tv Bloomberg Markets Middle East Bloomberg July 12, 2016 12:00am-1:01am EDT
$1 million, accusing it of helping hamas. >> it is 8 a.m. across the air mirates. angie: welcome to bloomberg markets, middle east. we are seeing a rally in asia as we extend the gains on the back ,f that recovery, if you will in the jobs market in the u.s.. however things going on in your neck of the woods? yousef: let me kick this off from this part of the world with a chart that caught my attention. we spent some time on the oil markets. it has been a remarkable 24 hours to say the least. the median consensus, according to bloomberg data, what is the graph showing us? this is the one year price, the line in white.
near-term deliveries are cheaper than those a year ahead. that price has nearly doubled over the last month. we put up the brent price, the line in blue. it tells us demand could be weakening from the refineries. you saw a similar picture last summer, the line in yellow, whether ms. oversupply from opec and the u.s. this could be a precursor to yet another route. we will keep a close eye on how the oil markets go from here. the central themes of today. angie: no doubt, whether it will be range bound between 40 and 53. let's check the markets right now. we have seen mumbai trading for almost 20 minutes and you are seeing gains across the board with hang seng. this is the broadest market for
indexes in japan. we are seeing big gains, extending the gains we saw yesterday. driving the region into its steepest today climb since february. two hours away from the opening of the emirates markets, 10 a.m. local time. here's the snapshot of the last close. we saw some pullback for the abu buti general index there, really as you said, it is a bout oil today. checking in on first word headlines from around the world, let's go to rosalind chin. rosalind: south korea plans to revoke the certification by volkswagen and audi as an investigation into emissions tests widen. it will hold a public hearing on july 22 after a request to ban
the sale of 18 diesel and 14 petrol models. alcoa shares gained an extended earnings after it exceeded estimates. in business offset declines aluminum prices, beating the 9% average protected by bloomberg analysts. it fell to $5.3 billion. unit. renamed its theresa may will succeeded david cameron as uk prime minister on wednesday, steering the country out of the european union. british stocks gained as the only challenger dropped out of the contest. david cameron says he will visit the queen on wednesday to resign. tensions over the south china up after aampant
tribunal gives its ruling on the dispute. they are expected to rule in favor of the philippines which is challenging beijing's claim to more than 80% of the south china sea. china has already ignored the results. global news 24 hours a day powered by journalists and analysts in more than 120 countries. oil trading near a two-month low after iran and libya flagged export increases. crude at the moment trading at $44. let's get more perspective. here is our middle east markets reporter, anthony. let's talk about iran. how much progress are they making in bringing back oil production? anthony: we spoke to one of their officials last week. he was saying they are coming back, bringing fields back online and getting back to
selling to customers that they could not sell to when sanctions were on the country. they were lifted in january. since then, they have gotten back to 80% of the level where they were before sanctions, according to this official. production is now about 3.8 million barrels a day , according to the ir anians. bloomberg shows it a little 700,000 barrels a day. they say they are doing 2 million barrels a day. ede european union embargo t iranian oil under those sanctions and now they are trying to get customers back. angie: so, customers in the continent ready to go, but what is iran planning next for important exports? -- import and exports? anthony: they are trying to get
back to 100% of where they were before sanctions. they talk about 4 million barrels being the target on the production side. we should see some exports inch up, maybe 2.2 million barrels a day, according to those calculations from iran. beyond that, they are talking about doubling of exports in the future. they did not give us a specific deadline for that, but iran has mentioned they wanted to get up to 4.8 million barrels a day and one million barrels a day of the light wilopil by 2020, 2021. that could be in indication of when they want to do that big jump in exports. yousef: another variable that is unclear -- to what extent are global markets going to align an the kindto give ir of oil they are looking for? anthony: there was concern that
iran would dump crude in the market. there were talks that they had a lot of oil in storage and there were fears that would come onto the market immediately, at about half a million a day even. took that morely in stride than people had feared. iran is saying demand will stay stable through the rest of the year. they see this market balancing that you talk about, they see this continuing to the rest of the year. they don't see prices getting back to these lows below $30 we saw a earlier in the year. they see it remaining positive and creating the conditions that will allow them to sell the crude. yousef: thank you, anthony. let's continue the conversation. a senior partner at a consulting firm. let's kick off with the data coming from the u.s. pertaining to the oil markets. the baker hughes index at some
