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tv   Best Of Bloomberg Markets Middle East  Bloomberg  November 4, 2016 12:00am-1:01am EDT

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♪ >> it is noon here in hong kong. i am shery ahn with an update of the top stories. the south korean president is willing to be questioned over her role about the peddling scandal. she apologized in a televised address. this week, her friend was arrested. shares have been halted in hong kong as an investment bank is set to announce a substantial acquisition. talk with china investment securities about investment opportunities. it has brought some of the
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biggest state-owned firms to market. egypt's central bank will abandon currency controls and raise interest rates to the highest level in more than a decade. the government also revealed plans to raise the price of gasoline by as much as 47%, leading to long lines at gas stations in cairo. global news 24 hours a day journalists and analysts in 120 countries. hong kong and china are closed for lunch. here is how they were trading, almost unchanged. fluctuating between gains and losses over anxiety of the residential election. ♪
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>> welcome to the best of the bloomberg markets middle east. the major stories driving headlines in the region this week. sold its largest sovereign bond in market history in october. that sparked the longest rally in two years. , opec18 hours of talks failed to come up with an agreement with major producers on limiting oil supply. the group remains divided over the role of iran and iraq, who both want exemptions. our markets reporter told us this was a missed opportunity. >> it is easy to say it is a missed opportunity because some of those other producers to come out and say, we are waiting for opec to decide before we join in. opec could not agree on final numbers. it is easy for those other
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producers to say we will cut if opec will agree. they do not have to make any decisions right now. ofwill really see at the end the month where people come down, whether they are finally willing to cut. the big prize for opec is russia, getting them to join on cuts. -- they are producing at record highs. that is key to what opec wants to do. they need to agree, first of all, on what everyone is producing, and agree on a number about how they will reduce to a target levels as they try to boost prices. manus: what is next in this? we have had talks about talks. is it about bringing iraq on board in terms of giving any latitude at all? >> the answer is more talks, of
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course. they will be meeting again opece the november 30 meeting to have a technical session where they will hash outnumbers. coming up to the latest meetings, we have seen a lot of diplomacy, traveling around, visiting members. we have seen the russians traveling for a meeting with members before they went to vienna themselves. we will see more of that diplomacy, of people trying to match up numbers, positions, before technical experts get back to vienna at the end of november for final numbers for the ministers to decide on. there will be more talks before final decisions. fabio from the
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iman investment fund. talks about talks about talks about talks. the opec boys and girls club to talk more than the. we had meetings in the anna. -- vienna. how optimistic are you? >> when you mean to strike a deal, the terms of the deal are important. what is more important is enfo rcement and how you actually make sure whatever is agreed to will stick. now, this has been quite difficult historically. ,f you bring a new actor in russia, which is a powerful force, a large producer, things become even more difficult. now, russia is increasingly willing to strike a deal because they have oil fields with very
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high costs. they are probably producing at a loss. there is a need for them to make this oil market tighter. and the seniorin decision-makers in moscow have tried to reach out to opec. whatwe need to see exactly opec wants, how opec wants to play this. if they want to reach a deal, trust putin, or stick with their strategy. i am not sure they have made a decision. we have a month to see the result of all this talk, as you say. in the meantime, the market will have $50 per barrel. go on, the news will
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definitely influence the market. we will see volatility. >> we just heard from anthony about shuttle diplomacy, all the moving parts. what is actually needed for opec as a group to maintain credibility on this front? is stronger when supply is tight. because then a large producer like saudi arabia can really drive the oil price. cartelmand is weak, a strategyve a coherent because it does not have actual market power. now we are in a situation which demand and supply are more or less balanced. we see the resurgence of opec market power, but not enough to
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actually drive the oil price up. presence of other large players such as russia complicates the picture. end up isthis will hard to predict. the iraq issue is an issue that goes beyond economic matters. iraq is facing a threat from isis. they are fighting a war. they need money. manus: they are driven by fundamental economic need. you just covered the bond issues last week. ultimately, saudi needs this above $50. they need this closer to $55. society, theomic economics of an ipo, that
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matter more. >> $65 has to be a level that can be reached and maintained. it is not enough to get to $65 or $70 if you go back to $50. it needs to be some kind of strategy that sets long-term price reference, which is the $50 we see. $60, we might be seeing in the near future. manus: talking about the bond market, we look at bonds. we looked at treasuries. there are politics at play in the bond market, but there is the threat oil could inflict inflation. is there something else driving that? >> the oil, we see in inflation numbers that the effect of lower oil prices are failing. we see inflationary pressure here and there.
