tv Bloomberg Markets Middle East Bloomberg June 14, 2016 12:00am-1:01am EDT
extra investment authorities. $20 billionrosoft's pursuit of linkedin is one of the biggest deals that tech has ever seen. manus: it is in :00 a.m. across the emirate -- it is 8:00 a.m. across the emirates. rishaad: i am in hong kong and it has just gone midday. welcome to "bloomberg markets middle east." manus: the level of risk in global markets is there. the channeling 1992 when empire went on side with tony blair. they are at it again. it is one of the most popular newspapers in the united kingdom. what you have here is the believe in britain. this is the message with less than a week to run until you can cast your vote. i want to show you the msci all
world index. markets have been hijacked by brexit fears. four polls overnight have put the u.k. on course to leave the eu. what we have here is the msci all world index. value destruction? $1.5 trillion has been wiped off global equities. we have not seen a loss like this since february. in your part of the world, shortselling is back. we have not seen it at that level since we began collecting data in 2008. rishaad: looking at the foreign exchange space. we could go down to 1.35 within days. also the reverse, that it could go up to 1.50 as well. fx is played out everywhere. mum by came on through -- mumbai
came on through 20 minutes ago. the hang seng is flirting with a gain line. action foras been in one half hour since their lunch break. two hourses market, away from start. we saw monday trading closing like this. a fairly lackluster session there in abu dhabi. 0.3%.arabia up by manus? manus: let's get into the other stories making headlines here at bloomberg. we have haidi lun with us. haidi: investors around the world may be exposed to the chilly wind blowing through chinese stocks. msci will announce whether the domestic equities will be added
to the benchmark gauges. shanghai shares have fallen by almost half over the past 12 months including a 20% loss this year. inata is to sell shares held auto companies to raise funds over claims of its potentially lethal products. it is already offloaded 2.2 million shares in honda. it also had holdings in toyota, nissan, mazada, mitsubishi motors, and suzuki. cutting extended revenue forecasts -- it is blaming a drop in medical advertising. would label their ads more clearly. that followed the death of a
university student due to an unproven cancer treatment he found in an online search. algeria has appointed a new energy minister. he is an advocate of higher power prices. he said costly subsidies were unsustainable. the government is less reluctant to raise prices due to popular unrest. the exports account for 60% of the economy and 95% of foreign sincee has almost have 2014. 2500 journalists and 150 news bureaus around the world. i am haidi lun. rishaad: the battering that worldwide equities are getting at the moment. we have these concerns about britain quitting europe next week. it is playing out in europe, the u.s., and this part of the world
as well. was that weope would see asia stop the bleeding. we are still down about 0.8%. that is how it breaks down across the different industry or sector groups. if you had to pick a bigger los er -- i'm not sure why you would want to, but health care is down 1.5%. just about every sector is down 0.6%-1.2%.e we are looking at half $1 billion of market cap wiped out since yesterday -- since wednesday. why we are not seeing the same magnitude as far as losses, that we saw on monday. we are seeing these measures of
volatility continue to creep up. while people are not unwinding their long position, they are buying protection. worth noting, australia rejoining the fray today. they were not trading monday. we are seeing a bit of catch-up. 2.1% declines there. that is the largest drop since february. japan has been at these levels all day. 1.5%. indexthis small caps taking a beating. -- what shouldff i call it? the magnitude of the drop on monday is something we have not seen in months, which is why we are seeing pockets of strength. overall, the tide is still very much lower. you can see the price action,
the equity markets, dollar-yen at 1.06. that give you a real sense of risk appetite not being there. rishaad: david inglis happening with whatavid engles is happening there and how the risks are playing out. manus: microsoft is buying linkedin. , $26 billion. one of the largest deals in tech we have ever seen. yvonne man is here. the eye-catching part of this is the $26 billion price tag. what am i going to get from my linkedin profile? how will i fit in to the microsoft world? yvonne: the trade-off is the professional network integrated with the professional lifestyle. theou mentioned
evaluations, this is 91 times even the -- 91 times ibada. islooks like the resume looking good for linkedin so far. nearly 50% of of their last flows on friday. microsoft is considering writing -- riding this tech wave into the future, so this could check all of the right boxes. they've largely been missing out on this consumer web boon. they are trying to sprint ahead when it comes to these social tools. it also remains largely independent. the structure remains the same. jeff weiner will remain as ceo. a similar structure we saw when google took over youtube, as
well as facebook, whatsapp. 443edin has more than million members. they have the potential to scale each other's growth. manus: there is a wonderful gadfly piece. they have a fantastic bart chart. it shows the revenue collapse in lincoln. whichever -- in linkedin. whichever way you cut this up, this is expensive. yvonne: it is the most expensive and microsoft's history. this is far more rich than recent deals. compared to nokia, an $8.5 billion deal. compared to skype, to $9.5 billion deal.