points. our viewers can pull it up on the bloomberg terminal. what do you make of that recovery that seems to be going on in terms of the oil rate? s? >> we had wti prices going slightly above $50 a barrel. this has led to a number of producers increasing their hedge positions, securing income for the future. this is not bringing back drilling rigs. a total of 11 new oil rigs coming in. one gas rig disappearing from the drilling scene. we are seeing a gradual buildup of offerings at the present time. we also see now a number of drills of uncompleted wells becoming known and brought into
production. from the production perspective, this is more positive in the united states, which of course will cost them more u.s. oil going into the markets, which then will affect the overall supply and demand balance. angie: where do you see it going in the second half of this year? morten: i think we are going to see, because of the hedged positions, it is going to be a continuation of this development. if you go back one year and we look at what happened in april 2015, just in texas over a period of two weeks, they completed an extra 900 wells. oil prices went up to $55. costs have come down. the picture is more positive among the producers today than a year ago. i think the u.s. is slowly going
to come back up. i think we are going to see the trough end. yousef: we like to pin down our guests in terms of their forecast. give us a number two work with. we worked with the forecast for q3. by the end of the year, where do you see oil prices? wtien: what we see is the price, $50 plus or -10%. this will bring a lot of volatility. right now, a number of hedge long, investors had bought positions hoping oil prices would increase in the future. because of situations now, for example in libya, also the way iran is talking, they are getting nervous and selling the position.
angie: welcome back. you are watching bloomberg markets: middle east. let's get the latest from the markets. juliette: it is a pretty good session in asia. regional stocks holding on to or near three-month highs, really led by the surge in japanese equities. the nikkei up by nearly 3%. it is only tuesday and japanese stocks up by almost 7% over the course of the week. all of these on speculation, or expectations, that we will hear more bold economic stimulus plans by the prime minister.
the yen also weakening after its drop yesterday. we had a pick up in australian business confidence and conditions which is helping the market. shanghai went on its lunch break pretty flat after a down morning session. hong kong up half of 1%. there has been good movement in the casino stocks. upgrading the casino players. galaxy up. macau has also been a standout. the korean easing against the u.s. dollar, showing more sign of the dollar strength. we are seeing good movement coming through following the global equity rally we saw in the u.s. more central-bank stimulus hopes. we have this uncertainty over elections in australia, japan and britain. the japanese yen, down 2/10 of
1%, pushing through the 103. the korean yuan also pulling back a little after yesterday's very solid gain, down 1/10 of 1% against the dollar. if we have a check on crude oil, it was at the two-month low, but pushing pretty flat. $44,78. angie: still with us is morten, the senior partner at morten frisch consulting. before thealked, break, we talked about the optimism for producers in the u.s. finding a little bit of support. we will probably see the corresponding prices in wti. that is the u.s. in the global market and here in asia, we are seeing economic slowdown in china. how does that factor in when it comes to energy consumption? morten: very good question.
generally speaking, there is a slowdown. this slowdown, you can see it is more marked. an additional and very important factor, up until now, china has been building its strategic oil reserves. they have been buying 1.8 million barrels a day to put into storage. see, thethe numbers we possibility exists that storage facilities which have been completed are getting full. if china should withdraw its purchase, then we are going to see another shock in the market from that and most likely softening prices again. yousef: in the region, specifically in the united arab emirates, they have lmg production. what is your outlook on that front?
morten: the energy producers locally right now, yemen is shut in due to the situation in the country. oman is producing at reduced capacity due to lack. qatar are producing at capacity. also in the uae, they are producing. on the lmg front, it is interesting. it is interesting. a large user of lmg. dubai is importing. jordan is also importing lng. egypt has two floating lng terminals in operation and they are talking about increasing it to three. yousef: morten, thank you for coming in this morning. coming up, qatar airways says it is in talks with boeing as a plan b in case its issue with
angie: welcome back. qatar airways' profit more than can drew gold late last year -- more than can dren quadrupled le last year. we spoke to the qatar ceo at the air show. akbar: other than the foreign exchange due to the brexit, we are not affected. we still have the passenger numbers. we see passengers traveling in and out of europe. more and more people are going into the u.k. because of the lower pound. iag,u have a 15% stake in what at this the a golden opportunity to invest more?
