tv Bloomberg Markets Middle East Bloomberg August 15, 2016 12:00am-1:01am EDT
business spending has dried up. yousef: it is 8:00 across the emirates, 5:00 in london. rishaad: it does look as though opec may discuss the oil output levels when it comes to the meeting in algiers. what are you hearing? yousef: absolutely. not just what has been going on with the informal or impending talks. but the impact it is having on oil prices. it is resonating across this part of the year, across gulf equities specifically. i put together this gorgeous chart. in yellow.r line
then you have your line and purple -- in purple. gulf investors had their first chance to react to that pop in oil prices we saw late thursday into friday. what is interesting to point out the bgc see 200 index is showing the rally, saudi arabia has been underperforming and dubai has been outperforming. thehat kind of difference changes in legislation are going to make in terms of bringing in more foreign capital? up-to-datet's get with the state of play in the markets. by three quarters of 1%. level.hing that 23,000
has been flirting with game lines for much of the morning, but now has gone down. two hours away from the open of the emirates market. second trading day of the week. this is how they closed out sunday. there we go, not really bucking the regionwide trend. the imf deal in the works. downside.of 1% to the let's have a look at the first word headlines. expandedjapan's gdp just 2/10 of 1% in the second quarter as business spending contracted.
decline .4%estment from the previous three months. policymakers have struggled to find a strategy. the imf has agreed to help egypt close gaps in its economy before approving a $12 billion loan. cairo is looking for $21 billion over three years. bonds are expected from the world bank. the imf says it expects the deal to be finalized in the coming weeks. donald trump has won some unlikely support over his claims about president obama. the head of the hezbollah says trump is correct that the president created the terrorist group. the uk's withdrawal from the european union could be delayed
until late 2019 as new ministries for the transition may not be ready to start talks as early as expected. departments are still recruiting staff making it unlikely article 50 will be a vote until next -- next year. day, thiss 24 hours a is bloomberg. yousef: gulf stocks have had a bumper start to the week, tracking gains and oil. -- tracking gains in oil. should we expect more? out, a lot ofted .his tied to the oil rally that always feeds and positively to our markets -- always feeds in positively into our markets. we have a global bullishness
across stoxx. the three main u.s. stock markets posting records in a week. that is the first time that has happened in 16 years. the emerging markets index is at the highest in more than a year. all this feeding through to our and as long as that global bullishness remains, we can consider we will get more gains. rally cloudslatest the underperformance of saudi arabia. and newstest move -- they will reduce to help bring in more foreign investors. how much would you read into that? >> i would not like to guess how
much the capital flows would actually be. dominated byis retail investors. activity across the middle east is very reduced. on september 4, they are bringing in the new rules for foreign ownership and foreign investment. that will reduce the amount of assets you have to have on the management from $5 billion down to $1 billion. they are talking about changing the settlement cycle. what this is going to do is create, make the largest index in the region more investable for foreigners. yousef: what else are you watching this summer? any reason to be cautious? rishaad: we are still in mid-august. volumes are very depressed through summer. , 30% belown the ds
the daily average. take everything with a penchant salt until the end of august and until -- with a penchant of salt inch of salt. you can get more on that and the rest of the days news at our digital destination, tailor-made for the middle east. region plusfrom the you can watch all our reports, interviews, and special content only available online. rishaad: while oils rally is helping markets there. yil and gas producer krisenerg reported a loss of second quarter. what are the problems they are
facing? where did this start? is like allroblem energy dealers going back to the 1920's. all your costs come up front and your revenue comes in long. these guys build up a debt and then you have an energy price collapse. they thought they would paying this debt off with $100 gas and oil. this is year 3 on this price collapse and they are trying to -- starting to struggle. with thirdrking parties to do things like look at equities, refinancing, or even asset sales. rishaad: other companies find themselves in the same boat.
how are they addressing these issues? dozen shell companies have filed for bankruptcy in the last couple of years. santos, they took a billion dollar right down on their lng project. a small oil services company that had to go -- talked about doing liquidation. and a lot of what these companies aredoing, basically last for as long as they can. you, dan.hank aidi: we have these
conflicting catalysts when it comes to monday. fairly disappointing miss on japanese gdp. beeneaction to that has pretty stark. you do have this continuing oil price story. talks, friendly, and that is playing out across the energy sector. in terms of some of the other gains, seven-month highs for shanghai. by thes been driven property sector, a lot of talk about potential takeovers.
