tv Bloomberg Markets Middle East Bloomberg June 9, 2016 12:00am-1:01am EDT
} turkish stocks haven't been so cheap relative to their peers for more than six years. is 8:00 in the united arab emirates. i'm in hong kong. welcome to bloomberg markets middle east. manus: another rate cut from the koreans. oil is rallying. billions of dollars when it's the emerging markets over the last two days. that is what got my attention. the volatility which is your blue line at his back in 11 month high. the federal reserve action is possibly on hold. the price-earnings ratio of 12.3.
just check out the brazilian currency or the russian ruble. all accelerating. rishaad: koreansaid we had the taking action. a surprise interest rates cuts. 25 basis points. also pressure on thailand's to do something about cutting interest rates. in the markets that are open we have hong kong and taipei and shanghai. all closed for the dragon festival. all these markets are down so far today. he's got dubai and i would be
coming on stream soon. look what happened in the last trading day. it ended up like this. some gains but to not outstripping the other ones. that is what we have so far when it comes to the stock markets around the world. yvonne: chinese regulators may be about to drop the last potential obstacle to the acquisition of sap miller. they are close to approving the deal. has agreed to divest one of its subsidiaries. that they don't object to the takeover. those transactions could come before the end of the month. of japan's largest banks are now among the world's biggest energy lenders.
most exposed with around $85 billion on the balance sheet. tens of billions exposed in the sector. diversifying with lending costs rising in the recent commodities slumped. george soros is more hands-on with trading at his family office. according to a bloomberg source. the 85-year-old is spending more time directing trades and recently oversaw a series of big bearish investments. soros has built a $24 billion fortune. he's recently taken a dim view of the world economy. manus: tel aviv is recovering from its worst act of terror in more than five months.
they opened fire killing for israelis. hamas said it was in response to israeli crimes in the palestinian territories. what exact we happened? in ant: this took place open-air shopping and restaurant complex. near central tel aviv. ministry that is the israeli pentagon. modestly dressed palestinian men sat down and had dinner and then took out two homemade submachine guns and began firing randomly of people there. they killed four israelis and for more wounded to them seriously. one of the attackers was also injured. he was taken to hospital. he is in serious but stable condition. moscow he his trip to arrived at the scene and described it as a cold-blooded murder.
manus: is quite near to the defense ministry and that is probably ringing alarm bells. it is near the defense ministry is an area where some of the people are stationed. the best guess as to why this location was chosen is because was a soft target. unlike indoor-air shopping malls we go in your bag is checked in your interrogated you have a gun on you. then they let you into the mall. shopping of open-air you can just walk into it.
like a street. the initial response has been that the village near have run in the west bank has been under israeli military rule. the conferences. in this attack. try together more intelligence if anyone else was somehow involved. carrying out this attack. it really depends on whether these two attackers are from the same family part of that large military organization which is hamas or islamic jihad.
they were just acting on their own. we mentioned hamas earlier. they did meet that it was a heroic operation but they didn't want to take operation responsibility for it. rishaad: china may be getting closer to dealing with falling prices. the consumer price index has reached lower levels on lower food prices. if you look at it in a month on month basis is up by half a percent. >> that is on top of a 7% increase from march to april. getting some more pricing power.
four plus years. we said firming of oil prices. more speculative flow. it's interesting to watch if there will be any policy response to these actions. it's pretty benign 2% action. 2.3 we've had for three straight months. kim and 2% for now. the largestelmingly component of ppi. 21 and a half percent right now.
that is often the case we get into the spring and summer. the festival prices. prices were 5.9%. the previous three months were in excess of 7%. some of that coming out. manus: a great deal of people on vacation in china. story that isry still continuing. you have inflation numbers that we just talked about. machine orders that take a backseat. minutes last 15 or 20 we can talk about was happening in those markets. in tokyo. it has gone horribly wrong there.
bolster a short, there is higher demand here. still seeing demand for these japanese government bonds. underwater under zero. just about 25 basis points the low the previous level. we're down to a 1.4% dollar yen relationship. stocks on the downside. that is pulling down everything else. it's a valuation play right now.
