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tv   Bloomberg Markets Middle East  Bloomberg  May 24, 2016 12:00am-1:01am EDT

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♪ >> is this in the death knell of opec? show is justs of not that keen anymore. has $3 billionc in investment. the kingdom looks for life beyond crude. causeia's troubles creditors to be determined to does resolve the bond dispute.
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extraordinary stresses are prompting a much better appeal. we are trying to live by the chief executive. it is 8:00 in the morning in the emirates. rishaad: welcome to bloomberg markets middle east. manus: under pressure. the saudi's are certainly not escaping. down by more than 3%. 106 stocks actually dropped. that is the most stocks dropping in one single day in five years. a couple of big issues. the relationship between oil and the currency is a given. whenoil is under pressure got here for you is a neighbor little skeptical on that relationship and the relative strength indicator.
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what you've got here is a pretty significant drop. the question for the markets is this. a week preparing for a disappointing opec meeting? oil below $40 a barrel? they are closing in on that oversold level. ground and some confidence remains in terms of what the saudi's are up to what happens next for the currency? on june 6 ramadan is starting. muslims will foster during the daytime. reduce hours will working hours during the daytime. will not bemes that impressive. that is what we have to look forward to in june.
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the equity trading session in this part of the work. about 20st opened minutes ago. pre-much flat. two days of gains came to a shuddering halt. we didn't have the momentum to keep going through that. the hang seng off by about a third of 1%. are draggingrs down what is going on with the markets. in the middle east we are still two hours away from the open. having a look at what happened there. are on the way a general trend that begins see in the session on monday. over in egypt and tel aviv a different picture. tel aviv on the way out by 4/10 of 1%. the egyptian market languishing. manus: mckenzie today.
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tom: india has agreed to invest half $1 billion in the stage and -- strategic force in iran. they're planning several other projects where hundreds of millions more will be invested in iran. it could be a symbol of cooperation between india and iran. it could pave the way to collaboration and other sectors. an egyptian aviation officials says egyptair flight a 04 did not lose altitude. that contradicts the greek defense minister who said the plane a graphical turns and dropped some 27,000 feet before falling off the radar. saysivil aviation ministry it made an emergency landing in 2013. after an engine overheated. ships and planes from six countries are searching for wreckage antibodies in the mediterranean area the united has changed is the
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way it calculates a key interest rate. what they need to pay to attract deposits. the changes already been implemented in many areas. the bank of israel has chosen to keep rates on hold at a record low. citing the strong shekel and falling consumer prices. a departure from previous months. the weakest decline in exports. plunging about 13% in the first quarter. inflation creeping closer to the government's target. manus: we about to see the death knell for opec?
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saudi arabia seems to be cooling on the cartel in favor of going solo. vision 2030 is set up. they ignited this policy of go it alone and get your market share. are we seeing the beginning of the end of opec. is the theyt question the people of been asking for a number of years now. the death knell for opec has been told the number of times. it is been increasingly insistent to since they adopted this market share strategy. they are pumping flat out trying to maintain their market share and price some of the other producers out of the market. that basically means all bets are off. when you've got saudi arabia the biggest member of going ahead and saying were going to do whatever we do. we are really need that kind of
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discourse. that really brings into question of the cohesiveness of the car hell -- cartel. manus: i suppose it puts them in a difficult position. every other opec member had this state owned company that they control absolutely. there we are with saudi arabia having a somewhat private enterprise. that is a different agenda. anthony: it is uncharted territory for the group. opec tries to control their production to have an impact on the price. how is that going to look when i ran sanctions are lifted? a dual listing in london perhaps. how are antitrust regulations going to look upon that. aramco has to interest its production -- adjust its production based on with saudi arabia said. that is a big issue they will
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have to take into account. they will have to take into consideration also with the investors want. they're going to want to the government to open the taps to earn as much money as they can. manus: they are not a swing producer. it is the fractures in the united states of america. thank you very much. oil we have been discussing rebounding almost 50% since that january low. but the recovery could be under threat. from singapore. you've been tracking oil tankers. this is really interesting steaming around off china. there is quite a lot of inactivity here. >> yes that's right. the pork is the gateway to china's independent refineries. which are called teapots. ofy have emerged as a spot
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demand. amid the global oil glut. port infrastructure hasn't kept up at all with the demand. that is causing problems. it does pose quite a threat to global oil prices does it not? >> yes. individually the teapots are small together they have gone one third of china's refining capacity. they are expected to by about one million barrels a day of crude this year. any curb in those imports because of the ship traffic could mean that the nascent recovery was he in prices this year could be under threat. rishaad: thank you very much. manus: doha bank says it is .eeing an extraordinary stress
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it will expand abroad to offset that pain. homeng in the bank's market. cheap oil is causing liquidity to dry up in the region area coming in to join and discuss all the issues of the day is our guest. we've just been talking about the death knell of opec. the saudi's no longer being got committed to opec. give me your sense of that conflict. >> they have realized that the solution has to come. you have to privatize. and you have to realize the market space. it is a medium and long-term plan. the compromise in terms of damaging the public investments. making the public-private partnership more active in investing globally.
