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tv   Bloomberg Markets Middle East  Bloomberg  May 18, 2016 12:00am-1:01am EDT

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rishaad: the imf said banking problems must be tackled. tehran wants to reconnect with the global economy. excess charity is on the agenda -- excess projects may hit the brakes. japan dodged a technical
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recession. offsetting lower business investments. out the trade route linking europe to asia. hong kong will have a big role to play. manus: welcome. i am manus cranny in dubai. man.e: i am yvonne good see you. what do have today? manus: i will kick it off with oil but from a slightly different perspective.e. as i said to angie flirting with 50, it is a long dance and can it last that there is one market that has taken this rally to hurt. the intelligence valuation. it is rocking it.
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trading at $80 a barrel. that is what these valuations are saying. valuations have gone up by the legendary short sale -- much. -- that is way too relative to where oil is. flirting with that nifty 50, can it last? american oil and gas explorers, this is not popular when it was 80 or 100 and certainly not when it is at 40 bucks a barrel. when we talk out oil we see that this record amount of crude, this is the u.s. crude inventories. the data coming up from last week saw little bit of a pick downward. this is the first have seen in a
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month. this is the fourth drawdown this year. that he'se signal most of output that have been dropped in u.s. are sucking up some supply. let's take a look at it. how it is in the asia-pacific. thewn day with .7 of 1% to hang seng getting pummeled. we have china's number three causing a lot of political tension. we are seeing another day of gains. in the middle east under two hours away from the opening of the emirates markets. here is how they ended the day yesterday. a mixed picture. it's the obvious -- abu dhabi stocks are up. there is talk of fiscal
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consolidation, spending cuts may have exacerbated this slowdown. let's go to saudi arabia to see how things go. cut.continued to defy that and the index is pretty much flat. we're seeing egyptian stocks, the world's biggest gainers, 1.9%, the most in a month. that increases the biggest among more than 90 days is tracked by bloomberg. the tel aviv stocks pretty much flat. manus: here at it or stock -- stories that are making headlines. heidi: hillary clinton has claimed victory by half a percentage point but bernie sanders has her in oregon.
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clinton is still on track to get the nomination but had hoped to get there without further losses. donald trump won easily in oregon. he claimed he had made $557 million in a disclosure. his campaign provided scant details on the sources of that money. japan's economy return to growth in the first quarter with a small jump in consumer spending helping at avoid another technical recession. following a revised contraction in the previous quarter. analysts say momentum for the japanese economy remains weak. beijing's third-highest ranking officials said hong kong should participate in china's development. is in the territory on a three-day visit and told an audience of business and political leaders that hong kong's prosperity is important to china.
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pro-democracy protesters were kept well away from the venue. cutter air is so brady the launch of its atlanta to the area where it. the ceo has said the new [indiscernible] delta has accused cutter -- qatar of competing unfairly. this is bloomberg news. yvonne: you're watching a pretty big mover in tokyo right now. heidi: we have had suzuki come online after it was confirmed testingis facing a
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issue. automakers saying it found an improper method of testing and they will report the issue to the japanese ministry. there was the lunch break it we saw this report coming through in suzuki shares plunging the most in 16 years. they were down by as much as 15%. losses down by 8.4%. this is a company that has an $11 billion market cap. so far thisn 33% year. a huge mover coming through and japan. just having a look at the rest of the market action. we are seeing some good moves in the firste saw quarter gdp and the dollar stronger across the board. this is on the speculation we could see a rate hike from the fed in june. elsewhere we are seeing
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widespread selling with the exception of malaysia and jakarta. polls weck of those saw coming from the u.s. recession. in a new survey half the company is interested in doing business are still worried about reaching sanctions. good to see her. but start with the imf, what are they saying? the imf was in tehran and one of the things they have been saying is iran needs to work on privatizing its economy. iran had started the drive about a decade ago but that was at a time when foreign investors were virtually nonexistent because
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iran was heavily under sanction. one of the actions that iran needs to take is to go over and try to push forward with that drive once again and introduce market oriented reforms. yvonne: most of the sanctions were listed in january. investment -- investor sentiment is pretty said do. why is that? a goodiran has been on course. most of the sanctions that were net clear word lifted in january. we have seen a lot of interest from the business community. every other week we're seeing for officials going to iran with trade delegations so that has been happening. we had the prime minister last month, we will see the south
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korean president was there earlier. we are seeing a lot of activity but the major issue is that for this company they need to have the backing or have a bank and banks are very reluctant entering into business with iran. some of the major top-tier european banks were burned trying to engage with iran and that includes names like [indiscernible] that had to pay a fine. theree of this background is a hesitation for banks to want to resume operations with iran and that is a major deterrent for resuming normal relations. yvonne: thank you. manus: markets in the middle east are opening up. saudi arabia sinking more
