tv Bloomberg Markets Middle East Bloomberg August 1, 2016 12:00am-1:01am EDT
♪ >> crude holds its biggest monthly decline with u.s. stockpiles at their highest level in two decades. rishaad: saudi arabia consumption falling as rising prices hurt the economy. >> the builder of the world's tallest tower posted a rise in profits. now planning a string of new projects. rishaad: we will be asking the
aramex why he sold out. just on midday. welcome to "blommberg markets: middle east". oil under pressure. that will be raising the flag for other industries should this slide continue. may be $40 a barrel is the line in the sand. >> saudi stocks on the largest losing streak since 2014. let me get a chart that puts that into perspective. this is the saudi arabian interbank offered rate.
rising 44.5% so far this year. the saudi arabian monetary agency has provided lenders with short-term loans in late june to constraints,y according to people familiar with the matter who asked not to be identified because the information was private good this is to the tune of -- was private. there be a additional measures for additional liquidity? that is the big question. the other big story comes from , whichnt data initiative provides detailed breakdowns of oil consumption and oil production. istook a closer look at what going on in the case of saudi arabia. you will notice the consumption is expanding at the slowest rate in at least six years. again, we built a chart for you to put that into context as
lower energy prices hurt economic growth. that demand increasing by an average of 24,000 barrels a day in the first five months of 2016. the question is what will the response be? are those reforms going to be sufficient? rishaad: right. mumbai back on for its start 20 minutes ago. positivity is key right now. hang sang up. the tokyo markets flat after a positive start. stream, 6/10 of 1% on the upside. dhabi,nd other
movement to the downside. off by about 1%. situation, a bit of weakness on the sunday close. uber is said to be merging with china's dominant right hailing service, didi. deal said towhole be vita $35 billion. -- to be valued at $35 billion. 20% will receive a stake in the combined company. the chief executive officer at , ir writing in a blog post
learned that being successful is about listening to your head as well as following your heart. both companies have yet to turn a profit. it's all about profitability at the end of the day. let's check on first word headlines. juliette: iragi kurdish forces say they are close to regaining control of an oilfield seized by so-called islamic state. three militants have been killed and the plant is still functioning normally. it produces 175,000 barrels of oil a day. semiautonomous kurdish government produces and sells oil independently of baghdad. really president says donald trump suggestion that the u.s. would not defend nato allies unless they pay is a mistake. shimon peres told bloomberg he does not want to be directly involved in u.s. politics, but said america became a world superpower by making friends, not enemies. america wills that
disconnect her relations with nato, that america will leave the field open to other countries. mistake,gment, it is a a really great mistake. by giving,ame great not by taking. the new york fed president says investors are underestimating how many times the central bank will raise rates this year and next. william dudley says expectations for slower tightening are probably right. investors put their chance of a hike by year end at one in three. the outgoing governor of the r.b.i. has issued a warning, global demand held back by deleveraging and that a court in it needed to support trade and the financial system. he also said helicopter money -- in three weeks after smashing market expectations with its quarterly
results, sony's operating income doubled with a profit of $205 million when analysts were expecting a loss of $380 million. the result is due to sales of play stations and other software , vindicating the decision to focus on media and entertainment. day areews 24 hours a by more than 26 hundred journalists and analysts in more than 120 countries. this is bloomberg. the 43: brent around dollar market, stockpiles at the highest seasonal level in 20 years. glut is hitting these prices. ben: it is a familiar theme with supply. we were talking about it many months ago. it has moved into the product market now. a glut in gasoline and diesel inventories weighing on the especially in
the seasonal time. demand is good. stockpiles or even higher. at this moment, sentiment is dragging prices down. lower,seeing them heading towards $40 a barrel. where to from here? ben: $40 is the line in the sand. it has bounced off that level many times before. if it breaks through that, we could see mid 30's. between $40 and $45 a barrel through 2016. where wern might the are moving out of seasonal demand. for the u.s., it is labor day, the refineries switch over manufacturing. through thatn move
is the question. rishaad: thank you very much indeed. the latest on the oil price. getting to the oil this trading day, the price of oil and the rest of the news from the market. at these three large singaporean banks. there's a great story on the bloomberg on singapore's exposure to the oil space. we are talking about the exposure of the big banks as far as lending to oil and the supplementary industries. as far as loan book is concerned, 5.3%, so exposed to the downturn there. that is leading to higher bad loans and will eventually lead to other consequences. we are looking at a rebound in oil prices from a low base.