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bringing in the macroeconomic fundamentals. they have to be transmitted in terms of market share. that is what is happening they have to slow down from those investments. to emphasize liquidity and consumption. creating stress in terms of liquidity. you have to privatize. you have to borrow from external sources. rishaad: they've got to change all those things for more liquidity. as a bank you have to play a part in all that. where you fit in? >> it is challenging. the prices going up.
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across the region. $30 billion in mobilization. subjectivities are also good. the banks a very strong. strategy toed is a move past this area and get more liquidity. it is not like you had all this interest earning capacity before. manus: i am trying to bench walk things in the region. are we anywhere near the scale of stress and liquidity that we on a benchmark of one to 10 how stressed are we on
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liquidity? >> liquidity is a much bigger issue if we look at 2008 to today. six states put together. all these countries were running a fiscal surplus. today they are running deficits. definitely is biting the deficit more completely than before. it could be an even bigger challenge. the intrinsic value of these activities to define the business model. making sure all the spirit -- stakeholders are taking care of.
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discuss how strong those economies are. at $150. stay with us. rishaad: let's just find out what going on in the markets. the yen strength responsible for what is happening in tokyo. haidi: fairly hawkish comments out from the bank presidents. that really tracked through to the asian session. we are seeing a broad-based selloff that really it has to be said there's a lack of conviction in this market at the moment. treading water increasingly as we get towards janet yellen speaking at the end of this week. it does seem like we are having the traders just sideline themselves until we see a bit more certainty about where the monetary policy might be going. this is what we are seeing. some of the steepest losses coming from shanghai down 8/10
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of 1%. still down 20% even after the recovery. moses dean yesterday. hong kong as well. it particularly when it comes to this oil story. manus: coming up: commercial property is struggling and divide. we're going to unpack the latest report on the state of the market. doha bank is looking to expand overseas. we'll continue our conversation with the ceo of that bank.
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manus: the chief executive officer executive officer of doha bank is with us. i hear your point. you are the ceo of a bank. that you want to say have bad nonperforming loans and things are going to get worse. but the economies are not strong server. oil is under pressure. nonperforming loans are set to rise. i am not as convinced as you are that things will get better. loan to deposit ratios are deteriorating. >> i see the economy is strong. regaining economic momentum. according to the spring meeting in washington. the deficit of around 5% $3 billion. the economy is still growing literally. the region has been growing in absolute terms. there is no contraction.
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they have huge sovereign funds in many of these countries. there is a huge call for market capitalization the capacity to borrow including the measurements for movies. of theve clear awaiting other ones. minas: you are fighting back there. let's get into the bond issue and story. everybody is into that market. the qatari bonds when they come to the market. how much will you bid for them? paperou issue short-term to bid for the long-term bonds from qatar? >> let's understand the position.
