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tv   Bloomberg Markets Middle East  Bloomberg  May 19, 2016 12:00am-1:01am EDT

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it 7:00 in the morning in kuwait city. welcome to bloomberg markets middle east. $50 oil is on the table. what about the economy and the bond market? you're welcome. ♪ opec has its right. it says the strategy to secure market share is working.
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the fed aims for a rate hike and shown if the u.s. economy looks positive. but then it cuts the country's 2016 growth forecast. arabia is considering writing ious to government contractors. 5:00 in the morning in london. some rather interesting points from his exclusive discussion with the kuwait oil finance minister. manus: this is a man who is a man who has three-way key ministries on the shoulder. when it comes to $50 oil the market will rebalance, he says. he talks about iran. and the economy of kuwait. this is a nation dependent on
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oil. he will balance the books and he will do it in five years. to the fifthhome largest sovereign wealth fund in the world. blood of a dying and why. that is the question. rishaad: we'll be hearing from him in a few minutes. mumbai is up. also news from hong kong and tokyo. all these markets have been led lower. we seen some declines of course there is another wednesday session. with dubai on the way down by about half percent.
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this is what the markets look like on their last trading day. right over what is going on there with the oil markets. collate up by one third of 1%. the others on the way down. cairo looking like that. terrible news coming out of cairo. egypt air says it has lost contact with one of its airplanes. between parisght and cairo. 59 passengers aboard along with 10 crew. details still very sketchy. let's get up to speed on what we know about this. the flight was traveling from paris to cairo. it disappeared from radar at dawn.
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just after it entered egyptian airspace. the missing plane is an airbus a320. traveling about 37,000 feet when it disappeared. a search and rescue operation for the lost flight is underway. it is now about three hours overdue. it is been sending tweets about the missing flight. we will be updating this as more information becomes available. rishaad: we're going to be looking at opec's strategy to defend market share. manus: we cover a broad range of subjects.
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when it comes to opec the sense that i got from this particular minister is that what happened dohai it sets a very robust framework for going to opec in june. washe market share theory implemented by others coming down from 2014. this is happened already. now we see an uptick in the market. over 3 million barrels per day. you have to have strong investments. it seems that over the last two
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years 30% of these amounts have been never did. demand willou that be picking up. .he forecast we will see more stabilized markets in the future. the meeting of june 2 is coming for opec. determine our steps forward. some of the outages of production are a temporary thing. of course. .t helps i think that the forecast everyone has been talking about
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heading towards the end of 2016 should be the balancing of the markets between demand and supply. it came early only because of the fires in canada and the issues in nigeria and elsewhere. let's see the good side of the last meeting. -- i haven't seen that before. members and the dialogue itself is good at this time. it is a hugely positive sign.
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many people anticipated a drop of oil prices after that meeting that would be much larger. we did not see that. it went down a number of days and then started to head back up. that takes us into june's meeting. , the marketting prices will be understanding with dialogue that would continue on deciding how to go forward. they believe they can come back to their production before the sanctions. many other countries believe everybody freezes as is as of today. then we lose market share.
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we are sticking to the market strategy and planning our production and investing heavily in our oil investments. to manager strategy of production. manus: the deputy prime minister for saudi arabia. they are spending $60 billion per year. much more common. house the economy doing? haidi: we're seeing lots of reversals. trading at $47 and $.52. brent is looking like this.
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up slightly. accelerating after moody's kim with their downgrade of the companies. perceived weakness in chinese demand is weighing on the oil markets. a number of other commodities as well. about three tenths of 1%. in japan the impact is down five and a half percent. we're seeing a broad-based selloff across the entire sector. a worse than expected loss today of 5% after the adrs were sold in new york overnight. a huge ramp-up was seen in the past few days. down by 6/10 of 1% in an evolution.
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now about the same effect. in terms of the broader market it is a down day. a positive session at the mark nikkei in the market in the morning but it seems to be getting it back in the afternoon. june is going to be a live event for the fed. we could get a rate hike. it had on the back burner. now seeing a bit of a selloff across asia. getting a very strong first-quarter gdp number. the bank of indonesia is meeting today.
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also expected to leave rates on hold. rishaad: you can get more on the rest of the day's news from a webpage. conserving cash. saudi arabia is getting set to issue some i have used. thet more to come from exclusive interview with the acting oil minister. bloomberg markets middle east. ♪
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♪ manus: we had an exclusive sitdown with the deputy prime minister of saudi arabia.