akbar: we want everyone to stay at that level. we are long-term investment so we are confident that this relationship between us and keep benefiting from each other's purchasing power. >> you don't see this as an opportunity to raise the stage? akbar: we are not thinking about that all. >> are you worried about brexit? akbar: we are not worried about instability. we have full confidence in the british government. it will rebound and business will be as usual, this is what i think will happen. >> do you worry this story going around the world at the moment that political instability is something we have to get used to? akbar: i think political instability will stabilize. candidatey, the only that is in the running. i think she will be a very strong prime minister.
there will be level heads that sit across the negotiating table in europe. i think things in the not-too-distant future will stabilize and everything will be back to business as normal. >> let's talk about what you are doing with your business. let's talk about a320. it is one of your favorite subjects. you ordered a neo version of the aircraft. perhaps had a few problems with those engines. you already walked away from one of them. how many more of these 320's would you walk away from? as possibleny 320 as long as they don't fix the problem. i have confidence in my my friend. he has assured us things will be sorted out before the year end. we will wait and see what happens. >> are you talking to boeing?
akbar: yes, we are very seriously. we hope that we will be able to get the light at the end of the tunnel as far as the 320 is concerned before the end of the year. we will have to exercise plan b. >> plan b is boeing? akbar: yes. >> what about the 350? you were expecting one? akbar: we have a second one that will be delivered to us this month and we hope the remaining nine aircrafts will be delivered before the end of the year. angie: that was qatar airways ceo akbar al baker. yousef: let's talk more about the prospects for qatar airways. here's our middle east airwave reporter. profits quadrupled last fiscal year.
what are the reasons behind that would be classified as most observers as a good year? dena: it has been massively exciting. this is the first time they have actually shared their financial report. they say it is the best year ever on record since the airline started. net profit has quadrupled and this is due to the drop in fuel prices which has translated into a drop in their fuel bills by about 3%. 13 -- theydded about have expanded their network, their fleet of wide-bodied jets, including with the airbus a-350 for which they are the first customer and now flies to the u.s., europe and asia. yousef: they look into the next year, what is going to be the biggest challenge? deena: the biggest problem is the reduction in fuel prices is a double-edged sword for qatar airways. on one hand, it means lower
costs. on the other hand, it also means fewer executives from the oil and gas industry are traveling. this is a segment that qatar airways as a luxury airline really depends on. they are seeing demand on that front, unlike emirates. they are not thinking about going down the route of premium economy class. they are looking at a new business class by the end of this year. yousef: the air show day one, better way to say it would be heavyweight fight round one between airbus and boeing. deena: the biggest question in airshows is the cycle for orders. for the first day, we have seen it slow down a little bit from past years, but what has been driving day one of the show is demand from asia, especially china and india. we are seeing a lot more aircraft in that region and
there is growth in the middle class in those countries. it means more people can afford to fly which is really driving demand for aircraft. bought seen -- they boeing 737's. we have seen donghai airlines make orders and so as vietnam. we expect more orders from malaysia's air asia. yousef: in 10 seconds, the biggest hurdle for manufacturers right now. deena: whether or not they can keep up pace with the level of production. yousef: ok, thank you for coming on the show, deena, our middle east aviation reporter. facebook is facing a multibillion-dollar lawsuit. we are live to find out why some israelis are suing the social network. this is bloomberg. ♪
angie: it is 1:30 p.m. in tokyo. we're entering the last 30 minutes of trading. the yen extends its biggest loss once october of 2014 stimulus potential. ♪ angie: the top stories on bloomberg markets: middle east. japanese shares are driving shares in asia going to its steepest climb since february as the yen weakens. at 11gional benchmark is
week highs after the s&p 500 closed at a record. global equities are almost back to pre-brexit vote levels. senior iranian official wants to regain market share. he says exports are around 2 million barrels a day out of 3.8 million being pumped. he says iran plans to expand shipments to around 4 million barrels a day. angie: qatar airways says it is in talks to buy as many as 30 boeing 737s as it disputes with airbus continues. the ceo akbar al baker tells bloomberg he will continue to reject the airbus planes until the engines are fixed. their profits quadrupled last
fiscal year. it's 12:30 p.m. in hong kong. i'm angie lau. yousef: it is a 30 a.m. in dubai. anna: it is good to see youhappe get ready for the trading day in this part of the world. one of the big factors is the brexit debate. the political vacuum that has existed in the u.k. we have managed to fill the vacuum and little bit. theresa may will become the next uk prime minister. tomorrow, she will take over. we will have a new resident of number 10 downing street. business bit of a background for the bank of england. has beener time and everything other than economic and business facing roles. it will be interesting to see where she stands on business topics.