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a similar contraction is happening in the global market for bonds from qatar. we will subscribe to that answer is yes. we have to participate. they have those solutions. oil and gas and petrochemicals. the spread of capital is zero
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right now. in sure they would join me stating the externals are present. that is good for the country in terms of those investments. if the saudi's guest and fbi inclusion next year. that winning will be about 5%. is that going to really cause a big issue for qatar because that country and to dubai ready has that status. if the saudi's exceed to that status is really not liquidity in your market. which i understand is ready pretty much on its knees. that could a real impact on the market. these markets are getting mature. they're trying to bring in other kinds of issuance.
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the rest of the markets will experience enough. a lot of realization will take place. it is good to have sending the right kind of investments. that would reflect positively on the market. if they can be misunderstood by others that have suggested a wall. how does that economy happen exactly transforming with prudence what sort of thing will affect the markets in the long-term. that is the multimillion dollar question.
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manus: that was chief executive officer of doha bank. details on that spec coming up on bloomberg markets middle east.
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rishaad: the conflict in other david we've been following. we see an end to this disagreement? >> we really don't know. it is just a comment and we haven't been told the conflict with abu dhabi will end. they met with creditors on monday. outlining why they would help
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outline the next step in the process. also the progress on this rationalization plan. as you know it is been a tussle between almost a case of who blinks first. i think guarantees debt amounting to $1.75 million. if they default it they will also pay the coupon this month it another set of securities is complicated. it has been a riveting tale of money trails. manus: what you got here is the relationship between oil and the ring they are inextricably linked. a high correlation in 2012.
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it was the darling of the first quarter. we got some pretty big calls in terms of which one to move forward with? >> is more than just politics. the best-performing currency. it has been volatile. it is not just one company weighing it down. correlated with bank crude prices. soon enough. is battingk to ing about a 19% jump by september. if this currency is very much undervalued at this point in time. what happens with the fed and
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for the dollar. everything else is pretty much secondary.
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rishaad: we see the opera house in sydney. in positive terrain in australia. ♪ india agreed to invest half $1 billion in a strategic port in iran. the visit to tehran. the project was suspended during the sanctions.
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hundreds of millions more. as predicted, the bank of israel is keeping its interest rate on hold. at a record low of 1/10 of 1%. pointing again the strength of the shekel. bank also highlighted the decline in exports of almost 13% in the first quarter. saying the egyptian airplane did not swerve suddenly before its disappearance. they'd said that it made radical turns before it fell. manus: let's go to our
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reporter. >> this is what we are we at from a european perspective. from the start of the next hour. they will be convening in brussels today as we know. finance minister talking about this as the first time that greek debt was going to talk about in his words seriously. debt relief really seems to be on the table in a way it has not been for some time. debt to gdp now at 70% larger than it was back in 2008 despite all the efforts by greek authorities to reduce spending. what you do about this 321
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billion euro jeff burton that the country is facing. do you go for long maturities. the interest rate. and is something of the imf some countries within the eurozone at loggerheads about it. a serious conversation in brussels today. manus: the bond market is telling us something about brexit. the pricing of some of these debt issuances from u.k. corporate when you look at the pricing it seems that is suggesting that the bond market is increasingly in pricing in its getting in its more relaxed about the kind of risk.
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sterling denominated bonds. that is decreasing. a couple of key names. a bank of america merrill lynch. attached to this debt. the 7% is the rate at which these companies can borrow back in february of this year. to 3.2 percent. getting a bit cheaper for u.k. corporate entities to issue debt. a little bit more relaxed about the prospects of global loosening. adding some drama to today's brexit meeting. manus: thank you for a much. $3 billion in saudi arabia.