in terms of the rest of the region, a little bit of strength coming from southeast asia. singapore retail sales up. jakarta extending losses. we are getting indonesian trade numbers. thailand, a little bit lower at the moment. gdp,d get second quarter which was better than expected. nikkei 225, down by about 3/10 of 1%. talk -- we are going to see the pressure really be mounted to do more. the question is, what more can they do? these other property developers i was talking about in china. this is china's largest
macau is one of the top decliners here in hong kong. .hina has clamped down yousef: breaking news hitting the bloomberg terminal. figure,nue second-quarter loss, 225 million. project backlog, 9.7. contract and in portland benchmark -- important benchmark when it comes to property stocks in the emirates. they are issuing their third eurobonds sale.
it is all part of a debt repayment plan. the chairman stated it was part of a restructuring agreement. state run press to be say special teams have been dispatched. damaged the plants in recent weeks and the u.s. and israel might have been involved. yousef: gulf equities advanced after oil prices have their best week since april. let's bring in our next guest. interesting numbers.
-- latest -- reviewers viewers can follow the breakdowns. we have done this for the dubai benchmark exchange and you can see the sales and earnings growth or lack thereof in the case of some of these industry groups. what is your read on some of these numbers? there is a general slowdown in the region because of the oil drop in the last few months. most companies have not been performing as well as they should have or have done last year. this was driven by the new home sales because the hospitality division, that rumor has been going down. new home sales have continued.
more companies have been struggling, especially banks. provisions onf bad debt. yousef: have you been surprised by the extent of the slowdown? >> not really. it always happens. .here is no clear data provisionsjust take because it is a bad time. this happens every couple of years. you have the quick spur in growth and you have a few months of slowdown. yousef: the other big regional story is what is happening in saudi arabia. how much of an impact will not have?
it is significant but that will not get you all the foreigners you want. my as you want as long as you are not beyond 49% of the company. i think it is the right step in the right direction for now. they will end up easing more and more in the future. >> your view on what we are huntg, people are on the for yield. it looks like the fed may be holding for longer than anticipated. does that part of the world benefit from it?
not hear you, sorry. rishaad: whether the hunt for it is so common amongst investors, when does that part of the world start to benefit from that? yousef: when do they benefit from the hunt for yield and the broader emerging markets space? >> when there is less volatility, people switch from stocks that would give them growth to stocks that would give them a better yield. priced todayts are , people will find many opportunities in terms of yield stocks. yousef: we will continue this conversation. plenty more heading your way. stay tuned, this is bloomberg.
yousef: welcome back. you are watching bloomberg. we are talking equities. we are talking about the hunt for yield in emerging markets and part of that conversation comes down to the maturity of markets and the latest developments on the nasdaq. you are excited about that? >> dubai futures, that is a very exciting thing to happen. the first time something new has come to the market. i do not think we were very successful in adding many listings. these futures could end up increasingly quiddity on the main exchanges.
hopefully it will spread out to other markets of the future. we are extremely excited. people will be able to hedge their positions. you have the option. yousef: you talk about these futures helping as liquidity. at liquidity,king you should be consolidating your exchanges. >> i do not think it is going to happen. the story is over consumed. yousef: there is a tangible and if it. there is a reasonable rationale for doing it. >> i do not think merging both markets will enhance liquidity. in many countries, you have
different markets. i do not think the problem is that we have exchanges or more. we did not have enough products for people to be interested in those kinds of things. investors good hedge their positions -- could hedge their positions and stay longer in the markets. yousef: where does oil go from here? we will stay in a trading range of 40-50 for a while. and i do not think it is bad. you for coming onto the program this morning. always good to see you. still to come, what is next for japan as the economy grinds to a
climbing high. it is prepared to discuss market stability next month. the pressure is building on policymakers in japan after gdp extended just 0.2% in the second quarter. business investment declined 0.4% from the previous three months against estimates of a slight gain. by rain -- b ahrain has picked eurobond managers. the sovereign debt is rated junk by all the major agencies. yousef: time now to see what is coming up later today with manus cranny. what are you watching and london?