we have a few clues from her. she talked about the negatives of globalization and cracking down on tax avoidance, the u.k. need an industrial strategy. some of it sounded like it was borrowed from the left during the 2015 general election in the u.k. she could also be trying to make a bid for the center ground in politics generally. she also talked about the need for governments to block certain predatory takeovers. one of the key questions she will face is who she will make chancellor. will george osborne hang on to the job or will he be replaced? george hammonds is somebody that might be seen as a known person. mark carney also testifying at the bank of england. yousef? yousef: this brexit cloud of
uncertainty is dominating the meeting from the air show to the finance minister meeting in brussels. is there an end to it? anna: it is all pervading. it is the topic of conversation in regards to the businesses that have been put together of this project that has been the european union. a lot more to come from that show on that subject, no doubt. brexit in the brussels conversation, finance ministers met yesterday and continue to meet talking about patience. they have a lot on their agenda. talking about the italian bank and eu budget rules. yousef: thank you. the s&p 500 index is at an all-time high in one day trading, better by expected jobs data. let's get more with tracy alloway who joins us live. it is not just u.s. market setting records, we have seen
milestones in emerging markets. tracy: that is right. what has happened is we had the u.s. jobs report on friday and it has sparked general rally in risk assets. in emerging markets, what was important about the number is it came in strong enough to show the u.s. economy was still growing, but not so strong that it forces the federal reserve's hand when it comes to raising interest rates. scenario and that has provided a lift. the really interesting thing is even before the payrolls report pouringay, money was mornin op into emerging assets. that is really interesting giving some of the data we have seen from various regions has been coming in soccer than expected -- softer than expected. angie: how is that affecting optimism?
anything standing out? tracy: oh, i have standouts for you. take a look at turkey's cdf. the cost of protection on turkish government bonds. they are currently at an 11th month low. risk premiums compressing. when you look at indian equities, have reentered for market territory. the benchmark index is at an 11-month high. risk premiums are spread that investors have asked for. that is also a nearly a one-year low. when we are speaking of bonds, we have to mention the ukrainian government debt. crisis at a two-year high. going back to where they were before the recent conflicts. a stunning turnaround when it comes to emerging market assets. when we think back to the dark days of january, february, when it seemed like em was falling apart. the question now will be whether
this does something fundamental about the fundamental economies or whether it is basically a relief rally or a general rise in risk appetite or the continuation of the global search for yield. angie: certainly all of that is fundamental some and not all equal. thank you. checking in on first word headlines around the world, let's go to rosalind chin. buylind: in talks to almost $2 million in commercial properties from blackstone. it will tip him around $582 billion. they have not identified the partners, only saying they are not related parties. sources tell bloomberg that ubs has imposed a partial hiring freeze to cut costs. the restrictions apply only to support functions and exclude client advisors.
meanwhile, the president of ubs has told bloomberg it is the right size after laying off thousands of workers in recent years. are exactlyhat we where we should be to face the environment that we have, to face the regulations we have, and the forces that we have. now at this point in time, our challenge is to choose correctly what we have in front of us. ucf has been sold for about $4 billion. it was sold by a group led by -- it reaches over one billion television households, it has suffered from lineup changes and banned substances. global news 24 hours a day powered by more than 2600 journalists and analysts. i'm rosalind chin.