all of these did not live up to the initial promises. people are saying, can microsoft get this to work? linkedin is set to grow at the slowest rate since the company went public. there is a lingering concern that they cannot get users back to the site, as well as pay for services. that is perhaps why we are seeing microsoft shares down. manus: they are doing this deal and they are taking on debt for it. great article. i cannot wait for microsoft to reach out to me on linkedin. you can find out all you need for the rest of the day's news. destinationdigital is tailor-made for you, tailor-made for the middle east. you can find reports. you can watch all of our reports, and the news, and special content only available online. rishaad: coming later on, the thirst for energy. we will look at how the world will shift its power generation over the next quarter of a
manus: we are back. it is "bloomberg markets: middle east." how interested are you in saudi stocks? what is the potential for a rally? we have run the analysis -- a little bit of buying in the saudi market. why should i care? >> it is a unique trend. we are seeing about 42% of the members on the saudi stock index showing some buy signals. it is interesting, considering you have selloff everywhere
else. manus: we were back in a bull market in april. what are these readings you are looking at? >> the last time that this happened, stocks began to rise. when they started, they rose more than 20%. we are saying, the last time thathis happened, a lot of money was made. if you want to have a look, it is happening again. manus: saudi stocks -- you just said to me, saudi is outpaced. -- has outpaced the msci emerging markets this quarter. call me a skeptic. >> if you look at the data, it says, of the 172 members on the index, 80% have average ratings. a potential60% show upside.
we cannot tell you to go in and buy, but there is an opportunity here. if you look at the market closely, you may find bargains. manus: i ran wcrs. it's one of the functions. we are able to look at the performance year-to-date. aboutlenged emirates this. we have run the data, which is what your piece is about, versus the performance. cali old-fashioned. -- call me old-fashioned. you have media down 70% year on year. it is still a big call between the two. >> because there is a lot of change happening, you have to watch out for the cues. if you look at the division closely enough, you'll see some were mentioned and some were not. it doesn't mean others that were
not mentioned won't benefit. people are waiting for the cues. they want to see where the money will flow in. don't forget, it is ramadan right now, so working hours have been shortened. it is quiet. people have to study carefully. manus: we love of chart on "bloomberg markets: middle east." rish? israel has posted its worst trade deficit in four years. our reporter joins us from tel aviv. the pesky shackle isn't doing -- doing theirt economy any favors. >> when it comes to spending power, the israeli consumer is doing well.
it is making the cost of foreign goods and travel cheaper. whether it is cars or scooters that the import and do not make, it is cheaper for the israeli consumer bloomberg.com but -- consumer. but the export become more expensive and less competitive. that, the biggest trade deficit since march, 2012, are probably more calls for the bank of israel to intervene, to buy more foreign currency, to try to weaken the shacklekel. >> a bit of a shakeup in the pipeline for their commercial banks in india. >> the finance minister said he had a few priorities. one was to lower the cost of housing, which has not happened. the other was to reduce the power of their big two banks. they submitted a number of
proposals monday. the main one being that the big banks will sell off credit card units. that is in hope that someone will come, buy up the unit, and more broadly turn into a competitive lender. this is a to make it easier for foreign banks to be created in it isountry -- they say to make it easier for foreign banks to be created in this country. it's not good news for the big banks that will have to tsell of their credit card units. at one point, they were told they could set up new units. that is not going to happen. they might come out on top if they get a good price. than they can build up a new business by cross-selling to their existing banking customers. elliott in tel aviv. one person who got a good price
is 8:22 in dubai. let's get you up to speed with the headlines on bloomberg today. says they willy maintain are holding in mitsubishi motors, despite the fuel consumption scandal. the news comes after nissan agree to rescue mitsubishi motors by buying 34% stake. mitsubishi motors shares have fallen more than 40% since it admitted in april that it overstated the fuel economy of its mini cars. >> the future of the management
and mitsubishi motors is unclear . once the plan becomes clear, we will decide what we can do to help them. this company is set to theolar and wind from renewable energy company. it will take over a gigawatt of renewable power in india's biggest clean energy deal. ceo said the acquisition is a plan to raise non-fuel based capacity to 40%. these two companies have been brought into silicon valley startup.
