tv Bloomberg Markets Middle East Bloomberg May 23, 2016 12:00am-1:01am EDT
egypt warns against champion to conclusions about the crash. rishaad: turkey's new premier has a mission to undermine his own position in boost the powers of the president. manus: it is 8:00 across the emirates, 5:00 in london. welcome to bloomberg markets middle east. we have a red-hot headline, rishaad. billionins and $11.3 order for 737 planes. jet.comes from net confirmed, the size of the
order, at $7.3 billion. this is a fairly hefty order? price,: that is the list of course. at that 92, you will get discounts. interesting, the timing on the left announced as president obama makes his asian tour in hanoi. that is where we are getting this order. that is what we have got now. you're going to tell me that volatility? are -- take akets look at is buried what we've got is channeling a rising volatility. taking you back to when oil prices collapsed, you saw some really strange moves in the first part of yesterday, we saw that spike in volatility but it is picking up again. volatility risen by 42%. bank of america, merrill lynch, biggest risk is the brexit.
equity volatility is trumping and affectsity volatility. it is going to be a big focus today for this show. what happens next from the fed? they are letting the torch paper of volatility. rishaad: with that in mind, it is playing out between washington and tokyo, as well. they do not want the japanese to intervening in weakening their currency. the finance minister has said that it does actually if markets are out of sync with unreal situations, if you will, with the reality on the ground. that is something which is of course debatable. prettyay area is meanwhile, all of this playing out in the trading session, let's head to mumbai.
hang seng higher. getting to the middle east, two hours away from the opening figures of the emirates markets. dubai comes online at 10:00 local time. dubai closing 7/10 of 1% down. stocks now, the longest losing streak since october, qatar does not want to be outdone. declines of one point percent. let's have a look at saudi arabia. down, down, bahrain pretty flat in myanmar. manus: let's get up to speed with the other stories making headlines around the world. good morning.
g7 leaders meeting in japan later this week after their finance minister talks exposed againences appeared complaining of disorderly moves in the yen before a joint statement in which all members pledged not to devalue the currency. his comments hinted at growing frustration within the government at the recent rise of the yen. turkish prime minister backing erdogan's push to expand the powers of the presidency at the expense of his own office and parliament. afterlaces davutoglu losing a power struggle with the president. the lira has fallen 6% this month while it stumble benchmark's down 16% in dollar norms. to beis said investigating 12 people for
allegedly manipulating the shares of financial holdings following a 243% surge in the company's share price. regulators continue to investigate what was behind the rise. has artie filed a complaint against what it says is a continued cancellation of transaction on shares. insident obama has arrived vietnam at the start of an asian trip, indent building stronger ties in the face of china's growing influence. he is that there is sitting president to visit after the end of the award. washington is here to upgrade relations with any emerging the rapidlyer, expanding middle-class is a promising market for american goods. says relations must not thread regional stability. this is bloomberg news. manus: iran has said it will not
join any freeze in oil production until the second half of the year or until exports returned to pre-sanction levels. on that one of 27 analysts we surveyed expect no agreement .eeks opec meeting in vienna joining us now is our iran government reporter. again, before we can get to opec, the iranians are sitting it out clearly that they do not want to join. what will happen if the iranian -- reaches pre-sanction levels? guest: we have to put this in context. iran has been coming out from a number of years of sanctions, and those sanctions included caps on oil exporting. in this context, where you see iran coming out of the sanctions
lifted in january, they have been clear that the goal was to make sure that the iran part of the oil production and exports -- and they do everything they can to rebuild. manus: back in 2011 levels -- what more do they want? they are exporting 2.2 at the moment. they want to get as high as they can. guest: in many ways, what they say does not indicate any change. the air clear on the fact that immediately build the energy industry that has an starved of technology and foreign investment. they had set the benitez -- they need $100 billion to be able to ramp up production in order to -- with the help of foreign partners, get back to the levels that they were before. it is not only a question of reaching that level being fine, it is an iran is coming at from
a fundamentally different position in they are clear on the fact that, you know, we are happy to support it, but as far as we're concerned, we are not part of this because we are commanded from a different set of situations and questions. manus: so everybody plays for the market share, that seems to be the name of the game from the kuwaitis. thank you very much. let me bring in our next guest. gas producers of had to adjust to lower prices and cut back. saudi arabia is further along that path, issuing their new post-oil economy vision 2030. atis the chief economist deutsche securities saudi arabia. thank you for coming in. guest: thank you for having me. manus: we have just heard about what the iranians are up to. i sat down with the kuwaiti oil