a few things you want to consider. you look at these discounts aramco is giving customers and a shirt, a big cut their in price to the benchmark. you are also looking at a weak dollar story in flight prices. is $41.78, brent crude trading .5% higher. a bull orlking about bear market, that is academic, but still a 20% drop, a fairly steep drop in a short amount of time. it also has to do with where we are trading at the moment, a very low base when you talk about oil prices. when you talk about currencies, very much about the weak dollar. the japanese yen is falling, hitting 102 earlier. that is the drop we saw into this morning.
the broader story when you look this playses, and into what we have had from the fed, the gdp report, that money flowing out of the dollar into emerging-market assets of the, bonds, or currencies. have a look at this graphic which shows the drop in the get,ar against the ring the won. tois the fed holding on rates at these levels for longer , leading inflows into the currencies and brings me into my equities picture, and you do see emerging markets, especially southeast asia, indonesia, two point 2%, the highs level since april last year. when you take a look at some of the data from these exchanges across the region, a lot of inflows despite the kleins -- despite declines.
i'm curious to see what those numbers will show come tuesday. yousef: thanks, david. let's take a look at another story we are following. the builder of the world's largest tower posted an unexpected 8% rise in second-quarter profits. $345 millionse thanks to its retail and leisure operations, which made up 40% of revenue. it is scalingays up its small business and planning a string of new hotels and service residences in the uae and elsewhere. a fascinating story. the consensus rating before earnings was 12 out of 12, a buy rating on the stock, which makes of 20.9% of the benchmark dubai exchange. still ahead, a top u.s. army official visits turkeys after ties fray after the attempted
rishaad: you are back with "blommberg markets: middle east" . japan government pensions investment announcing a lost, the biggest since the financial crisis and the first and two years. the fund disclose individual equity holdings which shadow of the inch mark topix index. the latest lender to post results, down by 16%, that was still ahead of estimates. japanese banks under pressure
since the boj started charging them for parking their cash at the institution. mitsubishi releasing the results later today. a huge opportunity in china a month after rolling out a mandarin version of its japanese shopping platform. "buyite already increased the millions" the exports to china. chinaerce demand from should tripled to more than $22 billion by 2019. of aramex hasnder sold his stake to a group of gulf investors. why he sold out. he joins us now in the studio. great to have you in the program. why did you step out? >> i stepped out four years ago as ceo.
involved in the management of the company on a day-to-day basis. i have been more on an advisory, vice chairman, more strategy, but more importantly, i have been busy building a couple of other new businesses. there is a new venture capital fund that we are just closing now, focusing on technology investment across the middle east. that requires all my time, my energy, and a lot of resources. i have a couple other projects that require capital. i need to focus that. manus: let's get some more details on this deal. who initiated this? .> i have not gone to anybody the company is a fantastic company.