they basically frontloaded that cut. manus: thank you very much data. you can get much more of that information and the rest of the day's news that our brand-new digital destination tailor-made for the middle east. data and newsket from the middle east. only available online. rishaad: we'll be hearing from former u.k. prime minister tony blair about brexit. these controversial attacks on unused lands. this is bloomberg markets middle east. ♪
saudi arabia has released more details of its national transportation plan. let's examine the latest statement from them. last night was another marathon night for the team here. what did we divine from the saudi statement? >> is about the so-called white land tax. land in cities is not being developed. this is one of the things that the king wanted to do. about 1.5 million homes over seven years.
another highly ambitious target. they're cutting subsidies so they have to make promises to the other side. fuel subsidies have been cut. they're talking about reducing the public sector wage bill. from 45% of spending. a little bit of give and take. there has to be some push to tackle that issue. it is very very real. this is the deputy prime minister in a hurry to achieve his stamp across saudi arabia. you are talking about taxing expatriates. we will see how quickly back in the implement.
at the same time as they want to diversify they also need all of these people coming in and helping them with the diversification. one way to attract them is by giving them good salaries and giving them tax-free status. what was really interesting was that this is probably the biggest push to diversify the economy away from oil. great targets to modernize the economy. the private sector by 2020. how open they are about it. these press conferences that are happening late at night. they are taking questions is also something we've not seen very often. a new regime in saudi arabia. we joined now by the senior
economist from hsbc. that claudia and i have just spoken about this debt explosion. this rebalancing of the markets. from an economic point of view what have you made of this. what you think is achievable. i think it is quite an ambitious plan. there's certainly a lot of things there to divest. there is room for a lot of structural resources to be done. there is really no choice right now.
they're starting right now from a position of strength. it is hard to see other oil producers outside of this region. some of things we've been saying will carry them through. is this really much better than not enough to keep the region running at the peso was before. there are still imperative need for change.
we are starting to see the impact going into the broader economy. the impact we have had on the banking sector. fundamentald a change in the way the government's relationship has taken with the banking sector. we seen the move away from being depositors and being moving into the realm of withdrawals. that will push deposit growth to its lowest level in years. we're seeing government issued debt in saudi arabia being reduced.
even look at the deposits and the deposit growth is waning right across the region. you say that brings some alarm bells. it is a reflection of the drawdown on government activities. it is also having other consequences. we're seeing banks that are used to getting these cheap stable deposits now having to go to offshore markets to borrow. growing across quite a few countries in the region. these are more expensive and less stable. there's also this rush to the bond market.
cheap money, let's get it in let's get it issued. because reliving the 0% world. razan: but even in the short run he can get more expensive quite quickly. interest rates as you mentioned are going up. so they are looking up externally for their borrowing. there's a huge demand for this paper. there was also a huge supply. talking about deficits in this region that are adding up to $160 million a year. that is a lot of money that needs to be funded area partly through sovereign wealth funds in local currency and now we're seeing foreign currency. take the explosion in debt
load for saudi arabia. 30% of gdp. that's going to involve them issuing $200 billion worth of debt. their view was that that is constructed for the region. that builds capital markets. that will build financial liquidity. from your perspective is that progress or is a burden. it is constructed to some extent. building up a yield curve will help the rest of your economy to issue debt as well. we estimated there be about $90 billion of bonds. these bonds will also be
continuing in the private sector and after that they have heightened interest rates in the u.s.. in other still quite slow. that will take effect for sure. by anybody's stretch of the imagination that is a lofty ambition. you think they can achieve those goals? it is a very ambitious goal. i don't think they need to achieve all of their goals. it will be considered a success story for saudi arabia. ideasitial studies and
january and it happened across the defense ministry. israeli crimes in palestinian territories. controversy attacks on empty land in saudi arabia. regulations have been finalized all for the levy on the value of land. cities not being developed by the owners. chinese consumer prices rising less than anticipated. the deflationary trend has continued for 51 straight months. turkish stocks could be right for a rally. coming up from a six year low.