minister last week. you said that if market shares of m&a name of the game -- does saudi arabia really have time to corral opec? we are at $50. they have bigger issues to burn, haven't a? certainly do. it seems their policy of going after the market share has started to come through. u.s. and opecthe countries has gone down and is expected to go down. there is no reason at this time for them to change. they have also said clearly from the beginning that they are willing to go for a freeze or other items if everybody agrees to it. just want to pick up a bit on what manus it's a computer they cannot keep this up forever. somebody budget tory
constraints. how many -- how many constraints can they stand? guest: actually, although prices now are above the 30-40, and the expectations are they are going to ratchet up as we go along at a 2017. saudi arabia has enough reserves to be able to stand it for a few years. that is the issue for the immediate term. gcc countries are not enough just to be in a budget neutral, but they read -- they should be getting surplus because eventually, the oil is going to run out, 60-70 years down the line. they should be racking in surpluses for the government and in a cushion for the future from an oil goes down. for now, that is why they have issued division 2030, to raise
nonoil revenue to revamp their economy to the way from oil and diversified and put it in a much new economy, not just dependent on oil. manus: and i talked to about vision 2030? what do we know? gifford a great deal that bloomberg from the deputy crown prince. what about the team around the prince? will they execute aggressively? will they deliver a? tell me about the people advising him. i know, someople of them i don't know everyone -- but from the people i have met and the people i know there, very dedicated, very enthusiastic, very well-educated, very bright people that are doing the project. they are aware that they have to deliver and they are aware of
also the cost of that there will be some short-term costs and delivery may not be 100% -- there will be some hiccups but they are aware of it and they are budgeting for it. they are not just thinking that everything will be 100% and there will be no short-term top -- cost of the economy or otherwise of the are very, very enthusiastic and clear about their mission. if i can ask you, you and i chatted a little bit earlier -- what you have to remember is near-term plans, and that is the top of the agenda? guest: yes. they have put in the ve would like to get $100 billion in plug the oile to deficit. they have said that they want to
privatize a lot of the government companies and for both efficiency and money, but mainly for efficiency. they want to increase the role of the private sector. they want to strengthen government performance. they want to increase efficiency. manus: thank you very much. rishaad? later,: coming up egyptian tourism minister saying the 100 cut prices to encourage visitors following the flight 804 crash. at vision looking 2030. bloomberg markets middle east returns in a couple minutes. ♪
penciled in for this year? guest: for this year, we penciled in total growth in gdp of about one .4%. next to come and we expect it to pick up to 1.6%. on whatl depend in part policies are taken. that may change after we hear that specific policy that will be announced in a few weeks measures.s, revenue, the gcc itself has a tax addition of 2018. will that get executed? how much social acceptance therapy around the taxation? that will be as you'd there is enough time to
put in place a mechanism to a secured such a plan. accepted socially because we are starting at 830 hello great of 5%. it is not a very high rate. in saudi arabia, one of the things floated is that they will be given compensation to the cover theme groups to additional costs that may come so, the lower income groups will not be affected. manus: these are averages. can they go lower? have we reached an inflection
point at the moment? dr. melhem: i think they could definitely goes nowhere. as nonoil revenue starts to come in, that will reduce the amount of oil needed to break even for the price of oil to reach a state.neutral if we raise 100 billion over 3-4 years in saudi arabia, that will certainly bring it down for saudi substantially. manus: what about the rest of the region? others are nowhere near. dr. melhem: some of the other qatar,es, like kuwait, the break is lower than saudi arabia. $45.t is estimated at the ones that are not our
.ahrain and oman these are the ones that will have to take substantial measures. to break even. manus: let me circle back. 90 you spent time at the imf. dhabi is cutting more aggressively than sony. the imf says abu dhabi could step. should they? dr. melhem: they have the financial resources to step back but frankly, once the low oil prices have made the impetus for cutting and if the cutting is cutting some of us that it is not necessary for future growth, it is much easier to cut when things are down when things are
really doing very well and oil is at 60 or 70. harder from amuch society standpoint to understand why you're cutting. manus: indeed. dr. melhem melhem, thank you very much for joining us. that is it from us, then to you. rishaad: coming up, years of political turmoil is turning of the off of each governments of the latest plane crash will not cause damage, we from their towers and minister next. ♪