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we asked what ge plans to do in saudi arabia. see how important it is for governments like saudi arabia to be as clear as they have been with vision 2030. just like in china you have a series of five-year plans. this is the 13th one. he gives companies like ours and investment clarity and an agenda they can focus on. the saudi's have done the same thing. they are talking about diversifying the economy that is what we can help them do. talking about expanding the health care capabilities. we can help with that. human capital development. creating higher skilled labor force that can do different things these are all in our sweet spot as investors. they told us what is important. we now can align with that and that is the substance behind the commitment that we have seen. >> your oil and gas units. the whole industry is been
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suffering. down about 20%. operating profit down from 30%. you see opportunities? >> sure we do. we look at that all the time. we think that the low point of the cycle is ready past. there will be buying opportunities. in our world there has to be a willingness a cellar for us as a buyer to come together. we expect that there might be some of that. we are taking a cautious approach because we want to make sure that everything we do is that you created. recently spokelt about the unallocated capital at about $50 billion. are you looking for strategic investments right now? >> will always looking for strategic investments. across all platforms. mergers andammon
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acquisitions we do will be different from the ones we've done the last two years. adjacent companies that we can fit into our larger business model. creating more value that way. rishaad: they talking about bsi. bank operating near lausanne order to shut down in singapore by the monetary authority. all six members of the senior management have been referred to the prosecutor. it is been shut down on money laundering charges. the psi bank. serious breaches of anti-money laundering requirements. all coming from the maf in terms of an e-mail statement coming through.
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other banks also being investigated in the same unit. bsa bank to shut down in singapore. the order to do so by the monetary authorities. manus: more deals in another example of public-private partnership. saudi arabia is working on ways to bring such deals together. to bring companies together. this is all about diversification. anthony: this is a case where the saudi goals and what ge wants a really meeting in the middle. beyondrabia wants to get
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the oil economy and expand to things like high-technology and manufacturing. using the raw materials created through oil. taking them down the chain in creating more products. ge is seeing some of the profit to getthat so they want into more things than power technology. in interest there really is the issue of technology transfer that is running important. they want to bring in more saudi's to have jobs. yet the more educated and have them get the technical skills that they will be a would add when they bring more industry into the state. a local supply chain equipping themselves in the future. anthony: this is something they've been working for. there are educated engineers there. saudi aramco which is a prime example of what we seen as one
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of the most professional companies in the region. they want to take the skills and expand them throughout the country and saudi aramco is part of that decision for 2030. to expand those injuries and add on. ge with this investment is going to be one of the partners that we see. there will be working with them on this effort. manus: you got companies that want to invest money.
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expand into services and technology and make sure that they are service provider for people of a cell equipment to. the days of them just selling refrigerators and microwaves and things like that is over. they want to provide the services as well. a lot of these companies buy these products in order to maximize the operations. to get the additional profit. it is that kind of give-and-take that they are looking for. manus: thank you very much for bringing us up to date. let's get up to speed with some of the other headlines. president obama has a
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limited one of the last best vestiges of the cold war. he wants to highlight the current relationship as the u.s. tickets to the asia-pacific area. china's rising assertiveness in the region. it must not threaten any third party. the fbi investigation of hillary clinton is nearing an end. it is expected to lead to her being questioned. agents have already spoken to one of her aides. chief of staff is also cooperating. the indian prime minister has congratulated them for successfully launching a mini space shuttle.
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a reliable option for putting satellites in orbit. egypt wants to play a big moral role in the commercial satellite market. $200 billion in 2014. rocketeded its first 1963. as for satellite making 75. rishaad: ordering them shutting down of the bsi limited. a massive italian insurer. since 1998. the prosecutors talking about probing possible money-laundering taking place at that bank. still related to a troubled relation with the state. this is what we've got the moment. we will have more on this later on. a breaking news story.
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we'll be back after this very short break.