meta.g it is a.r. which superimposes digital images on the physical world. meta says it will use the money to develop a headset that does not need a pc. ast year's fundraising was led by horizon ventures backed by hong kong's richest man. foreigners buying houses in sydney will pay a new property tax from next month. the south wales government will introduce a 4% duty surcharge and a land tax worth 0.75%. similar costs are already in place elsewhere following a move by banks to tighten lending to property investors overseas. rishaad: goldman sachs has been accused of using gifts including holidays and prostitutes to
influence authorities. jeremy.t the basics, how did this litigation start? fascinating piece of litigation that started in london yesterday. the libyan investment authorities are accusing goldman sells of advising it to inappropriately risky trades which lost them $1.2 billion. that it from a fund worth $60 billion. rishaad: a lot has been talked about. what exactly is the bank accused of doing? >> the bank has been accused of effectively getting too close to the fund by exposing its lack of sophistication in 2008, at a time when it was just coming out
of being released from international trade sanctions. and coming toward the end of the muammar gaddafi regime. hospitality, lavish holidays, prostitutes in a bid to put undue pressure on the fund to enter these traits, which cost -- these trades which cost a huge a lot of money. rishaad: what can we expect from this trial and how long it will go? have we heard the other side? what is goldman saying to defend itself? >> goldman is countering that they are an unfortunate victim of the credit crisis and not the bank's wrongdoing. conducted a it perfectly proper business relationship. the trial will last about seven weeks. it is one of the biggest trials of the year in london. it is surprising it has got this far. we should see witnesses lining up to testify that libya lost
hundreds of billions of dollars ade $300 million worth of profit. rishaad: thank you for that. jeremy hodges there. is get you up to speed with what is going on market lies. asia-pacific. 1.5% down when it comes to the topix there. india flirting with the gain line in the hong kong market. they are on lunch at the moment. the nikkei 225 down. china is not as pronounced as it is elsewhere. you can see that with the nikkei, he hang seng 0.25% down. mounting concerns about britain's future in europe. or more precisely, britain's lack of teacher in the european
japanese and australian bond yields hitting new record lows and the yen, strengthening. may be duei stocks for a rally according to the moving average convergence data. those figures put the buy signals at 40% of the members. it mirrors the bounce that sent the index into a bull market. just 1% of the members have sell signals. microsoft set to buy linkedin. one of the biggest trash -- cash transactions in the tech sector on record. microsoft is hoping the deal will help it get ahead in the social networking space. 12:30 here in hong kong. i am rishaad salamat. manus: it is 8:30 a.m. in dubai,
i am manus cranny. anna: it is 5:30 a.m. in london. i am anna edwards. good morning to you. let's get more details on the polls that have been released overnight that will no doubt add to the confusion about what will happen in the referendum on june 23. all oflls overnight, which give a lead to the leave campaign. icm put out two polls, a phone and an online poll. both of those give a five percentage point lead to the leave side. poll that gives another laid. -- lead. is one version of the orb
poll, if you take all of the voters, not just those that are likely to vote. her -- remember, with these polls, heavily criticized after the election in 2015. a one-year long investigation into the polling industry concluded they had issues that would be difficult to fix. the direction of travel seems to be clear from the most recent polling. things look a little bit more in favor of the leave camp, a bit more brexity, if we can say that. manus: i have something here for you. i am channeling not intended to. -- 1992. i voted in that election. it is interesting that they have thrown their hat directly behind be-leave. -- we have sound
from the dutch prime minister as well. this is revving up the game. anna: we talked about the european implications a number of times. i have another 1992 parallel. we spoke to a guest on "countdown," who takes us back to 1992 and the way the u.k. left the exchange rate, and what we can learn about the way that markets could react to a leave vote. next friday. we will have that conversation as well with mark. he describes himself as an anglophile.\ he is the dutch prime minister. he apparently exchanges regular text messages with the u.k.
prime minister. he says that he thinks the u.k. will vote to stay in the eu. we will see if he is right. manus: there is certainly a level of fear we have not seen for quite some time. i will see you very shortly, in just under 26 minutes. -- on ards and i back edwards -- anna edwards and i back on "countdown." >> we are seeing another sign that opec's strategy of flooding the market is driving up high cost producers. in 15s fell the most years. the biggest the client since 2001. the biggest offshore producer says that it sees output falling 5% over the year. oil and gas production expected to fall for the first time in 17 years. the united nations says 43,000 people have managed to flee the iraqi city of falluja.