whoever wants to be in business will find aramex the best out there. .hey came others have come also, but i thought this group was the best suited to help the company in the future. manus: there is a sense that this is part of a wider platform to use aramex to build a regionwide e-commerce business. can you run us through the thinking and rationale? >> i cannot speak for him. his record and his view on what he was to do in the future is out there. lectures,n giving giving statements about e-commerce and what is happening , but e-commerce is happening in the region. it is growing massively. whoever wants to be in that space needs a backbone, and infrastructure play that gives you the last mile, and aramex is effectively the last mile
company that all e-commerce serious in the region and other parts of emerging markets will sit on top. it is an enabler of that. i just want to get a sense of the earnings potential of aramex through this venture they have entered into. >> the earnings potential? the potential earnings for the company? rishaad: yes. >> i don't know. this company just reported a substantial increase in net income. effectivelyhas been e-commerce, and e-commerce is happening globally. this is the way you need to view theex going forward into future, and e-commerce enabler, at the core of what happens in e-commerce, and e-commerce is exploding and booming globally. about the money
from this? i think it is $175 million. what are your plans now? earlier, ie said have launched a couple of years ago a venture capital fund focusing on technology in the we are going to go with another fund going forward. i have another couple of investments and start ups that i am focusing on. require capital and equity, and i felt it is time for me to focus on the next phase of my life. since aramex is doing so well and had such fantastic management, it can go and fly on its own now. it is the right time for me to move. manus: would you consider channeling those investments. yousef: some of that additional
liquidity? >> that is exactly what is happening. i needed to be much more independent in the way i raise funds, and that is the way to do it. yousef: we always like to get your big picture thoughts on this part of the world. this part of the world is suffering in terms of geopolitical headwinds. where would you put your money to work? what are you bullish on? >> i am bullish on the region. i continue to be. is positioning itself extremely well, has done for years now. fintechgy, e-commerce, economy is happening. llion are 200 mi
people online, effectively building the next economy. i am betting on those. it is happening. that requires a lot of funding. yousef: if you could let us know your top choice apart from the uae. asi am not as pessimistic the politics is. if you look at the politics, you will see the gulf that you wake up in the gulf and hear the same stories for the past 30 years. ever since i started building aramex, everyone ask me the same question. this is a turbulent region, what will happen, but always the same stories, oil price goes up, oil price goes down, you need to build a robust and flexible organization to live through the relative busts.
saudi arabia is a massive market, evolving, changing, and one needs to bet on it. come on thel to program, the struggle for stability in tunisia. lawmakers tried to form a new government after firing the prime minister over economic worries. we will get you all the details. this is "blommberg markets: middle east" ♪
manusyousef: welcome back. this is "blommberg markets: middle east". tunisia forming a new government after firing the prime minister for a lack of economic growth. just give us a sense of the political shockwaves that the latest of elements have sent. >> there are two ways to see it. number one, for tunisia it is not great that they are
suffering political instability when they need a stable government to push for it with economic reforms. on the other hand, the outgoing prime minister made a point that we have a democracy that enables the country to push out a prime minister if the parliament so decides. it depends on how you look at it. where do we go from here? they are now going to look to form a new government. they have to present a new prime minister in 10 days and have a about a month to form a new government. it was expected. there was a lot of political pressure on the prime minister, trying to push through economic reforms. there was frustration that it was not going fast enough. there was some battling over positions within the government, so the president was looking for somebody to change the prime minister and push these crucial
reforms through, some tough reforms cutting back on government spending, especially the wage bill, trying to cut back on that. need totough, but they do that in order to attract foreign investment. yousef: there is the broader regional context. tanisha as the remaining front in terms of holding the flag up high for the argued success or semi-success of the arab spring. closehe latest setback that chapter that the arab spring brought to reforms? >> not at all. at the end of the day, it is a democratic event that happen in tunisia. that was not possible before. becauseshow that just you change the political system, you will have a successful economy and solve the problems tanisha has and continues to have. unemployment, 35%
company would be $35 billion. we're also told the company is making a billion dollars investment in over at the evaluation. >> oil has made it little ground after its biggest monthly decline in the year. stockpiles are at the highest seasonal levels in at least two decades. many people increase their short positions on crude falling further. consumption in saudi arabia is down. rishaad: holdingsling his 9.9% to other investors. he said it is the best move to secure the future of the company. this 12:30 p.m. here in hong kong.