minister says the crash should have little impact on the number of tourists heading to egypt. that theed to realize attack that you are seeing right now is not about egypt. terrorism is a global threat. aside.s security is of great importance to all of us. we want to ensure the safety of all people at all times. --haad: can he really be serious? guest: it is what they are looking for, right jacob, they are hoping that their plans to will remainrism unchanged. this is not just an egyptian problem. it is also an egyptian problem in the sense that this is the
third incident we have had to is an aircraft in october -- the hijacking in cyprus, and now this will be do not know what it is. but he is saying, let's wait and see what it is. it looks bad for egypt. rishaad: what is the latest with regard to this crash? the egyptian president has been commenting. what did he say? guest: he is saying the same thing that all the leaders are saying. saying, let's wait for an investigation. the civil aviation engineer said pushed, it is more likely to be a terrorist attack than a mechanical failure but we do not know, and she does not know. it is interesting that he spoke. it shows how seriously egypt is
taking this. it is an issue because he came into power, taking charge of egypt as a representative of stability. theanted to stabilize security situation and that has been a challenge. obviously, -- in terms of the three air disasters -- the context, i was looking at some of the numbers in our stories in terms of the size of tours and in this economy. it is the lifeblood in many ways. guest: right now, i think it is 3.5% of gdp. it used to be more than that, almost 5%. they are trying to bring it back up. a shortage of dollars they are -- a lot of egyptian companies are suffering. they cannot pay for the imports
and so, this is terrible news for them. yes, they are hoping that they will manage to get tourism up again. it has been falling for a few years, hasn't it yet good they have been many incidents putting people off going to luxor and beyond. guest: that is right. i mentioned them earlier. the bombing of the russian airliner last year, over 200 people died. incident,ess serious a domesticng of flight to cyprus. that did not end in tragedy, however, it gives a sense of insecurity. rememberme time, let's that egypt is struggling with terrorism, as well. the sinai texan
boeing announces and $11 billion order as president obama is formally welcomed to hanoi. in hong kong, i am rishaad salamat. manus: 8:30 here in dubai. london.30 year in county down to the beginning of the trading day in europe. good to see you guys. let's look at european programming this morning. we will at numbers in about half an hour from ryanair. egyptair disaster very fresh in the minds of anybody who operates in the asiatic sector. the ability for comments on that dreadful disaster, but also the impact it is having on bookings at ryanair. they do fly to morocco. are they actually seen
bookings diverted to as a result of the ongoing questions raised about safety in north africa? brexit also a key topic of conversation. manus: he would never chatting earlier. who would have thought that austria could be on the brink of a far right administration? this guy is friends with the dutch far right. give us the latest. anna: the latest is that this is too close to call in voting in austria. the far right against the grain. they are tied after most voting has taken place, but today, the focus moves on to counting the absentee votes.
they could give us a conclusion about who won. they could result in about 14% -- could represent about 14% of the total. this would be a real breakthrough through the right wing of european politics. typically quite a ceremonial position, but that might not stay the case. open offeren to talking about his intentions in austria. manus: we will see you in 27 minutes with the latest on european continent. we can ask michael o'leary everything we want on the brexit rishaad:. for japan,heading finance ministers already meeting, exposing sharp differences on current tree strategy, particularly the difference between what is going on in tokyo in a way that they view the world in the united states. yvonne man was at the talks for us and what happened yet go yvonne: not much appetite really
when it came to a global share strategy on how to combat growth. the world's largest developed nations agreed on some things, not going into a currency war. he agreed on some geopolitical risks to the economy when it came to the brexit, terrorism, and refugees. watch appended knock it was a blessing from the g7 nations on what it should do next in terms of the policy levers and they should pull to stoke growth in japan. we saw a lot of tension over the yen among the most developed nations. the finance minister saying, the recent move of the yen has been one-sided, speculative. he did have a bilateral meeting with the u.s. treasury secretary jacob lew with him saying, the notnt move in the yen is overly volatile and there is a pretty high bar when it comes to what constitutes disorderly movement.
take a listen. [speaking japanese] >> there were no heated discussions. we have different views about the exchange rate. his natural to have different interests pretty only difference between the u.s. and japan is at the u.s. dollar is the reserve currency. the definition of disorderly, what does it mean? the question was brought up ,uring the g7 and jack lew said look, there is a pretty high bar to it one example is 2011 when japan was sanctioned to sell the yen after this devastating .arthquakes and tsunamis still a long way from those extreme situations. rishaad: of course, the yen waiting on next is. what does it mean for all the comics? -- abenomics?