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international investment. the first to get such a permission was hs -- hbc. great to have you with us. it has not been a resounding success thus far. the what you have seen from reforms that are proposed, changing the rules and terms of assets under management. are you more hopeful for their trajectory? >> the coup happened last year. could before investors enter the saudi market. emerging markets went into turmoil and the oil rice collapsed. buting up was a good step came it bad timing. 2at we had recently was
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massive reforms. importantly the opening of the saudi economy through the intoprogram to diversify the other sector. those two will definitely create the catalyst for foreign investment into saudi arabia, no doubt. it will take time but will happen. reading through your notes. no alternative and in that you talk about minerals and those egg opportunities. do i play 2030 and i'm trying to get somewhere in to answer this question. do i play it directly into saudi investment or do i look at major european participants who are doing business with the kingdom
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and said to benefit more? trixie should brace through the saudi market. we have to wait for the opening to happen, we have to wait for the flow of ipo to have been. everyone is speaking well. this would definitely change the meaning of the game. [inaudible]usion of which is quite substantial. you think iraq is worth $2 trillion. >> that is a $2 trillion question. it depends on what they will list and we need to define what will be that needs to be ipo would. go global.ill this is patrick george. staying with us for a little bit bloombergersation on "
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markets middle east." stay with us. ♪
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manus: the federal reserve will shed more light on wednesday on rising -- on raising interest rates. and to regional fed president said that at least two interest rates may be warranted in 2016 because the economy continues to expand and inflation is speaking out. goldman sachs chief economist said it is increasingly unlikely a hike will come next month. thet is less likely because data is weaker partly because some of the fed commentary has become a little more --committal about the enemy
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eminent case for rate hikes and if you look at market pricing is hurdle for them generating pricing that is consistent with the hikes. it is pretty high now. manus: everyone is contributing their view on when this will come. come here because we had a little bit of inflation. i was told that will solve all our problems. normalization.t these markets are shuddering at the thought of two or three rate hikes. ratethink hiking interest would have some positive impact on the market as we break that negative cycle of low interest rates and negative interest rates. what investors want to see is there is normality. we go down and then up and we write the cycle. we believe that -- i believe there will be another hike this
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year whether it happens in june or september, i do not know. we have to take in mind the u.s. presidential election, the last round is happening in november and there will be a timing effect. -- this is not necessarily perceived as a bad thing. the u.s. economy has gone into normality. ofus: we have a couple months. big market risks are brexit in june, the market would choke if it got to hikes at the back end of the year. >> this year has been about clinical deadlines with the brexit and the elections. timing will be important. if one thing, there is a bit of apprehension from investors getting into the market because of those deadlines. balancing the headline --
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deadline and the rate hike would be difficult. georgewe will get to soros. would you be prepared to pull money out at the moment? >> i am not george soros but i would take some profits now. this: i want to show you chart, by fax. we had a five-year shopping spree. some say this was another massage to the market. what we're seeing, have a look at this. they have dropped by 38%. is biggest champion beginning to tire. these buybacks are dropping, down 38%. the biggest reduction since 2009. it was all built on puff. thehe companies think [indiscernible] which goes in line what -- with what george soros is doing. manus: let's get your
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perspective on europe. we have sentiment rising. citigroup's numbers are back toward zero. they are getting a bit better. but equities are under a little bit of rusher. what do we need from a european perspective to convince you to take more european equity risks? >> will we need is to go through the referendum on june 23. once we have gone through that we will decide. to invest we need to understand what europe will be as an economy and as a joint state. at the moment there is a bit of uncertainty going into the referendum. that has created a lack of interest from u.s. festers and local ones in europe. manus: the euro stoxx 50 is underperforming. the cbs locked in negative rates. it seems to be more focused on the transmission mechanism or
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the valuing of the euro. what do you need to see, we need to get brexit out of the way before we commit to europe? >> in my view, yes. that is what does grass are showing. manus: it was a wonderful article the other day, no -- at spente was so much money and so little value. is nothinghere happening. if i was an equity investor i would be crying. are you? >> not yet. we have give japan a little bit of time to solve their problems. i think we have given them a lot. shinzo abe is quite serious. what we need to see in japan is structural reform.