allies attempt to retake the city from the so-called islamic state. falluja is the last major iraqi city under the group's control. human rights groups say thousands ring trapped in the ruined center. lebanese authorities said a bomb blasts on monday night specifically targeted the head office of the second-biggest bank. the explosion wounded one person, wrecked cars, and smashed windows nearby. the bank recently closed accounts linked to has below -- links to hezbollah to comply with u.s. sanctions. g -- reasons why have not been released. the paper is trying to clean up allegations that up and fifa is try to clean up allegations that have been tarnished by allegations of
bribery. they are looking for a permanent successor to kpmg by next year's conference. powered by 2400 journalists in news bureaus around the world, i am haidi lun. rishaad: microsoft snatching up linkedin for $26 billion. the biggest acquisition on record. what does microsoft see? is a 50% premium on the closing priced -- it is a 50% premium on the closing price of last week. paul, what is the business logic here? all these different moving parts -- do you think they can all work? >> it is a phenomenal amount they have paid. this is bigger than any acquisition microsoft have made before. we look back when they acquired skype and nokia. those are dwarfed by this.
what is linkedin worth to microsoft? if you look at it in more detail, microsoft have been having a tough time of late. they are pushing their operating system. the phone business is not going well. they are known for their office software. every office in the world is likely to use microsoft office, whether it be outdated or not. linkedin is the social network for business. they have become synonymous with doing business across the world. millions of users. 433 million users have their details on linkedin. they have their information of where they work, when they are looking for jobs, how they are moving. the value may not seem that great, the revenue isn't huge, but you can see the data that microsoft might want to get their hands on and something
that may want to integrate into their office suite. rishaad: that is the key. you mentioned the acquisitions before, skype and nokia. it's one thing that they have got these companies, it is another thing how they make them fit into their products. this is the nearest to the one they already have. is the implementation that will be key. >> if you think back to nokia, the microsoft phone did not really work. it is not something that will be used for business. .m. had that sewn up at the time. skype, if you think of a platform where you are online. the old days of having everything on a mainframe in the office are gone, you have all your office systems online, access to excel, word, and other things you use every day, and in addition you have your entire business network -- a network
that often goes beyond something you would have with an organization, all in one place -- that is a fantastic sales point for microsoft. can they make it work? will people be turned off? will they say, i know what -- i no longer want to put my details on lincoln now that it is on by microsoft -- on linkedin now that it is on microsoft? there are questions about, is the data safe? how will it be used? we do not know at this stage. if it doesn't work, it would be a terrific embarrassment for the company. manus: paul, good morning. look at the potential here. unique users. microsoft just pay $250 for them. subscribers they paid $50 for them. when facebook but whatsapp, they paid $40 and that was one
billion users. this is expensive by any measure and they are taking on debt. whatever way you stack this up, it is a company with declining revenue, people are not signing up for services on a continual basis, could this be the deal that undoes the ceo? >> it depends how it goes. there is so much money at stake, that if it does not work quickly, it will be difficult to recover. they have to find a way to monetize linkedin's content. at waysthey are looking to harvest all of the data machine has to use in a for analytics. they have to think of a way to monetize it quickly. acquiring linkedin seems like a good idea. it is almost a surprise no one has acquired it before now.
acquiring it for this much money -- it is hard to see the sense. there is certainly value, there is a lot to make business from. you can revolutionize the social media business for business, but the question remains, can microsoft make it work? to date, that has not been the case. they have been trailing facebook, trailing behind apple, trailing behind google. it remains to be seen if they can build this niche. yourften do you log into linkedin account? how often do you use it compared to facebook or whatsapp? maybe the data will not be there. rishaad: rupert murdoch. myspace. myspace.ught who uses myspace anymore? over the next quarter
manus: it is "bloomberg markets: middle east." we talk about markets. welcome my next guest to the show, the managing director of middle east africa. the elephant in the room is brexit. what i have for you -- let's kick it off. oil markets, gold, the middle east, global equity markets are reacting. the probability of brexit is the white line followed by the spot risk of the british pound. it is getting crushed. from your perspective as a cio, have we even begun to price in
brexit? >> will only be able to price it --once we get a sense of how most of what is going on and driving these markets is propaganda. that is what is uncomfortable for the markets. whend similar volatility we had the scottish referendum discussions coming up. in the last two weeks, there was a lot of questions about will scotland stay? some of that you almost need because you get the inner stay voters not turning up to vote, otherwise. you kind of need to mobilize the voters. it is saying, if you want to stay, turn up to vote, if you don't, don't turn up. that is causing uncertainty as well. the other -- were looking at the chart of the hour and we have
had vision 2030. i've almost talked within an inch of my life on vision 2030. the implications are interesting. buyave a series of indicators. how bullish are you? more than 40% have a buy signal. that is the most in four months since we ran into a bull market the last time. what is it for you? >> we look at it in the global emerging market. that is what we are competing for, despite the fact it is not in the index at the moment. what is driving that is the huge amount of retail investors, a pickup in the confidence. they like the transformational plan. they like that oil prices are starting to pick up. a lot of the companies are struggling to recover from the removal of subsidies.