lawyers haveli filed a $1 billion lawsuit against facebook, that using of knowingly supporting the palestinian group hamas. elliott joins us now from tel aviv. what is the story here? elliott: well, the plaintiffs in this case include the families of a 16-year-old who was hitchhiking in the west bank's when he was s abducted and killed. another was thhit by a driver. they say hamas uses facebook for terrorism. particularly, facebook is knowingly providing material support as resources to hamas. is designatedse, a terrorist organization by the u.s., european union and israel. hamas says this is further
evidence of america's prejudice against the group. facebook also putting out a statement saying there is no place for content including violence, terrorism or hate speech on facebook. angie? angie: it is such a broad accusation and so flagrant. facebook itself has acted against palestinian calls for violence. why so specific, accusing facebook of this? facebookas you say, took down a page that was calling for an uprising against israel. the plaintiffs contend facebook either does not act when people report certain postings for being insightful or inciting that it, especially
takes too long. the interior security minister is calling facebook a monster israelisg the blood of is on the hands of facebook. certainly, we saw some high-ranking people here in israel who don't think facebook is doing enough. facebook urges people to report any such posts to its internal act if saying they will they breach their guidelines. yousef: maybe a change is perspective needed. will it be easier for israel to block those posts themselves? elliott: they like to call themselves the startup nation. facebook itself, along with most big u.s. companies, have offices here. perhaps the task can be feel it out to their office year. many people say you cannot just block facebook or police it.
even the education minister says a simple algorithm will probably do the job. yousef: elliott live from tel aviv, thank you for joining us. coming up on the show, the bank of england governor is preparing to oversee the first interest rate decision since the u.k.'s vote to leave the eu. we will discuss the implications on markets next. this is bloomberg. ♪
yousef: let's get the latest business flash headlines. political violence in tunisia are adding to economic pressures by increasing the reliance on energy imports. oil production has fallen by about one quarter since 2010. at the same time, it's energy import bill has risen 45%. only one exploratory oil well
has been drilled this year instead of the 11 planned and even international countries armed pulling out. angie: a unit of japan's mitsubishi may be in talks with iran. the company is discussing with iran air. mitsubishisays have at is looking to passenger jet underdevelopment. yousef: israel supreme court may stop the government's push to cap salaries in the financial sector. toinjunction against it limit it to $660,000. some fear the legislation, set to go in effect by october, will cause a drain. several banking employees have announced plans to quit over their retirement packages. betting thers are bank of england will cut rates
for the first time in seven years. governor mark carney says policy easing is likely in the coming months and he will testify in front of the parliamentary treasury committee today. we are joined by richard. can you believe that equity markets are now at record pre-brexit? it is essentially seeing this as a nonevent. stability,k it is a politically for mark carney, that is helping support that sentiment? richard: i don't think it has much to do with the u.k. at all. they were perhaps not doing too badly before then. brexit was a big shock. .t may have been contagious ande have seen with the yen other currencies, we have seen that. it looks, although there was a
scare last week when the property funds gated themselves, and looks as though the storm has blown over. angie: i want to bring up a chart right now because one of the biggest losers after brexit was the yuan. there.ly weakened the japanese yen, that tells a story of the safety haven play. there are a lot of bets piling yuan sliding to seven per dollar. that is piling up. what is your sentiment? richard: i think it is really dollar strength, because we have also seen weakness in the past, substantial weakness. people were concerned about the safe haven. gold stood well.t he the yen has done extremely well and most people thought yuan is weaker.