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manus: commercial real estate in dubai has become a tale of two cities. we welcome barry strang. he is head of investment and strategy. looking to the show. the free zones are holding up. where are billionaire is. less appealing zones. barry: i would say more peripheral zones. the turkey thing about dubai is covering the segment nature of the market. it is held up far better than others. just give everybody a brief
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overview on the same time covering those specific technicalities in certain areas. hopefully we can discuss that. manus: dubai residential is down about 10%. is it the same thing in commercial? what kind of drop have you seen? murray: that certain factors that really kicked off a change in the market. a change in the mortgage legalities. and also transfer rates. so the residential markets where changing for a couple of years now. extremely held up well until probably the second half of last year. then we start to see something across the market. i think as we touched upon free zones of held up extremely well. i think they still are stable. we've seen increased take homes from blue chips and new entities
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coming into the free zones. we have seen probably five to 10% softening in this market. other more peripheral areas. another kind of possibly oversupplied area. within divide. -- within dubai. rishaad: looking ahead is more supply comes on. a change in regulation. is it more deep-seated than that? murray: there are a lot of factors behind it as well. in terms of the oil price. there's no doubt that that affects dubai. technically it is direct but definitely across the wider middle east. there is no doubt for takeover in the commercial market the dubai is seen as a middle east of. anything that affects that market negatively is acutely experienced in dubai. especially in the commercial
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market. the expense of dollar and no doubt the commercial market has made a difference as well. there are a number of factors compounded at this point in time so that we an effect touched upon an area jailed see is the primary focus is metals and commodities. it doesn't take a rocket scientist to know that this has been a tough time in the markets for commodities. there is definitely an area with a lot of debt. manus: you had a lot of this in the united kingdom and western europe. taking old commercial properties reusing them redistributing the into hotels and apartments. what is the trend? that is a trade for the braves.
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murray: definitely with the announcement of exports we saw a that theyncement would require extra hotel rooms coming onto the market. that spurred a lot of hotel development. at that point in time. focused possibly more on the five-star and beachfront properties. we've now seen a movement toward more affordable hotel rooms and apartments. shift fromd to a oversupply of commercial office buildings being converted into those types of accommodations. manus: let's see what that does for dubai in five years time. rishaad: back to that breaking news from singapore.
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an extraordinary step of ordering bsi bank a swiss italian bank controlled in part by italy to shut down over a legend money-laundering problems. quite dramatic moves here. very strong words coming from the monetary authority of singapore. it says the shutdown that has been ordered is for serious breaches of money laundering requirements. poor management of the site. gross misconduct by some of the banks staff. ofwill impose a penalty $13.3 million for those breaches. we also know that this was government has opened criminal proceedings on the one mdb case. bsi to seven charges against the former bsi banker.
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banker was seen as facilitating a transfer of almost $12 million is currently held in custody in singapore? staggering amounts of money there. under multiple investigations around the world from switzerland to the united states. money that is missing a not accounted for. the latest twist happening right here. psa ordered to shut down its operations in singapore. rishaad: bsi order to shut down. manus: reasons for the bank of israel keeping rates at a record low.
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manus: defining exports requiring the bank of israel to hold rates at record low. our middle east editor standing by in tel aviv. it is the relationship of the dollar and the shekel. israeli gdp. this is why you are seeing the iconic flow. holding rates at a record low. the shekel versus the dollar. down 2.6% last week. the biggest drop since february. record low rates. elliott in tel aviv. elliott: deflation or inflation is becoming less of a concern for the bank of israel and the governing council.
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they specifically reference to the decline in exports. excluding diamonds in high tech startups. one of the reasons for that was the strength of the shekel. the upshot is that we shouldn't expect to see record low rates being raised anytime soon. rishaad: what we expect the government to do here. do they buy more foreign currency. elliott: i think that is every possibility that they might decide to do that. governorer when he was for $12 billion. when the shekel is above 3.8 to the dollar which is where we are right now that is also starts raising concerns that they might
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have to make is really exports less competitive. and therefore lead to slower growth. manus: the bank of israel is in a bit of a pickle. you have record low unemployment. a lot of politics at play here. the number one priority of the finance minister. have you do that. if you have record high rates. the possibility of something catastrophic happening in the world economy. there is a bind here but no whatever said being a central bank governors easy. rishaad: enough of that. we will stop you right there. that is it for this edition of
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bloomberg markets middle east. manus: you make it look easy. we'll be back again at 8:00 dubai time.
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anna: trouble in china. a top analyst says the country may need a bailout worth trillions of dollars but the morgan stanley ceo says he is up beat. >> the second largest economy in the world and growing at 6.9%. it is certainly growing at a rate demonstrably faster than the rest of the world. preparing for the u.k. referenda before a pre-vote, that as the corporate bond market suggest that don't accept a brexit. one of e


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