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i do not think the oil price toound will be so strong derail monetary policy or economic recovery. up, saudi stocks went on the longest winning streak in more than two years. we look at what was beyond the move. ♪
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♪ manus: welcome to the best of "bloomberg markets middle east." gains on saudi stocks finally came to an end this week. what drove the longest winning streak in more than two years? up 9.5% over the past eight days, the longest winning streak since 2014. amazing turnaround in sentiment. why the sharp turnaround? it has to be the bond sales.
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,17.5 billion worth of debt proving saudi arabia can tap the international finance markets. we have seen some domestic measures that have improved sentiment. we have seen the saudi arabia monetary authority announced last week it was going to start 90 day repo operations to ensure banks have enough liquidity. we have seen cash costs rising dramatically. they eased yesterday. it feels like the confluence of these events, access to financing, proof that they are trying to improve things, is starting to change investors minds. manus: there is confidence on the chart. i need you to talk us through this. the 200 dayg gcc, index, the 50 day, the 100 day, bring them together for me.
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what is a double death cross? >> short. here -- sure. here at bloomberg, we like to celebrate halloween with analysis. it is when it moves below trendlines. traditionally, this is a bearish signal. the last time we saw the signal was in august 2015. that was right before the end of ,he year and the big fall-off stocks felle gulf the most on a monthly basis since 2008. one of the things people look for when it comes to this indicator is for it to be accompanied by trading volume. we have not seen trading volumes pick up that much this time around. we have not escaped the summer volume lull. things are still pretty slow.
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in order for that signal to real shine, i suppose you might put it, it would need to be accompanied by trading volume. maybe it is not time to panic yet. manus: saudi arabia has replaced its finance minister of nearly in favor of ousted a man that used to head the capital markets. w, what do you make of the man brought in? >> surprised in the sense it was not telegraphed. we did not have any hint it was coming. we kind of knew this was in the cards. we had a changing of the old guard. naimi was replaced. 20 years.there for the deputy crown prince is replacing old guard with younger, more energetic, more
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ambitious, more with the 2030 program and the changes he needs to get through quickly. arabia tos help saudi the outside world? the bond sale of $17.5 billion last month, the biggest for an emerging market. saudi arabia ran a budget deficit of $100 billion last year, 15% of the gdp. they need to sell the country, bring investors in. they are trying to get more qualified investors. they need to sell t program. external investors, but domestically. the outgoing finance minister was on tv last month to talk about the austerity package. it did not go so well. he was criticized. for sure a lot of the job
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the incoming minister will be to sell this domestically. manus: the honeymoon period may be over for vision 2030. thank you for your perspective. let's bring our guest back into the conversation. -- it isg of the guard about appealing to a broader church. give me to -- your perspective. >> it has been a challenging year for saudi arabia. one of the issues andrew touched upon was a frontloading of the lederity program, which has to a difficult fiscal situation, challenging fiscal situation, for the kingdom. perhaps now we need to see some positive catalysts for the markets. finance minister has to offer not only one side of the equation, the cost-cutting side of the equation, but the other side of the equation, the benefits that accrue from a
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national transformation plan. how much of this is really optics? al-assaf was one of three officials that turned up on a popular saudi talkshow talking about austerity, the new age in saudi arabia. it got a lot of criticism. how much of this is payback, i guess? >> i think part of it is optics. of course, there has been some perhaps,nication, recently. the reality is we have seen salary cuts, higher bills for the average household. that needs to be offset at some point by some catalyst. it is time to deliver some of the promise of vision 2030. manus: next on the best of "bloomberg markets middle east,"
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property sales in dubai plunged in the first half of the year. we spoke to the head of one investment firm that managed to increase income. that is next. ♪
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manus: welcome back to the best of "bloomberg markets middle east." real estate sales in dubai fell in the first seven months of the year. stubbornly low oil prices weighed on the region. there are signs of a revival. we put a question to the ceo deputy chairman of emirates. beginningsed from the on the balanced portfolio. own 30 year we leases and invest in properties to make them attractive.
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in the current market, tenants are keen on limiting cap-ex. we are doing it for them. environment, you prices,ump in oil property prices in the region dropping. you manage to increase total property income in nine months. culturederstanding the and the desires of the local consumer? boils to a few things. in the current market, you can buy property, so we are heavy on acquisition in the moment. therefore, it helps you having good numbers. as i said previously, we
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invested a lot in existing properties. we fitted them out at good rates. angie: just checking your performance here, despite all you said, despite this increase, the strong results, stocks were up less than 1% monday. i am just checking here in my bloomberg terminal. if you want to go into it now, i have year to date. much,ill see it pretty you know -- investors not really believing this story. so what is the message you need to get across to investors? the stock market has been challenging. it is still challenging. we are mostly flat for the year.