it does not necessarily have to go weaker. i think they see an opportunity to weaken or a position where you have dollar strength which gives them an opportunity to weaken, i think they will go for the higher figures. yousef: it is healthy to look at opportunities. do you think brexit could become an opportunity for the u.k. to position themselves? richard: i'm the wrong person to ask that question but i was told it would be a hockey stick. it depends how deep the slowdown will be before the recovery comes. i think it will be quite deep. i think it will be a surprise. i think people will say this was a necessary consequence of getting back whatever we actually needed to get back. i think it will be, but i think it will be good old-fashioned economics. crush the pound, slow down the
importing economy, get the exports going. jobsuld lead to loss of but so what policy be if they did that to get it back on track. they are seeing a hard medicine caused by an external factor which is how the politicians like it. yousef: we are still trying to have an uncertainty equation. you say crush the pound as part of the economic story. how low does the pound have to go and where will it consolidate in the longer term? richard: i think these are reasonable levels to consolidate. last week when we saw the property funds close, there was a question that will this lead to a contagion? are we going to see the dominoes knocking over each other? there will be a bit more recovery back in and maybe more investment into the u.k. property market from overseas. i think although there will be a possibility of a spike downward,
i could see the pound consolidating. it hasretty well below been in 30 years and maybe moving slowly up. angie: where does discipline go? central banks flooding the markets with liquidity. it is easy money, but fundamentally, is this a global economy that is strong enough? richard: it is clearly weak. in the short-term, all that money will keep things going but we have not had the stimulus we wanted. the u.s. has seen to done ok, but you cannot survive on negative interest rates. money needs to have a vitaalue. angie: it is false optimism when you see yet another record on the s&p. richard: people need to put money into something. my roadmap is short-term bull markets and i always thought the equity markets would do quite well for a while.
i could see trouble coming up ahead. you have to think these bond markets are in this humongous bubble of the likes of which we have never seen. what happens when bonds becomes what we are investing? maybe we carry on investing. it is unsustainable. it cannot happen. sometime in the future, we have to pay for it. i hate to sound like dr. doom, but it sounds that way. angie: the prescription is there, it is a matter on whether patients will listen. yousef: a lot of these correlations between acid classes -- asset classes have been decimated. what is your asset allocation? how do you play this market? how are you managing the money? richard: i'm short-term bullish on equities, but overall, i'm bearish. i think looking further out, the commodity markets will be impacted largely by economic
growth. it looks quite interesting. i think there is some slightly different alternatives than what i was looking at. i do like cash at the moment. you have to be quite careful with what currency you are in. angie: exactly. richard: i like dollars at the moment. i think we are going to see that trend continue for a while. i'm looking at europe. i like the european equities. i think the euro will start turning around because we have well andhe dollar does you have these chain reactions through the market. the dollar will come back a bit and the euro will start to see some progress in upwards. the euro is also very weak. angie: it is. richard harris, always good to see you. port shelter investment ceo. still ahead, hundreds of filipinos rally at the chinese consulate in manila ahead of the
yousef: welcome back. you are watching bloomberg. protests have taken place outside the chinese consulate in manila as tensions rise over an international tribunal ruling on beijing's claims to the south china sea. bloombergs tom mackenzie looks at what led to the case and its significance to a region on edge. tom: regional friction over territorial disputes in the south china sea have been ramping up. this ruling will likely put fuel on the flames. the philippines launched the case in 2013 in a challenge to beijing's claims to more than 80% of the south china sea. the u.s. says under the chinese president, china has reclaimed
1300 acres of land and equipping some islands with ports and runways. the philippines acted after in area ofd rocks. malaysia and vietnam have claims as well. $5 trillion worth of trade passes through the south china sea every year and it is home to rich stocks of fish and significant oil and gas reserves. beijing says it has a historic right to an area of violence spanning nearly 1800 kilometers. a u-shaped boundary known as them 9 dash line. the u.s. has been sending warships and planes close to some of the reefs in what it calls freedom of navigation operations. that infuriated china which responded by dispatching ships to ward off the u.s. navy. the panel is expected to rule in favor of developing.
beijing has already said it would ignore the results. outreach side response could determine the region's future stability. angie: that decision coming down from the hague in a couple of hours. it isal could to note, valuable oil and gas reserves. that is what is happening in asia. what about you? yousef: we have spoken about oil quite a bit but there is plenty else happening on the commodities front. if you pull out your bloomberg terminal, what is going on with sugar. you will notice it was one of the main movers. 3.6%. there is also a note saying it is in a structural deficit, so expecting pressures to build tehre ahere. that is it for this edition of bloomberg markets: middle east. angie: and edwards will have all
brexit.t means the message it from may. how friendly will she be a end who will be the next chancellor? the committee this morning, two days before the post-referendum decision. and, the ebs investment bank nowf says his workforce is the right size after thousands of job cuts. >> i think we are exactly where we should be in the environment we have to face