kaabi and his Iraqi counterpart Hayyan Abdul Ghani to discuss what’s next for global energy supplies and demand.
Rwanda to Return to Debt Markets When Need Arises (10:15 a.m. Doha)
Rwanda will need external financing for new infrastructure projects and will raise loans as required, President Paul Kagame said.
“We are busy building a country. We will need resources,” Kagame said in an interview with Bloomberg TV at the QEF. “Whenever there is a need, we will always go back” to the international debt markets, he said.
Rwanda sees “huge opportunity” for building ties with the Gulf region and Asian nations, including Qatar, and is focusing on linking up with market leaders in various sectors, Kagame said.
AI Should be Regulated, Ursula Burns Says (10:10 a.m. Doha)
The “unbelievable gift” of artificial intelligence should be directed toward good use for all and making people’s lives better, though the technology should be regulated, said Ursula Burns, chairwoman of global consulting firm Teneo and founding partner at Integrum Holdings. “Regulation should not be about control or making it fool-proof,” Burns told Bloomberg TV.
For businesses, Burns said that tools such as predictive AI can help to quantify, and therefore outrun or mitigate, risks significantly. That would help create more opportunities to invest, she said.
However, the lack of direction and regulation makes investing for the upside a “very big difficulty for us,” Burns said, “because who the hell knows.”
AirAsia Founder Says Ticket Prices Have Peaked (8:35 a.m. Doha)
AirAsia founder Tony Fernandes reckons that ticket prices have peaked, at least where his airline operates. All 210 of AirAsia’s aircraft are due to be back in operation in about two months and its fleet should expand to 300 planes in the next four to five years. By then, the group’s annual passenger traffic will rise to 150 million from 80 million, he said in an interview with Bloomberg TV.
“This is quite something from two years ago when we were struggling to survive,” Fernandes said.
AirAsia is also looking at starting airlines in two more countries in Asean, in addition to plans to launch in Cambodia, he said, pointing to “phenomenal growth” in the region.
–With assistance from Paul Richardson, Ellie Harmsworth, Francine Lacqua, David Ramli, Grant Smith, Haslinda Amin, Ram Anand, Paul Wallace, Nayla Razzouk, Zainab Fattah, Verity Ratcliffe, Charlie Zuza, Todd McEvoy, Ben Priechenfried, Manus Cranny, Archana Narayanan, Mike Cohen and Ben Bartenstein.
(Updates with comments from media mogul Peter Chernin and CEO of Qatar’s wealth fund.)
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