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they have been pumping liquidity into the system but we have not seen serious structuring reform. structural reform on immigration, unemployment. and maybet takes time that is what markets are not. to do those reforms because he has been pumping liquidity, that is for sure. it is not enough to revive the japanese economy. manus: underweight the japanese economy? >> underweight at the moment. with me.at to have you yvonne, take it away. the roadnd laying out asia,de route linking europe, and the middle east. that is coming up. ♪ yvonne: welcome back.
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and out longing -- outlining the city's role here. is the most senior official to visit the city cents pro-democracy protests two years ago. he said hong kong should participate in china's that the cityd has important advantages. stephen engle is at the convention center. we saw a bit of our testers out there during the speech. tell us the highlights coming out from china's number three. stephen: and here it was very strict and security and protocol as well. the number three man in the
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chinese communist party hierarchy speaking here. macaualso in charge of affairs. people were definitely listening close in their pushing forward his belt in route initiatives that the president launched in the autumn of 2013, trying to get some momentum going and using hong kong as well as a platform with its logistics rmb andt's offshore among the highlights, the global economic recovery has -- is losing momentum. and rude initiative could help in that global recovery. some of the others -- other comments he made, he said it is also about shouldering risk which china would shoulder a lot of that was created he says it is an arduous task and shouldering the risk could foster a global recovery.
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as far as hong kong's role i spoke to the financial services secretary and he said hong kong plays and will play a very active role. >> this is not just about money or people. it is about making projects viable. the environment [indiscernible] expertise andme the advice of various governments to put projects together. what hong kong can be very good at. ofphen: a little bit knowledge -- all of branch to hong kong. he said hong kong can play and should play a great role in furthering china's development
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and that includes the initiative. just half an hour before trading
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kicks off. this is a live look out of victoria harbour. it is a foggy day here in hong kong. hitting the brakes too hard. the imf warns abu dhabi against overdoing austerity in the wake of lower oil prices. spending growth in the first quarter but business
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investment went backwards. shares plunge after finding an issue with its economy testing method. it is 12:30 p.m. in hong kong. ands: it is 8:30 a.m. dubai. and: still to end a half hours before we get there. that's talks are some of the things we will be covering on the european programming from the top of the next hour. every will be a focus in the luxury part of the corporate reporting season. giving us their full-year earnings numbers. it has not been a great reporting season. and the problem for burberry is buyingese shift from
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has 2%goods -- it only of its sales coming from that market. hs bc head of global equities said we need to get over this fall been the road. 150 going together. brexgo here, everything you need to know about a brexit. 24% chance about a of a brexit. the forecast is very much what in line from what we heard. that is coming up. we also have plenty of other things on the program including numbers from sab. back to you.
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yvonne: china's number three has made a keynote speech in hong kong outlining the city's role in the one belt, one road program. speech at the convention center. steve: the chinese government and xi jinping is leading the initiative but they cannot do it alone and throughout the palaces morning has been the emphasis on public private partnership. they need to get private companies and the commercial sector involved if this is going to get wings. that is why we went to bring in the dp world chairman and ceo. thank you so much for your time. as chinack you today a trying to get this to be
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regional if not global initiative? >> interesting thing about this, we are in the fifth quarter already. what got me is the gap of $8 trillion that is needed. is not a small man of none it -- money. definitely. there are many avenues. governments have to be involved. there are risks that have to be mitigated people to encourage people to put their savings. kong play?an hong it is as such as -- interesting.