manus: we will keep an eye on the pile. it is a big week in terms of hard data. you have retail sales, unemployment, and inflation data. none of it is expected to show any per -- prophetic moves, but it is a crystallization. this is dollar sterling. the white line, down she goes. a little bit of a reprieve this morning but the net short positions are hitting levels we cap -- we have not seen in a number of years. you are seeing the net short positions on the british pound, gearing up for a volatile week, reaching net short of 90,000 contracts. also, the analysts are saying about euro-sterling. one quick way to bump the euro is to vote to leave, in terms of brexit. hsbc says they are calling the
potential for your -- sterling-euro parity by the end of 2017. yousef: there are also reports that the you k's exit from the eu may be delayed until -- that the u.k.'s exit from the eu may be delayed until 2019. manus: no one knows when article 50 will be invoked by theresa may. one lovely piece of news overnight, this is the reality of brexit. londoners cut their house prices to lure buyers. are having to cut their prices a little more aggressively to get properties away. that is the reality of brexit, that along with the pound is the devaluation. enough to put a floor under the economy. breaking news coming
out of japan. industrial production numbers coming through for june. against this backdrop, the backdrop of that gdp figure. the pressure is back with this number and the second quarter of growth figures. we had business investments going backwards. jodi schneider is standinb by. -- standing by. let's start with the key takeaways of this report. i will highlight business investment. that was falling off a cliff, it seems. >> that was a decline and was not expected. that's one of the key takeaways. yenously, with the strong and declining stock prices, companies have not been choosing to invest in the economy. but also concerning to policymakers are the consumption
makers. they were up slightly, but these numbers show that the economy continues to oscillate between slight growth and contraction over the past few years. even with the amount of stimulus we have seen from the government and tank japan. -- bank of japan. rishaad: how has the prime minister responded to the numbers? >> first of all, sinc eth -- since the quarter ended, they have announced a large stimulus since he had that big win in the upper house election. have been some attempts to come out and say, we are going to do more on the fiscal side. some have said that is not enough. the package was not enough. maybe we will see more. this puts a lot of pressure on the bank of japan at their meeting next month to do more. the most recent meeting in july,
there was slight easing, but around the edges. we keep saying the next meeting will be one of the more closely watched. this one in september really will be. if the bank of japan is undergoing comprehensive policy review, what are they doing -- >> and puts more pressure on the review. it looks at how the policies have been working. how the unprecedented easing has been working, along with any other policy action. the fact that even with this unprecedented easing, you .ontinue to see slight growth that has to be on the table in these discussions. rishaad: going to take a look now at some of these first word headlines, making news around the world. here is stephen engle.
yousef: saudi arabian forces will be given one month extended pay. saluman order- them to reward their sacrifices. they assemble the coalition to fight shia rebels in support of yemen's internationally recognized government. the thailand economy expanded 3.5% from a year earlier. the military-backed government has accelerated spending on road and rail projects to offset weak demand. investor confidence was backed by the completion of a constitutional vote before a series of bombings hit southern provinces last week. italian shareholders are said to have approved a $4.4 billion the to do list -- to delist -- he says he would like to relist
wanda in china where he expects a higher valuation. today's vote marks the biggest ever privatization deal for hong kong. engle.ephen this is bloomberg. bahrain is effected to have five banks include j.p. morgan chase to manage its -- tracy, what has been the rush to market? what has been driving it? week in thether gulf and we have another gulf bond sale. we have seen a rush to issue new debt thanks to lower oil prices. a lot of companies have growing deficit, growing budget gaps that they need to fill. indeed, we have seen bahrain tap the euro bond market.
twice already. this would be the third sale. we are expecting this relatively soon, but not until the august lull. even though we have had billions of dollars worth of new supply, it has been a good environment for selling debt. if you look at the bloomberg index of u.s.-dollar denominated bonds, you can see it reached a record last week. that was helped by higher oil prices but if you look at a longer-term chart you can see that even for the past few months when oil was in a bear market that index was doing pretty well. there is a lot of investor demand for these assets. yousef: what about the broader emerging market space. they generally been on a tear as investors chase yields. where does it go from here? >> it is difficulto bt not me
the search for yield on the -- to blame the e.m. rally on the search for yield. we have seen benchmarked, developed countries touch record lows. u.k. gilts, japanese bonds. that is all pushing an influx of money into e.m. assets, e.m. bonds, i should say. the real yield is adjusted for inflation. 2.07%something like versus -.34% for debt from the g 10 countries. a huge yield differential now. the question investors will have to ask themselves is whether they feel they are being adequately compensated for risk. if you look back to this year, there were so many worries about the fundamentals in e.m. economies and we have drifted so far from that judging by the action and those yields.
yousef: welcome back. you are watching bloomberg. rishaad: i am in hong kong. a quick check of the business headlines. bulls and bears colliding. short sellers increasingly convinced the stock is off its peak. bearish bets are at their highest ever. the stock jumping 19% last week. the number of shares borrowed for shortselling rose to a record 4 million. panasonic may be getting ready to sell cheap smartphones. this is according to the nikkei
news. panasonic is said to be selling myanmart initially in while seeking to expand another 10 markets next year. considering setting up tax haven areas to keep billions of investment dollars in the country. the government says the money could attract money stashed over seas which could affect infrastructure projects. therepatriated funds canal invested in assets such as golden property. yousef: -- such as gold and property. yousef: the battle for -- one that dubai has been winning for recent years. the lower ruble and stronger dollar has put a dent in the numbers. dubai is diversifying. let's discuss that with the ceo for tourism.