the buzz that we had has really fated pity yen strength really taking a beating on exports for the month of april following 10.1%, worse than expected. the seventh month that we have seen exports declining. that is because of the strong currency, rising 5% in april. we saw the recent earthquake in the aftermath, some come -- some supply constraints. the u.s. andnts in exports to china both phone, as well. you saw the drop of oil prices importdampening the picture, tumbling 23.3%, the biggest drop in seven years, the largest surplus in trade we have seen in over six years. the bank of japan said hovering
yen -- rishaad: joining us now from sydney is john fellows. great to see you. what do you make of events there in japan? look at if picture to the finance ministers conjure up a ? attitudes, what is due disorderly, it is obviously a judgment call. the u.s. makes his position clear that they want japan in g-20est of the g7 in the to intervene as rarely as the bank of england does. very much hands-off unless there is an absolute emergency. japan, they are reserving the right to intervene in clearly, they are still concerned about the strength of
the yen. they do keep talking about it. one-sidedabout that move. obviously, they used to before when they intervened. there was no communication in the g7, no consensus from this g7 about policy. g7 is becoming more and more irrelevant, isn't it? probably. means a lot to japan to have these officials there and you have a lot of politics, it's not just about the markets. that will be a big deal for japan. perhaps it will be useful, but it is certainly a long way from the days of the g7 in terms of relevancy to markets. it really wasn't of anything great to note for currency markets. really, it has recovered with
the higher prospect of rate hikes. also, of course, the rate hike probably if anything perhaps in july not june given the brexit vote -- is it better [indiscernible] what commissary? -- rishaad: the strength of the dollar. it is difficult. judy is awkward in terms of the brexit timing. it is not entirely clear that the market would appreciate what following thenged last speech from janet yellen and concerns about the global economy, what she was seeing in terms of inflationary pressures and so on.
the june hike just seems a little bit too really. i think the market pricing has risen to about 30%. and maybe as far as we compared the u.s. dollar has had a good run, but it may have to step back about it into the june meeting if they'll study, as we expect. we are leaning toward september who we can see the case for july. we look with the broader context, this chart reflects the last presidential elections. the fed has actually moved three times in the past seven presidential's. by the fed bluster not being prepared to move more aggressively this year, what you make of that? guest: it is a very common assumption in the market. it is good to know that they have that history.
that is the point that john williams was making over the weekend. its view.ands by i think the november meeting is just so absurdly close to election day that would be very difficult. far enoughtember is ahead of campaign. september or december are wide-open potatoes are the dates that are attractive in terms of the statements and press conferences anyway. it will probably not be a very big deal. it is a good way of reinforcing the independence of the central bank. .ishaad: thank you let's look on other stories making headlines around the world. haslinda is in singapore. haslinda: the u.k. is wanted
faces a recession if they decide to leave their european union. the treasury has made an assessment of the short-term impact of the so-called brexit and will publish results later today under what is called a shock scenario, forecasting gdp in 20,018 3.6 percentage points below the current estimate which is for a 4.3% increase in inflation has also been rising wouldy while home prices fall. south korea has rejected the north offer of military talks in last pyongyang agrees it is made of its nuclear program. pyongyang said it had offered a working level discussions with him weeks. the defense ministry expressed regret that the offer came without any mention of the nuclear issue. north korea carried out a fourth nuclear test, claiming to have developed a hydrogen bomb. has launched a reusable
space shuttle, confirming its experience in low-cost high-technology. the craft is a model of a future shuttle, climb into an attitude of 70 kilometers and splashing down in that they have been. mars --ys a mission to was spent only $1 billion on the entire space program through march. that is a fraction of nasa's $19 billion budget. bloomberg news. manus: thank you. just a moment, angela merkel is on a mission, the chancellor has backed turkey day shirt support for the refugee accord. that is next on bloomberg markets middle east. ♪
iran has no plans to join if reason oil production until the second half of the year or until -- or until exports returned to pre-sanction levels. iran is meeting opec partners in vienna next week. egypt is sending a submarine to search for the egyptair black box flight recorders. they have warned against jumping to conclusions about what happened. the egyptian president says all scenarios are still open. the flight crashed on thursday .n route from paris to cairo investigators said the plane sent messages that smoke in the cabin before losing contact. the energy minister spoke after meeting the saudi prince over
the weekend. is interested in upgrading facilities. search the markets, here is heidi. someter: we are seeing issues, fourth straight weekly loss and seemingly starting to break out of that streak. this is as markets are waiting for more indications from janet yellen for greater signals as to when june is the month that they will go with the rate hike. already seeing good games. the nikkei 225 is way off its session those. take a look at taiwan and stocks in taipei surging the most in eight months close to 3% in gains they are.