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to have ais great vision for this new soap road but you have to get the commercial sector on board. china is good at infrastructure otherso there are security issues. there are political issues and there are financial risks. guest: absolutely. publicve private partnerships are key. we are -- we have [indiscernible] all of them are done and termeded his we had a long public private partnership. we are all partners with government where we have a board , where we have an icd and we have our own trains because we need to transport our cargo to the customers. geographically
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diverse. you just opened up in turkey which is along the silk road. where as the chairman and ceo do you see areas where you still need to invest to take advantage? >> everyone has to adopt their thinking and look at the silk road and see how we can because this silk road will succeed. at the end of the day how do you save, how do you become an enabler of fate? china one of the big problems today is last year we did manage to send [indiscernible] it took 12 days. containers were $4000.
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how do you make the silk road work? that is where the course of china has to move. there are a lot of changes to make it happen. steve: how do you assess the global economy with china slowing down? in the first quarter actually saw in posted growth in container volumes. how is the second half looking as europe's third of recovers with the u.s. is flat in china slowing? >> i have a different perspective. i believe the chinese economy is strong and lower growth is good for china. china is experiencing a big problem. howr biggest advantage is do you do something cheaper than anybody else? in our business we have been facing rising labor costs. year after year.
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the only way to curb it -- is by slowing the growth. so this is not important or driven by china. they are factored to relocate to allow people to have -- it is very important. >> you would agree with some are saying they have to whittle down the death pile. christ china is very good that. -- china is very good at that. they made it happen. months we haveo seen growth. steve: in europe you are seeing some recovery. guest: it is stagnant. look at china. everyone says 6.9 is slow. compared to the chinese markets, how big it is, 6.9 is huge.
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steve: thank you for your time. we will send it back to you. manus: thanks for a much. let's talk about the region and the fiscal restraint. months of cheap oil have horse the gulf nations to tighten their strengths. cut another 17% this year. the imf is concerned that austerity may cause unnecessary pain. i read this and i say this is , i reflect back on the warnings to george osborne about coming too far too fast. where are we in this debate? >> -- this isere that
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the worry. the imf is expecting you could end up with economic growth at 1.3% versus 4.3%. last year a major slowdown and the economy sector could be slowing down more. the issue here and what the economists say, governments need to be helping the economy. and trying to pull down when times are good. but this is a story of diversification. it is -- i would do we had their program they started. i know what to buy is but what is on the dobby, it has a different view on its tourist industry. >> definitely. what they wanted to look for are those who spend more and they built up a lot of hotel rooms
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which are the majority five star. they're building the louvre and the time. create mostly financial services and some are already filled in the tourism. that would be held. story you bring it home. you read about what is happening. there is a new ceo and how many of these job cuts are down to him. there is a major pullback on the railways but these are major employers. >> absolutely, we are talking here coming down through the economy where a lot of companies are filing employees, large and small, private and government. they are mostly -- they leave cars and homes and jobs.
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>> it is the additional money that goes into this system. the --y latest on a down abu dhabi. appliancesthe home company out of china announcing some news here on a possible acquisition. this is a german robot maker. at 115 a share. they said there is a minimum condition of 30% in their offer. this is the chinese home the robotmaker buying maker. yvonne: we get more from the managing director of securities. this is "bloomberg markets middle east."