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this country is home to the fifth-largest sovereign hedge fund in the world. 600 billion dollars in the wealth fund. what are they doing with it? where is the money flowing? we are thinking some of the services. upstream, downstream. taking action of privatization. on the services yes we're thinking of some ideas that we have. the level of $50 per barrel is expected price.
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we could go higher than that. i'll tell you again after the freeze. the sovereign wealth fund. kuwait has the seventh-largest in the world. we are doing both. we used some of our general fund thehe future to funds future generation fund and the general reserve and we've used some of that money to finance
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our budgets. it is no secret. whatever last year's budget was we calculate and induct 10% even we are in deficit. we're injecting money into the system and also taking money out to finance our budgets. we haven't decided how to invest that money. some of the ideas on the table are more general.
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where is the egg focus coming? k.i.a. is so much older in the market that we have capacity. we are doing it as per the book series. we don't buy an asset because it is down we buy it because it gives us substantial returns. targeted returns. having said that we are so much available in the real estate market internationally major cities we have a good footprint.
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our interest now is the infrastructure. the k.i.a. has been active lately. london's airport. partnersstrategic looking for opportunities internationally for the construction projects. manus: possibly shying away from trophy assets. how are they funding the economy. this is the deputy prime minister who seeks at reform. much more, on the economy later in the show. rishaad: making the most of cheap oil.
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what will happen when the price comes back? ♪
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rishaad: india has managed to use the dip in oil prices to its advantage. but india's lock may be fading. let's talk to our correspondent in mumbai. if we see rising oil prices in the future how will that affect india? >> india is a land of many gods. the god of oil has become one of them. oil above a hundred dollars. budget deficits were high. the rupee was sliding. onwas a big issue commodities. in the last two years coinciding with the fall in oil prices.
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that has made india's budget deficits were good. inflation has come down and interest rates are under control. all macroeconomic factors look good. thanks to the god of oil. if the price of oil starts to climb back toward $100 we have a problem. there is a forecast of the strong monsoon coming. in a low interest rate scenario we're still looking at that. it looks far better today than it did last week. rishaad:
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let's have a look at what movies has been up to. concerns about emerging markets. >> moodys has downgraded its economic forecast for the united states. that this week first quarter and ultimately a slowdown in china has had a much bigger impact than anticipated. they are saying that a significant impact is really going to royal the financial markets with cutbacks on riskier assets. theyatings agency says only see to fade rate hikes.
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this is very different from what we are seeing in the fed funds futures market. the idea of the june rate hike is increasing from this 4% on the course of the dollar higher. moody's it's not just a slowdown in china. they do still have their u.s. target of growth in 2017 as 2.3%. they are now predicting the china's economy will slow to about 6.3% growth this year. a number of commodity exporting countries. brazil has had a downgrade. mexico argentina turkey. commoditiesl exporting countries.
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this is going to have a ramification on advanced economies not just the united states. the forecast was at 1.7%. down slightly. india has had an upgrade. their economy will grow at a rate of 7.5% annually. a lot of concerns not just about the emerging markets but also the g-20. rishaad: are studying the transfer of assets from a former malaysian officials. two official goldman sachs.
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company that he was backing. helping to raise more than $6 billion for the embattled fund. generating above average commissions. to support the retrained that is there. goldman has not been accused of wrongdoing. zuckerberg says he wants to build trust and ensure the integrity of facebook products. news report that facebook editors or deliberately downgrading conservative news articles. deutsche bank was above five big lenders pursuing that it was manipulated by the government. institutions such as the world bank. all named in the lawsuit. brought by pension fund.
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♪ rishaad: a live view singapore. the market is down at the moment. ♪ opec has it right. the strategy to secure market share is working. the fed aims for a rate hike in june. if the u.s. economy looks strong. economy'scut the
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growth forecast. and egypt air flight has gone missing. 12:30 p.m. here in hong kong. anna: we're counting you down to the start of the european trading day. let's start with one of the big mergers and acquisitions stories. received a date from the german industrial giant. part of this broad consolidation story that we've seen in the chemicals business. crop chemicals companies coming together. they agreed to by syngenta. the chinese deal was valued at $32 billion. new cropoff their
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science unit. if they can put their businesses together, it could be the largest deal we've seen this year. so far. under relatively new management cap they are. -- activator. at bayer. anna: we'll be talking to investors and deutsche bank. towardnvestor ire activities. the old management scene was under pressure. they're going to feel any pressure from the investment community. revenues are plunging of course.