they lost $24 billion in may. there has been a cabinet reshuffle in that country. possible rate hike. equities are vulnerable to u.s. monetary policy shifts. rishaad: it is 12:30 p.m. in singapore. anna: we are counting you down to the start of the european trading day. the latest news of the brexit story. international attention to the story. with ministers all over the world weighing in. seeing it as a threat in some places.
will the u.k. decide to leave the european union? it can. chancellor says achieve its net migration targets. this is a hotly debated target in the run-up to that vote. the deadline to register to vote has had to be extended because of technical problems with the website. having to work overnight on the 23rd.
a lot of them are considering according to this great story got abandoning some of the electronic platforms. during the trauma. when the central bank dropped its pegged against the euro. voice training for example. manus: doing with robots and automated trading. he speaks today. anna: he is speaking in brussels. this is interesting because will be the first time he's speaking since he got that data about payrolls in the united states. by corporate bonds. we learned a lot yesterday about what they want to buy how aggressively they want to buy it. what kind of risk profile is attached to these investments.
they brought some telecom italia get into that area. how the ecb is coming out fighting on this one. not afraid to take on the risk profile. was struck about potential bargain. tex stocks haven't been so cheap relative to the emerging markets in more than six years. bloombergs emerging markets editor will speak about this. why is this cap opening.
turkish stocks had such a great month. a lot of turmoil of people quite nervous about turkey. you have a prime minister saying that they wanted to step down. a cabinet reshuffle. emerging markets stocks were rising. through stocks actually falling. you got this gap. it really depends on how people see turkey if they are able to handle the risk in turkey this is an opportunity. why does anybody care about the gap being so large. i'm a great believer in the fact that refunding his sheet. because the fed this could affect all of the emerging markets.
the valuations in turkey are so low. if you are willing to take that risk is what people are you going to go in and out he can make quite a bit of money. to trade at that level. if i look at the political landscape. heightened last month. talk about undoing the european immigrants activity. you can just sleep on it. you have to read the news. the situation in turkey is ongoing. the just set off two bombs in turkey. what is to be aware of happening there and keep up with it. there's a lot of money to be made.
rishaad: we have a lot to digest today. a couple of right decisions in this part of the world. investors at the moment trying to understand the trends there. great conversation there. take the case of brazil for example because of uncertainty thee if you did get in nikkei, less than 90 minutes away from a close. underwater for the week. got about 10 points.
has been seen in asia. belize dollar story continuing. rishaad: let's get some reaction to this latest activity. the latest rate cut coming out of south korea. let's get over singapore. that seen as emerging market economist. that banked out with of korea decision. nobody really thought about that. everybody thought would happen next couple months. of problems with that korean economy. quite a surprising move. everyone knows that the economy is under pressure.
especially on the export side. export growth has been negative for more than a year. the china. today's move is a big surprising because timing is right court with these actions. hand thebefore on your strength of the korean won is one of the reasons they want to cut because it looks like the strong currency will continue on the economy.
fundamentally speaking the most important thing is still the quick demand growth globally. i think there will be another cut in rates. very likely in august or september. on the other hand we still have to see the growth engine globally. that deflationary measure is actually improving. on a month-to-month basis it is actually positive.
does it mean china is dealing with those structural problems it is facing. particularly the old economy. ppi has been deflationary. we have not seen any significant improvement in that. china still has overcapacity. china's corporate debt and also the credit growth in manufacturing is still a big question. any significant turning point of this kind of issue. the recent month on month increased ppi may also be because of speculation those prices. it is too early to say that china has been the old economy to the new one. china is still critical. cpi is another issue.
it surprised the market on the downside. the rates decision in korea this morning. thinkinghas to be about further rate cuts. burstr monetary easing to -- and boost growth. in the other hand you don't want to provide too much liquidity. rishaad: we are time. thank you so much for joining us. manus: tony blair talked to bloomberg. his thoughts on saudi arabia and the prospects for peace and iran post-sanctions. more to come. ♪
donald trump said he has narrowed his search for a running mate to four or five people. including some of his former rivals. beijing has called on the philippines to abandon its arbitration case on the south china sea and engage in direct negotiations. the foreign ministry said the filing of the case three years ago shutdown dialog it harmed relations. it supposedly violates agreements between the two countries and the yuan extension on the law of the sea. a ruling from the hague is expected this year. choking smog has returned to beijing. the environmental authorities say the air quality index hit 201 this morning. that is described as severely polluted. it tops 230 in some parts of the city.