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if you include dividend performance year on year, it is about 11%. market, investors see us like the global stock market. let's talk about the cash on your balance sheet. you have nine blockbuster properties here in dubai. are you in acquisition mode? >> we are very much in acquisition mode. we have $900 million to spend. we just did a development of a british columbia canadian school. we are looking at building new schools and buying existing schools and office buildings. it is a good time to do it. manus: i want to talk to you about saudi arabia. there has been a shift. talk me through it. arenext time we sit down,
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you going to say, i have expanded beyond my nine blocks in dubai? reit, we are very bia, looking at saudi ara one of the big local markets. all the markets are starting to shift, which is a sign of investment. we are interested in looking at it. tous: reit has been looking acquire property in the emirates. will it be commercial? retail? education? talk me through the agenda. foreign investors can only invest in free areas, which are restricted. working with the
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government at the moment, looking at the education sector, which is promising. the retail sector is also promising there. angie: you have a royal decree allowing reit's manager to acquire property. what is the value, perhaps the size, of any purchase there? >> it is extremely difficult to talk about acquisition. it is volatile, so we are careful when we talk about acquisitions. if you look at previous acquisitions, it is usually between 100 million and one billion. we are looking in this sweet spot. angie: it is all about the sweet spot for investors. on the property you can tell us about, what is the outlook for
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2017? >> the outlook is stable and increasing year-over-year. we had organic growth of 5%. in contracted rent, we usually have an increase of 2.5% per year. 5%. year, we did we expect something similar over the next year. manus: next on the best of "bloomberg markets middle east," the slippery slide of crude -- can it reverse its losses? that is ahead.
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♪ it is 12:30 in hong kong. the race for the white house is getting tighter. hillary clinton holds a slim lead over donald trump. a new york times poll has clinton ahead 45% to 42%, much tighter than the nine point lead last month. the abc news tracking poll has the race even closer, with clinton only ahead within the margin of error. gopro shares under 20% in extended trading as the camera maker presented a hazy picture on sales for the holiday season.
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the company lowered its four y ear sales forecast. sales have failed to click with investors this year and are down more than 30%. the ceo told bloomberg he is not worried. tokyo, shares were suspended said takata'sews u.s. unit will file for chapter 11. the company began seeking buyers in may after regulators in the u.s. and japan ordered expansions of recalls that were already the biggest in the auto industry's history. breaking news out of japan. mitsubishi corporation has just released earnings for the first half of 2016. 179.82 billion yen with
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yen.d-half dividends of 30 they deal in everything from electronics to metals and are yen foring 330 billion the full year. stock prices were falling in the morning session because of a surging yen, but overall for the year, it is up more than 10%. global news 24 hours a day powered by 2600 journalists in 120 countries. let's get a check of how markets have been trading with david ingles. pound,have a look at the one of the better performing currencies this side of the world. we are very close to the 125 level. the 200ancing back from day moving average. hours, the latest quote
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on the egyptian pound after the massive drop. not the best day. a big weekend ahead. in -- and in hong kong and china, fingers crossed. manus: welcome back to the best of "bloomberg markets middle east." fallen almost 10% over the course of the week. what is behind the declines? ti trading around $46 a barrel today. last three sessions, it has fallen about 6.1%. faileday, opec members to come to an agreement on output levels. they met in september and they came to a basic framework agreement. they wanted to limit output or potentially cut output. the devil is in the details.