we had a report in taiwanese media suggesting that apple had requested or put in in order for 78 million new iphones. we are really seeing heavily suppliers leading gains in taiwan. also, volatility in chinese mainland shares. that is also helping matters when it comes to shanghai, up 0.5%. rotating from old stocks into consumer stocks. we are seeing some red across the board, some stocks in australia the word by the oil price story, weighing on the energy space and mining. southeast asia doing ok despite the move out of emerging markets. checking on movements we have been watching this morning. in a tokyo session, we have seen the end weighing on consumer
stocks and exporting. sales falling. it also lost that packaging lawsuit in london, as well. ncl, analysts think they will have to struggle to meet their targets. thank you. a comprehensive round of has ever. let's switch our attention to angela merkel and she is on her fifth visit to turkey in eight months working to assure of the refugee according the face of increasingly tense relationships between erdogan. joining us now is our is double bureau chief. bureau chief.l we have seen a dramatic drop in the arrivals.
this agreement has fundamentally reshaped the refugee crisis, hasn't a? guest: that is right. for chancellor merkel this is all about the refugees. the deal has been controversial from the beginning. there are concerns about the legality of the deal when it comes to refugee rights. it has become something of a cliche that they will express concern about turkey's democratic trajectory. has been, the deal very effective, the flow of refugees from turkey to greece has decreased to several thousand an day. angela merkel's priority will be to put aside criticism to make sure the deal does not fall apart. manus: there is a new prime minister, isn't it? stated that his mission was to clarify the position for erdogan. what do we expect to happen?
understanding is that this is a significant step forward in erdogan's impatience to transfer powers from the parliament to the presidency. he was explicit about that, saying that his main goal is going to be to legalize it effect a situation in which erdogan is the supreme decision-maker in turkey. manus: let's talk about markets. the lira is under pressure, various reports saying it will go lower. we have a central bank meeting. what do we expect to have in that regard? benjamin: there are two narratives about the central bank. because there is turmoil injured is turmoil introduced, the justifications for another rate cut have hand,shed it on the other there is an expectation that erdogan wants a rate cut.
now, in a bloomberg survey, the consensus is that they will continue to cut rates on the top and the corridor tomorrow. manus: thank you very much. great roundup on all events in turkey. rishaad: coming up, the highs and lows, prime minister modi starting his new term with big ambitions. has he kept his promises? that is next on public markets middle east. ♪
this is his record so far. haslinda: you would have to ask an economist. [laughter] the pace of reforms may have slowed for modi. things have not gone as fast as they would have liked. if you are an investor looking at emerging markets, india has been on a good path but this year, there has been changes. the ruby has not -- the rupee has not performed as well, down 1.9%. indian sovereign bonds delivered, but now, starting to lag behind as well. brazil in russia second to do better there. some people would say that things are beginning to slow down.
if you look at what he has achieved -- the economy, that really needed a boost when he came into power. and inflation was more than 11% in november. they had managed to bring that down after his election to 5%. you have to say, he has been a global traveler, hasn't he? he feels stadiums around the -- he is filling stadiums around the world. that message has really been propagated. haslinda: unfortunately, he does not have the majority of the house. some the things he wants to push through are not being resolved. some of the things that investors are looking at, for proposals about labor rules.
they have not been so keen to jump on board that. goods andea is that services tax, another area that investors are looking at, but again, being blocked from the further forward. pressure rlot of onajan -- on rajan. haslinda: there are tensions with some politicians. questions raised over whether he will get another term. his term runs until september have been reports field by the fact that the finance minister .ill not comment on this rishaad: thank you very much. that is it for this edition of the markets middle east. manus? myselfanna edwards and
anna: the yen strengthens. concerns over the japanese comment -- currency dominate finance minister talks. the fed president john williams talks over the chance of a rate rise saying the central bank will not caved to pressure to hold off during an election year. the diy recession. david cameron george osborne said that they will be plunged into a crisis of its own making if they vote for the brexit.