air and water pollution pose a significant threat to the authority of the communist party. manus: the former u.k. prime minister tony blair says he is excited about the changes he sees in the middle east. in a wide-ranging interview with bloomberg, he spoke about the prospects for iran and hopes for peace between israel and palestine. in their mark with changes in saudi arabia. tony blair: i think it is been one of us living in changes has come about the region past years. i think the program of economic will bend social change of fundamental importance to the future health of the reason.
he is young but those who used to dealing with the saudi system over many years, it has gone from being a rather clumsy vehicle to one that is moving fast that it is young population. they realize that they need change. he is really driving the change. he has a vision that they set out that is obviously sensible in a modern forward-looking way. implementing it is going to be hard. but i think he has the executive capacity and also the support to do it. that is an absolutely vital strategic interest in the west. >> what about the saudi iran tony blair: i
think the biggest long-term tension in the reason -- region is around the need for the region to achieve rule-based societies and to religious tolerance. those the two things that are of the heart of the crisis in the middle east. tensions between saudi arabia and iran. the sony problem with iraq is that they have a desire to export this theocratic revolution. it is not that the deal with americans is wrong. if you put a constraint on the iranian nuclear program that is a plus not a minus. the problem is what the iranians continue to do with the region is export instability and chaos. .here supporting hezbollah
there supporting radicals in yemen. to put hamasng into a position of hostility toward israel. rather than move them into a position where they could be part of the peace process. hostile to our interests. hostile to the interest of rule-based economies all around. this is a problem correctly. in the end i think you will find that the saudi issue with iran is tough to do with sunni versus shia. it has to do with the actual impact of iranian policies dictated by those who ultimately govern iraq. >> you think there is a sign of a change in iran since the deal? tony blair: one of the interesting things is the iranian people are obviously smart and educated than capable. i have no doubt at all that they have the freedom to elect people
they would elect someone with the government to the rest of the region could work happily with. the truth is the ultimate power still resides with the religious leadership at the top. different people at different views about it. they want to take the country in other directions. if you look at the activities of religious leadership and the revolutionary guard iran they are still doing what they've always been doing. when you look at the roots of all this. all the terrorism around the region. in retrospect we hugely underestimated the impact of the 1979 iranian revolution and then the storming of the cap. we have greatly underestimated the impact that these two events had on the way the region subsequently developed. you also talked about
>> that is the question on everyone's mind. is up for the fourth day. is is trading right around $52 per barrel. are couple of factors driving them. the primary one is u.s. inventories. u.s. government reported yesterday that stockpiles fell to the third consecutive week. they are down to the lowest level in two months. we ares a feeling that beginning to work our way through this oversupply of inventory globally and particularly in north america. more bullish sentiment on oil prices. energy aspects the london-based consultancy is saying oil may rise to $70 a barrel next year. the japanese bank is even more bullish on it. that isary reason for that you are seeing u.s. inventories slowly going down.
a true sort of supply and demand balance. manus: the wildfires back in canada. aaron: that is another factor. the wildfires of the last few months and have a huge impact on canadian production. they cut about a million barrels a day. it seems like a sort of receded. u.s. energy department is estimating that about 4000 barrels a day of canadian bothies will be off-line of those factors are clearly bullish limiting supplies somewhat. that will help prices rise as well. rishaad: thank you much. that's it for bloomberg markets
anna: china's factory gauge inflation slows, but consumer price gains remain subdued, leaving the central bank going for more easing. a lot to be scared about. george osborne on the brexit threat, exactly two weeks away from the referendum. draghi president mario speaks at the brussels for him. we are there live talking to the european commission vice president, that is later in this program. ♪ a very warm wee