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how much is everyone going to produce? going to cut? they failed to come to an going to on who is cut, how much, and by when. that injected uncertainty into the market. that is why we are in this bearish trend now. glut?t about the global is there still overhang? stockpiles? >> that is the other factor. the american petroleum institute said last week, u.s. inventories rose 9 million barrels a day. bloomberg had estimates forecasting u.s. inventories rose by 2 million barrels last week. total oil inventories are around million barrels, 30% above the five-year average. there is still overhang. through a glut to eat
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before a supply-demand balance. that is why you are seeing a downward trend the last few days. manus: the question is, will that trend continue? thank you so much for joining us, aaron clark, with the latest on the oil markets. and we have the managing director of national bank of abu dhabi securities. -- it isonly one story whether you think saudi will hit a price above $50. what is the betting in your shop? >> i am not sure what is happening to oil prices is related to opec or the agreement. i think what you see in the bond markets is a selloff. is if they reached an agreement five days ago, with the price have gone up? my answer would be no. there is a risk averse attitude
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with investors. a lot of that is coming out. we are still trading in the acceptable range after breaking $52 10 days ago. or $52. be back to $51 none of the fundamentals have changed in the last five days. the talks will drag for a few weeks. manus: another few weeks. can society get by at $50? will they be happy with $50? >> if this continues, they are budgeting for that. they have cut down expenditures over the past year. it will be tough times for a year or two, but i think they can. the issue is not just saudi. saudi said, we are not going to cut production unless everybody else does. unless they back down, this will be a bad statement on everyone. manus: exactly. >> everyone has to be on board
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if they do an agement. manus: there are two big issues. one is the federal reserve. there has never been so much dissent. has of the time the fed dissented, more than greenspan or berneinke. will we see that grow going into 2017? >> it is not clear. everyone is pricing the december 1. everyone is expecting the totement that may come up confirm to prepare markets for that. of issue is indications 2017, the speed by which they will increase. if they increase low, it will grow. but i do not think you are going to hear that with the elections. the u.s. elections may bring
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with it a change. in general, that is not positive for the dollar. it is not positive for stability we have seen in the markets in the past two months. angie: certainly not status quo. that is one of the key issues in the u.s. election. says that hemp represents. i just want to jump in right now. index, gyrations in the climate. p to a sinceamping u june ahead of the u.s. election. for outside mean investors, especially in the middle east? willthink volatility increase on the short-term, especially at the rate it is going up.
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sixreak up the past sessions, it shows people are being anxious. there is a lot of liquidity outside. whether it is outside now or outside for a while, waiting for the election. we have seen the gold going up. overall, people are staying on the outside. that means it could be good and bad depending on the outcome. clinton n, you may see relief early. manus: look at the 3% upside on the clinton win. 15% drop on a trump victory. same status quo for you? >> that is the feeling we have at the moment. i believe that initial reaction may not be the long-term reaction. wins, thisif clinton will be a relief in the market.
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manus: coming up on the best of bloomberg markets middle east, we look at the planned expansion of heathrow. from dubai international airport's ceo. ♪
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♪ manus: welcome back to the best of "bloomberg markets middle east." the british government gave the green light to construction of a third runway at heathrow airport. dubairiffiths, the ceo of international airport said it is too little too late. >> absolutely the right decision, no doubt about that. it is 50 years too late. that is the only thing. it is going to be a long process. the bureaucracy in the u.k. seems to be the world's most
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refined and comprehensive when it comes to strangling infrastructure projects. whether they will let us build this or not, we will have to wait and see. iag ceow on friday, the saying he had no confidence in heathrow to deliver the runway cost efficiently. do you share those views? >> if you look at the track record of delivering projects on time, i have to say it is not great. it will be a difficult project. it is very complex. let's not take that away from the airport operator. there is a huge number of people that have to be consulted. that will take time and money. unlike a straight infrastructure project where you can just do it, this is by no means a simple matter. manus: what does this do to the hub discussion? you have heard the debates between london, obviously
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building your own global hub here. what does that do to competition? does it reinforce heathrow? >> absolutely. it is a great opportunity. london is a massive global center, as you well know. the airport capacity constraints have been there for decades. the unleashing of that constraint, the ability to not constrain growth for the future, will be a major benefit to london. unlike amsterdam, where there is a fairly small domestic market, the u.k. market is both a very large market and also has a significant opportunity to grow with a very large domestic population. intm a point to po international airport and hub, heathrow is positioned to use every ounce of capacity the runway will create. >> walk us through what a third
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runway means for aviation in dubai. does it mean more routs to london? the value of plots owned by airlines in the region starts to come down? >> it means that the capacity being unleashed at heathrow will enable more services to be operated. there are 13 flights every day between heathrow and dubai. i am sure the market can take more. the connecting hub in dubai is 260 destinations is more than can be served from heathrow. an additional runway will fuel that capacity. to buy is the second most out ofous route heathrow after new york. it could really strengthen the ties between the u.s. and u.k. manus: i saw that, an hourly shuttle. how is traffic at the moment
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between the u.k. and dubai? this trip will cost me 20% more than the last time. how is the route looking? >> when you get an impact like a currency change, it is the balance of benefits. for a start, the u.k. is suddenly the place to invest because the currency is devalued in real terms compared to the rest of the world. anyone traveling to the u.k. for leisure or business is paying far less for their visit. there is a balance of benefit when the currency moves against another. manus: let's talk about the mantle ou -- you wear. for 60l be responsible million tons of cargo if you get it on track. talk about the master plan for the airport. has it been approved?