yousef: i need to buy. dubai. let's talk about the stress tests we've seen for the banking sector. one of the key starting point is that things are better than 2011. versus what they produced in 2011 stress tests. that is a good thing. the results are therefore better results.previous the eu bank stress tests mean the regulators are relatively less worried that their previously were about bank solvency. there are a lot of things to worry about however. the success that the bank has
had is the focus of italian concerns whether they are finding the capital injection that they need. how they going to do that. not they have ended speculation that they will need a third bailout from the government. step one of their plan means they have to find backing for a new fund that will take the bad debt off their books. the banks were the worst performing group on the stock exchange. down 27% this year. lydia focus on the banks as we go through today's programming. heinrich is going to be the
focus of our thoughts. it is the world's third-largest brewer. they are going to report new numbers. thoseill be delivering numbers at around 27 minutes time. will get details that. they previously forecast that asia was going to join their marketing your. between russia and nigeria. she is the cfo of heineken. she will be having a conversation with bloomberg later. we are waiting for the final touches right now. what can be put onto that. the miller board recommending rejection of that offer. we saw that coming late last week. rishaad: uber is going to merge
di china business with rival di. extraordinary week is just a month ago they were saying this would not happen. unsurprising that both these companies have been burning through cash. uber at an estimate of the billion dollars a year just to be able to compete in china. a $35 billion valuation for this company. a 20% stakeetting in the new company. at least for now they will continue to operate their own at. sometimes you learn that being successful is about listening to your head as well as following your heart. both companies are yet to turn a profit.
in terms of building a sustainable business. guidelines for how they can operate. investors have been increasingly unhappy and concerned. both of these companies have been fundraising at a frenetic pace. they're going to bankroll the competition. in 80% market share. having toeally helped spend money just a standstill. they are worried about this. they will wait as long as possible before going public.
that is the most important market they have been supervising it. that issue from the table. a $68 billion valuation. thank you very much. the former israeli president donaldperes says that trump's comments about nato allies are the state. a made the comments during comment with bloomberg. shimon peres: a political agreement must have the palestinians as partner. they are hesitating. create a pragmatic piece
before you have a formal peace. if you change the conditions of life. you can be more knowledgeable. if 350 global companies want to do business they have to waive the israeli rules. >> relations between israel and egypt to seem to have never been better. does this make you happy and optimistic or are you concerned that these better relationships between israel and egypt happens when egypt has a leader who internationally has been criticized by a lot.
president trump the? peres: i will wait to answer that after the elections. i don't want to get involved in american elections. i want to say one thing. willggest that america disconnect her relations with nato that america would leave the whole field open to other countries in my judgment, it is a mistake. a very great mistake. it is the first superpower in history that did not take but always gave.
giving is wise. you create friends and friends of the most profitable enterprise you can have because to have enemies is very expensive. you waste money and you waste time. a typhoon is bearing down on high,. -- hong kong. two airlines will be suspending hong kong flights from 10:00. as typhoon anita approaches the city. i would encourage you to postpone nonessential travel. let's check in on the headlines.
egypt is going to look again at the risk of funding less than a month after the government said it was acceptable to bring it from overseas. are deciding whether the fungus poses a threat to the local harvest. a singled not allow reign of contented waste to enter the country. the world's oldest lender is turning to private investors. italy's bank a/c had a is hoping to raise about $6 billion in new equity. thanks of the worst performers on the stocks of europe's 600. they conducted a coast-to-coast demonstration of self driving cars in a state is going to test autonomous vehicles in singapore.
it will use six vehicles and aim to have robot taxis on demand by the end of the decade. they sent a modified audi from san francisco to new york. global news 24 hours a day. the chairman of the u.s. joint chiefs of staff is visiting turkey today is president erdogan intensifies crackdown following the failed coup attempt. what can we expect from this trip? general said tensions between united states and turkey have been running high. he's demanding that washington
extradite this cleric. he has stopped short of blaming the obama in administration for instigating this failed coup attempt. at some turkish officials are pointing the finger. he will visit the joint air base in southern turkey. he was closed for four hours due to suspicion that another coup was being plotted. this will come up in discussions with the general. both countries are members of nato. the military was the second-largest after all in the united states. we are seeing of course a lot of developments on that front. what else can we look forward to as the visits go on and as the negotiations and possible talks continue?
turkey has either removed or detained some 60,000 people. they have links to the gallant movement. crackdown on the army and the security forces is extremely worrying to the obama administration. is also dealing with terrorism not only with the islamic state but also with the kurdish militant group. this concern that security is extremely vulnerable within turkey right now turkey has dealt with a terror attack almost on a monthly basis. the turkish lira is currently hovering around the flat line. no visible momentum. we will keep a close eye on that.