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he said this was one of the toughest jobs in finance because unlike some of the other big banking giants they don't really have much of an alternative to what they've got. investment banking and retail banking. they were saying this is one of the toughest jobs in finance at the moment. rishaad: it is a developing story. egypt air flight has disappeared from the radar. we'll be monitoring this throughout european programming
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conflicting messages coming from egypt about exactly where the flight was when it was was supposedly 10 miles into egyptian airspace. bringing any further developments on that to you. saudi arabia told local banks that they are paying with ious rather than cash settling outstanding bills. how could this actually work? matthew: what saudi arabia has been doing is to try to conserve cash which began last year by their now around
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$40 billion outstanding. now isppen in practice perhaps similar to what the dubai government developer said during the financial crisis. the rest of the bill was paid with nightly you note. that they would hold for say five years. it would be much like a government bond. it would reach maturity and payout the remainder of the debt. rishaad: can contractors do with this government paper? contractors are not used to holding these sorts of financial instruments. do as we of them will saw happen in the 1990's when similar budget pressures forced the country to pay not dollars.
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we need the cash now for capital expenditures. rushing to payout salaries and so forth. that gave the contractors cash and in the banks took away these notes and they sat on them for the next five years. the problem for the contractors is the banks normally one say they will buy these from face value. they offer some sort of discount on this. the contractors probably won't end up getting paid the full amount of what they were expecting. rishaad: thank you. roz: the head of china's national people's congress has told hong kong to embrace integration with the mainland.
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and to quash the independence movement. help thate boat won't will harm people's livelihoods and the economy. he also warned that everyone will lack the stability. his visit to hong kong ends today. hundreds of people are still missing after mudslides area key villages in sri lanka. days of torrential rain. many bodies have been found. more than 200 families are still unaccounted for. survivors say each typically has about 5000 people. visited the scene and said the government would take full control. the head of u.s. intelligence says hackers are snooping on the presidential candidates. officials say president obama and mitt romney were targeted by cyber attackers from china.
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they've declared war on donald trump urging supporters to take down his website. wildfires around the canadian oil patch continue. out of control. although forecasts for the next few days provides a glimmer of hope. the fire has a most double in size over the past week. crude operations. they've been forced to abandon efforts to restart the phone just days after the initial risk of past. 1.2 million barrels per day. manus: we are joined by the chief operating officer for adf security.
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we have the federal reserve definitely back in play. that is what we're telling the market. do you begin to reconsider what volatility means for you? >> we are a brokerage. all activity is very important. trade and which direction they go in is important issue. supporting their trading activity. the u.s. market is greatly unaffected when there's no volatility because there's little incentive to invest. volatility is very welcome in that sense. we've been warned to that in the fx market quite aggressive moves
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have happened. what you are experiencing? have you seen moments of ?ractured volume in the markets. i think that will be a theme that was stayed. obtaining credit is crucial. it's true of the big market makers. other players have stepped in as they've been carefully reevaluating the way they do business. what we call non-bank market makers. they need access to credit in order to cooperate. the big banks with a large prime
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brokers are being discredited. they are out withdrawing from the market. the ability to sustain the effects of that market. potentially in five weeks time is one of question those key events that we have to wait and see what the outcome is. minmanus: u.s. election is coming. this is a triptych of potential high volatility. if the traditional providers of liquidity are stepping back are
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you able to provide more credit lines. fact this isd in exactly our focus nowadays. we believe that large brokerages like in this space. we have access to very large credit lines without prime brokers. the whole strategy is to make those credit lines available to people that are more middle-class. are they in dialogue with the prime brokers nowadays. of the total daily we arein the market talking about $3.5 trillion a day. it could certainly be affected by these credit lines. manus: that is something we're all thinking about. the prospect of donald trump in
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the white house, the brexit vote and many other issues. we look at saudi arabia coming up. can it change its direction. can you take its addiction to oil? bloomberg markets middle east. ♪
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haidi: a little bit of soul-searching going on here for asian markets. ending the session flat. seeing a significant downturn when it comes to asian equities. they soldwork out how
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off? i believe over 30% of that rate hike coming through. this is what we are seeing shanghai is going green. all the other markets are on the downside. coming out of japanese equities more weakness. they're giving it all back now. the month of march. we also had to gdp numbers yesterday but that is not translating into a bull market when it comes to japanese equities. we had jobs employment numbers holding pretty steady. with the underlying numbers taking a bit of a beating today. into the 60's demand weakness of course.