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yvonne: welcome back. japan managed to add to recession in the first quarter with the economy growing at 1.7% which the estimates for the gain. a look at what drove that growth. is gone.e heidi: both really listening their purse strings. 60% ofr spending japanese gdp. that is why this issue of whether he pushed for a second tax high. this pick up in consumption
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balancing out at ♪ disappointing rate. we have the situation given the brutal selloff. far again against the dollar. after three years of negative rates record profits when it comes to japan's corporate. still reluctant to go out and deploy the cash piles i would say are sitting. we could see some headwinds. we had a leap your and that extra one day of activity would have been a contributor to positive growth. some of these other headwinds have investors concerned about building inventories. the strength of the yen, all that will come into play. as going to hit exporters in particular. this is notaid
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going to look that flattering. we have the cases in -- g7 coming up. even with this rapid that we have seen in the end it is falling substantially in the had thats and we situation where there was speculation that some kind of shanghai accord between central bankers had taken place to weaken the dollar. officials at central banks will be trying to avoid that kind of speculation. [indiscernible] manus: thank you for the latest on the markets. joining me to talk a little bit , ourabout local markets jet -- test joins us in the
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studio. great to have you with us. a bloomberg first for you with me. equity markets, we had nice isds but the big thing issuance. what i want to know is is that what clients are asking you for, is there still a huge demand, we sales up onef debt third. what is the appetite like? >> it is very positive and that is why we see this increased activity in many of the banks. whether it is the islamic banks or the normal banks trying to do roadshows in trying to sell those primary markets. the south appetite for people to go into these kind of [indiscernible] especially with these confirming the ratings. increasedissue of an interest rate.
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manus: get in ahead of the fed and you have u.s. presidential's. i was chatting to the voice on the stoxx team. abu dhabi ran up to 24%. divide ran up by 36%. we have pulled back. talk me through your perspective on this. you can say with the draft continued equities is lower. >> if you look at the one year chart we have this object because we have the inclusion of shares into the morgan stanley index. rebalancing on may 29 but we expect markets to be less so there could be more of a selling pressure than dying pressure. we do not think that will be a major move. the traded values in may are extremely weak. they are as week is january and therefore we worry that they
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have any bad influence or stores -- stories. manus: are we going to see more volatilityand that is going to exacerbate? a -- theink we are in sentiment is affected by their international ones. if this continues without any positive local news that means our markets could be seeing some pressure. we are at certain points that theimportant to stay above 250. we could go to 3000 and we lose all the gains. manus: we are trading at a pe. is that a valuation opportunity?
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>> it is indeed. it still does not prove to be that attractive. you can pick certain things which give you a very good p at a price to book. mass: do you buy into the $2 trillion evaluation? >> a think it is -- if it happens it will be very [indiscernible] it has to be more that -- international participation. i think people will jump into owning parts of the oil reserves but it is a long-term story. short-term gain kind of person. thank you for a much. manager of of a dobby of securities. yvonne: chasing millions of
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potential smart phone sales here. ♪
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yvonne: the global demand for smartphones is lighting but india remains a market with enormous promise. tim cook has made his first trip there. us live from mumbai. we see cook here on a pretty big mission in india, increasingly important to apple. reporter: it is. india is an important growing market. spot whena bright sales were declining. makinges are that it is close to $1 billion from india
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snd this is some of the reason why. the second development is about the adoption of 4g technology. the venture is doing launched would meanoption more smartphones and that is why apple is interested. be meeting cook will with topic second of slater this week. told will bee launching some developments. and as a in the market talent base for apple. yvonne: we talk about india and we see quite a bit of regulatory inbox for apple.
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has been denied the right to sell refurbished iphones in the country. kim -- can tim cook change that? iphones will be a no go. this is against the grain of the policy on promoting foreign investment to our companies to come invest. the potential is quite high. apple's biggest challenges they do not have a big offering in the low end of the market and that is where demand lies. not feature in the top 10 smartphone sales. heavily tovesting get a piece of that pie. it has been ramping up its distribution and putting in place the management team and strategy in place. the details will be fine tuned but tim cook is there this time around.
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yvonne: thank you so much. joining us live from him by. exited and a possible making headlines and this is having an impact on the markets. today they are talking about strength enough you have to protect yourself. where do you go? they say go for $200. and exit this comes up gold. you buy swiss franc word do you buy gold question the work in $1400 possible target. his message was pretty clear. there are huge risks it play. yvonne: thank you. that is it for us here. manus: we will do it all again
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tomorrow. anna edwards is up next in a couple of minutes with countdown. you have to state
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snap their stocks today winning streak. rise,e hikes stateside forecasting at least two moves this year. japan dodges a recession. consumer and government spending helping growth in the last quarter. getting to the bottom of the nikkei, after the carmaker said it used improper methods to test fuel efficiency. and the rise of the robot, china's biggest makes an offer for a 30% stake in the company. ♪

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