♪ yusuf: saudi arabia is set to offer banks short-term loans. it is part of an overall picture of an economy under pressure. more isss that and much the ceo of renaissance capital. thanks for joining us. i am looking here at the earnings analysis from this company. 137 have reported out of 147. the earnings surprise is marginally positive here. challengesiquidity that have appeared, what is your sense of where saudi arabia is going? >> i think every knows the
challenges that are facing saudi arabia. it is mainly about the transition from the oil economy a non-carbon dependent economy. when it comes to the earnings season, look at the consumer sector which will show the volume of the market two years ago. it has been under a lot of pressure. it is a surprise on the positive side. that could be on the back of a stronger oil price in the second quarter. i think the focus will be on the transmission -- transformation of the saudi economy. that will take a while. the most important thing is that saudi arabia has an archive and reform plan which has never been the case before. they've never said before that this is what we're going to be doing at a specific time. criticizing the inefficiencies and looking to reform those. yusef:
how would you approach the investment strategy? sectors eu want to focus on are the sectors that the government needs to encourage the private sector. that helps education and insurance. they could be interesting, plus health care. rishaad: of the a sense commitment here. how deeply committed are the saudi's to making this transformation? >> this time it is very different. we've seen from the deputy crown prince is having an actual plan with numbers. they can actually look at the plan with numbers talking about every sector and how much investment the government was going to press for. how much capital of the government was trying to attract from the private sector. i think it is different this time. saudi arabia needs it. they understand that they need that.
rishaad: we see oil prices at the level they are at the moment it makes it more difficult for the saudi's to afford this. they want to see a full-scale commitment and perhaps new relations with saudi government. >> that basically means that you need the saudi's to show the commitment first before the private sector investment comes in. i would agree with you. commitmentsee that first. i think we've started to see the beginning of that commitment. rishaad: great talking to you. coming up, trade headwinds. the former imf managing director saying globalization talk around the world and international volatility. this is bloomberg. ♪
rishaad: let's have a look at this breaking news. gaming revenues have been having a torrid time of it over the last 23 years. back a further 4.5 percent. this is actually better than the analysts estimates had been. it is also better than the june number which was an 8.5% decline. many positive signs coming through from the las vegas sands division. they're finding and improving situation. this is what we got the moment. 4.5% decline on the casino revenue. than what had been widely predicted by analysts. the markets have recovered from the shock of brexit the former imf deputy managing director says that the discussion of
trade and globalization may threaten growth. pessimistic about the turnaround in trade. john: trade has turned into a drag from a boost. with the problems looking forward, implied by brexit and the need for the united kingdom to renegotiate all these trade deals. the opposition from the presidential candidates of both parties in the united states to the transpacific partnership. the likely delay in the agreement between the united and europe agreement. it is hard to be optimistic about trade turning around. the benchmarks of the growth in the most recent decade. anna: you talked about the u.s. election. is there a bit of market underpricing about the risk we could see with the potential victory for the republican candidate, donald trump. we see him talking about
withdrawing from the world trade organization. donald trump was saying that he will not defend nato allies. he is denouncing trade deals. using markets of not price to this all in yet us to mark john: those kinds of statements only add to the uncertainty in the markets and a moment where there are lots of reasons for uncertainty. importante to the point. the most notable weakness in the global economy and especially in advanced economies has not been the weakness in consumer demand of weakness in business investment. is thethe inhibitors uncertainty about policy and about things like trade regime going forward. it can't be helpful. how likely are we to see some kind of inclusive economic expansion? we have seen japan taking
certain steps. there are still exceptions. germany in particular. john: it is clear that monetary policy is not going to be decisive one way or the other. you can see the federal reserve is very concerned about creating may 22 kind of environment. nobody thinks or believes that monetary actions can make a big impact on the outlook. yusef: some breaking news. tost-half profit rises 90% two $226 million. that is just hitting the bloomberg ticker now. this is a lebanese bank that has seen quite a bit of upside this year. making 5% gains. we will wait to see whether it has further direction as to the
anna: pmi pain. china's factory gauge dipping in july as official measures head in a different direction. the new york fed. investigators underestimating the pace of tightening this year and next. $35 billion ride withits china business -- merging its chinese business with another in the country. ♪ welcome to "countdown