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when will work to begin on additional capacity? >> we have signed off the master plan. the detailed design is underway. the idea is we will be commencing significant infrastructure work in phase two shortly. obviously, at dubai international, we have a limited amount of space. we think by 2023 we will be up to 118 million, the most number of passengers per square meter of any airport in the world. the new airport plans to be open in the second phase in 2025 the not be a moment too soon. >> speaking of expansion, we know you are looking at closing space between a380's. is that still on the table? how close are we?
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>> absolutely. we are collecting data to be ofembled over a long period time to ensure that any subsequent operational change is safe. it has the benefit of being able increase arriving aircraft at dubai international. we hope this will help increases beyond the 90 million we are likely to achieve next year and the 118 we are aspiring to achieve. manus: a couple things come to mind, a couple of brands. cathay pacific has been at the top and gone. status drifts. if you look at emirates, is it going to be full, or is it just moment?hoenix-like will there be enduring airline success?
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none of them have remained, thay, pan-am. >> the difference is they had one strategy since 1985. incredibly closely with the aviation enterprise in dubai. it is very closely coordinated. i am very optimistic that continueand dubai will working in partnership to ensure the future is equally successful as the past. manus: next on the best of bloomberg markets "bloomberg dhabis middle east," abu is looking towards asia for technology investment. . ♪
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manus: welcome back to the best of "bloomberg markets middle east." mubala development is said to be considering an investment in softbank. peter l stremme told us what
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softbank is trying to accomplish. >> softbank, a few weeks ago, announced plans for this fund, a record sized fund if they put it together. $100 softbank has done many deals on its own. it acquired sprint in the u.s. it made investments in alibaba in china and announced a deal to acquire arm. this would give it capital to go out and do deals that would complement the existing deals. $100 billion would be the biggest fund in the world. it would get about $45 billion from the saudis. $20 billion of its own money. it is looking for other investors to supplement the capital. st is talking with the qatari
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and abu dhabi fund as well. manus: why has this deal, round at this time? this is about harnessing capital, really, isn't it? does it make sense? >> well, it does. of softbank has a strong track record. alibaba is the star in the portfolio. the stake is worth more than $60 billion. as it is going to the saudis they look to diversify beyond the oil-based economy. he is making the case that softbank would be a good vehicle to invest those kind of dollars overseas in different investments and diversify the portfolio. it is an enormous amount of capital. >> what kind of deals is softbank likely to do after it
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closes the fund? well, they have a history of investing in technology deals across a range of sectors. they made a deal in sprint, which has not worked out. they invested in e-commerce. arm is a bet on the internet of things. they talked about the opportunities they see in that field. the anticipation is theund would be used to build on that investment in arm and look at opportunities in smart products across the board to complement the chips they plan on making for this push into the internet of things. >> peter, thank you for all of that. now, let's go to the bloomberg nation builders conference in singapore, where we are joined by the chief executive of one of the world's largest engineering firms. they have an annual contract
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worth about $20 billion exposed to a lot of regions around the world, not only here in asia, but around the world. the ceo joins us now. what do you think of the global climate right now? as we talk about the attack on globalization, in this environment where we seem to have tightening from at least the fed, how does this all add up when it comes to infrastructure projects? well, thank you for having me on the show. it is a pleasure. i see a lot of potential for infrastructure development in asia, the middle east, and africa. what we are seeing is because of constraints in terms of funding infrastructure projects, we see a lot of potential in terms of the private sector stepping up. we see that happening in asia and the middle east. there is more talk about tpp.
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for that to happen, for structuring has to be correct. there is money available in financial institutions, but the structure has to be done right. the allocation and return has to be done properly. i see that happening more often. i think that infrastructure projects have a bright future. we were talking in a panel this morning. trillion in infrastructure globally and $80 , a lotn across the world of money the construction industry has to put to work. manus: that is it for the best of "bloomberg markets middle east." it busy week ahead in the region. we will be covering the opec gathering. we will be right here at the start of your trading week in the gulf sunday morning, 8:00,
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uae. i am manus cranny. this is bloomberg. ♪
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♪ it is 1:00 p.m. in hong kong. following corporation , down 3.6% after net income came in at $1.6 billion. the company has raised its full-year net forecast to ¥3 billion. the plan to pay a dividend of $.50 in the second half. tumbling, nikkei says the u.s. unit is planning to file for chapter 11. the company has been seeking a


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