they have to deal with a new saudi arabia. we will sit and watch it, but we are definitely not even on neutral at the moment. manus: the issue in the room there is the ipo and the inclusion of qualified investors. it was a year ago that we had it. have you seen the momentum to get more involved? >> we have. there are people looking at it more closely. the challenge has been that the allocation did not open up as much as people were expecting. we also had a change of leadership, which means some of the momentum potentially slow down. and a change in agendas which means the reforms have not moved as quickly because they have been more focused on the national transformation plan. is an interesting market for the region. in market terms, it is the size of russia. manus: what if china get
accepted into the msci? if that happens, does that draw funds away -- i have the dubai stocks. it has, suffered a little bit -- it has suffered a little bit, the dfm. would chinese inclusion draw funds away from them? you just said they are the size of russia in terms of market. >> saudi is a new market. there are a lot of research analysts around the world. ordon't think it is an either- decision. people will say what are the markets i like? what are the fundamentals? the markets will add two new constituents to the index. from a relative value perspective, you are competing with a broader market. manus: the managing director for
-- mea region of rubric are rueberger. they just released their long-term forecast. let's discuss the keys for the region. what are the big things emerging from this research? it is one that you have been working on a across various continents. -- working on across various continents. >> we look at it every year. always at new pipelines and new policies. the biggest things that emerge in 2016 is that the world will continue to make large investments and solar and wind. trillionoking at $11.4 investment in power generation over the next 25 years. two thirds will be in
renewables, mainly solar and wind, and the rest will be in fossil fuel generation and nuclear power. what is driving this is that given the supply glut, as far as oil and gas are concerned, the prices are low. the cost of generating oil and gas is low and likely to remain low, but the cost of generating solar and wind is lower. if we look at the countries of the world, for many of these countries, the cheapest source inpower would be renewable 2020. for most countries, this would be reality in 2030. rishaad: how does the market evolve in the middle east and the asia-pacific? will they be on a different path? >> this is a region blessed with good demand. like the developed world is struggling with flat or
declining demand. we are seeing interesting headlines out of this region. there are two ways that a country can encourage renewables. a fixedo have incentive tariff and the other is to give out projects to auctions. if we look at 2015, the lowest tariff that we got to an auction was from dubai. megawatt solar0 plant in dubai. 4.8successful bidder bid five cents per unit. now has comedder out of dubai. it is the lowest tariff in the world, lower than what it would
rishaad: index tracking global investors out to find out if they will be compelled to buy shares in the worst performing stock market. haidi is here with a look at what they are getting themselves in for. they deferred last time. did they dodge a bullet? haidi: they must have been quite relieved. this ise last year,
where they held off and it just went down from there. want tolose to 50% -- i say 44.5% over the past 12 months. today, down 20%. it is the world's worst performing market, here today. -- and year to date. time to makereat this decision. when you look at turnover as well, that is another telling feature. when you go to china on your bloomberg, you can have a closer look. there has been no interest. trading down about 34% from the peak last year. it does show that there has not been that much interest. this sense of calm will be what the msci has been considering. given that there has been a variety of regulatory issues,
volatility has come down -- that is something that the msci would have wanted to see. we have seen chinese markets become less volatile than japan. they could be lucky when they come through with that decision at 5:00 here in hong kong. manus: have significant a step will this be? some would say it is a baby step. put some context around it. haidi: it is unlikely to trigger any bombardment of capital inflows. it could mean about a $15 billion amount when it comes to inflows in asia. it is tiny in terms of the daily turnover. it does see that over the next decade, ramping up to 100%, potentially leading to $500 billion. also, it does not happen immediately. this will start happening around this time next year. rishaad: haidi lun there.
anna: a boost for boris. polls but the u.k. on track to leave the eu. >> all my knowledge of the u.k. is that at the end, people will sense why it is important to stay part of the strong common market. anna: as chinese stocks fall again, msci decides on whether to include mainland shares in its global benchmark. cloudoft's push for the could create stormy weather for the tech firm as moody's says they could cut