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seeing weakness for gold miners in australia in particular. that is some more ramped up gains. as well some of the oil players as well. the earlier gains are seeing a downside now. is affecting one of the top decliners. rishaad: now looking at prospects for saudi arabia and its addiction to oil. let's talk about that, the lower oil prices. approaching $50 per barrel. how does all this play out? in six months to a year. >> it is still a problem for saudi arabia. it is significant higher than that. clearly it is going to reduce the budget deficits. reduce the budget.
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we need to maintain cash flow. we still assume it is likely lower. rishaad: they need to do something don't they? the deputy crown prince. how they going to do that. the ambition is to really shift away the trade unions to intoining into health care expanding their tourism business. particularly religious tourism. the challenge is of course getting diversification is really hard. it is one of those countries that trying to find for many years but saudi arabia itself has had a thriving oil industry and no real reason to change. manus: not just an economic
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issue but a political one. the compact with the government. say that depends on either the investment with the government or these very generous social systems in terms of custody's. withdrawing that is very important to provide the assistance to the united arab emirates. the incentives for generating that increases in productivity may not be there. rishaad: saudi arabia is now issuing ious. be if main concern would there were any problems on the financing side of the budget. there are still massive reserves and saudi arabia. assets are still 100% of gdp or more. that is not really a concern. it is more efficient cash
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management with what is happening now. that is still manageable. rishaad: let's have a look at what else is going on in the region. who is likely to have their ratings reaffirmed or even upgraded. >> we do have a positive outlook by the region. we have five negative outlooks. this kind of balance of one positive with five negatives is quite unusual. of course it also comes off this massive selloff in oil. the region may actually benefit from the decline in oil prices.
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they then face the political challenges as in tunisia and egypt. rishaad: on the other hand he the country that is so dependent on oil but you also that is diversifying its economy away from gas and oil. i would job he is heavily dependent on oil. in the dhabi category of seeking credit. they are generally strong. they are now facing a little bit more liquidity problem. regulation has been sufficient and the government is of course
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dealing with the liquidity defaults. more from our exclusive interview with kuwait's deputy prime minister. and oil minister. itsplan to turn around falling gdp. you are watching bloomberg markets middle east. ♪
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manus: i'm here in downtown kuwait. we had an exclusive conversation with his excellency the deputy prime minister and the finance minister and the oil minister, they are all the same man. how are you going to fund the deficits? this is the man with a six-point plan. this is a minister on a mission.
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>> the effect on our energy would be quite substantial. by coming five years. measures of physical and economical reforms. all of our dollar-denominated debt. we think we can close or deficit through economic growth. >> is a tough parliament. reducing corporate tax and privatization. what are your priorities? i know what the stakes are. defined a way to focus
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on the new issues. closing the deficits and public financial questions. i will have to diversify my economy by having more private sector activities. leading up the courage to make that jump. we are willing to do that. some of the rating agencies that have just issued their ratings we held onto our existing rating which we were very happy to hear. the long-term negative for the region is something that we have to address in the coming eight months. andhow our reliability
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determination to make those reforms happen. manus: the deputy prime minister of kuwait there. is in theman that local bond market and getting ready for the international bond market. considering everything on the table. that is it from downtown kuwait. rishaad: we will update you on our top story. 804 and egypt air airplane en route from paris to cairo has disappeared. 66 people aboard this aircraft as they disappeared from the radar. he said it most likely crashed into the sea.
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the military is they are at the location. that is it for this edition of blue part -- a bloomberg markets middle east. countdown is coming your way next.
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anna: the fed seeing a selloff in asian stocks in crude after minutes show officials want to raise interest rates in june. strategies success, awaits oil minister -- kuwait's oil minister says crude will in the year at $80 a barrel. making a move for monsanto, germany's buyer makes a move. and egypt airplane headed to cairo from paris, has disappeared from the radar, 66 passengers and crew are on board. ♪


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