on theou for coming program. you are looking to target 20 million travelers by 2020. are you still confident you can achieve that? guest: when we set out a strategy, the way we position ourselves was to double the numbers from 2020 by 2020. with that we put -- from 2010 by 2020. the reason we had done that was when you there would be periods of time where we would see huge numbers of travelers coming to do by. we also developed a diversified strategy. we don't rely on traditionally strong markets, like the six or seven top markets. we started looking at the top 20 markets to go after. based on that strategy, and understanding, getting involved into, what is it that these people like to see when they t ravel, how do they consume
information, how do we target them? yousef: we will get to that strategy in a second. first, what has been the biggest issue for you in terms of derailing the numbers of tourism arrivals. what we say is the number one culprit that keeps you from growing faster than you currently are. guest: it is difficult to say there is one factor or another. what we have done, the ruble example, when that happened, having a diversified market weps because we quickly -- more than constant -- compensated the vigorous drop from russia. thatving a plan that works way makes it easy for us. having a strong relationship with the market makes it easy to activate others. yousef: what is the next phase of dubai tourism? you have been targeting the high
network. known for the greatest landmarks, the biggest and the greatest. all of that is passed, so you need to shift your strategy. how will that change? guest: part of the plan was to identify the key propositions people are interested in when a look at traveling to any destination. the landmarks did play a big role in putting to buy on the -- dubai on the map. things that we in the past might have taken for granted. the old sooks. a lot of the mature travelers want to see them. things that are unique. we started to identify those key propositions. we started highlighting them going forward. even things like, the adventure side of things. things like the restaurant experiences, whether the brand names of international chefs, and the homegrown restaurants as
well. all of this gives us great opportunities to speak about dubai. yousef: i can see behind you it is a beautiful sunny day. in mid-august. it is probably 45 degrees with humidity. how much is that a battle to persuade tourists at this kind --your ash this time of year at this time of year? past, you could say there were peaks during the specific seasons of the year, but there are other times where we used to see a bit of a drop. if you look at the numbers of last year, you can see we have a huge spike for travelers from the u.k. and germany. it shows there is an appetite to visit the by. it is all up -- to visit dubai. it is all about the information of what they can do. there are peaks for specific times of the year.
there are others who understand that there is a lot that dubai has to offer but it does not necessarily mean they are right in the middle of the sun and the heat during specific times of the day. most populare place to go for dubai -- i'm talking about the ones which generate the most money. >> if you look at the key destinations, or the key landmarks that people visit. this becomes a key attraction for visitors. alifathe iconic bridge k becomes eyespot people want to visit as well -- becomes an iconic spot people want to visit as well. it's where they want to have their iconic pictures taken. yousef: one issue you have been
facing is that travelers do not tend to stay that long. they visit a couple of sites and then will be on their way. you want to triple the economic impact and for that to happen you need them to stay longer. >> there are three things that we highlighted. doubling the length of stay and increasing the opportunity for those to spend more as well. have been working closely with the private and the public sector. you will see that we have a few amazing things coming up. you have dubai parks and adventure coming up. all have brought specific ip's with them. as a family destination, we wanted to make sure it is not just the parents making decisions, but the kids as well. we have made sure that, if we are going to a wider segment of audience, not just six or seven key source markets, we have to
make sure investments are not just in the five-star segment, but the four-start segment as well. it is view for people to stay in dubai knowing they can extend their stay because it meets their budget requirements. yousef: we will pick up on those points in a few minutes. our guest is staying with us. plenty more to discuss. this is bloomberg. ♪
number's from last year we achieved 4.2 million in 2015. increasee significant in specific markets. in the first half of this year we have already seen 8% growth from india. 4% growth from saudi and 11% growth in china. that is on the back of 29% growth. you can see the trends are positive for us. growth we arethe theng to maintain that from 0.2% from last year so we can be on track to get our market we're after. >> how closely do you work and do you work with the airliner? guest: we work very closely with them. with that, when we put a strategy out, and going forward,
we make sure we are in line with them, understanding the new market they will be venturing into, and understanding from the key source markets if there are local carriers we can attract to fly more passengers into dubai. emirates is a big help. what about abu dhabi? how closely do you work with it in attack -- attracting people to the whole of the united arab emirates and not just the one? guest: our focus would be on dubai, but that doesn't mean they are not visited when visitors come to dubai. you have the visitors interested in the cultural side, visitors interested in specific landmarks. there is always the opportunity to commute back and forth into those emirates. yousef: i'm looking at the
airbnb cost indez. dubai ranks number six. $168 per night. more expensive than some of its global peers, including london. you had a bit of a rough time with airbnb. you signed an initial agreement. where does that relationship go and what room does airbnb have an dubai? is a big player when it comes to people traveling around the world. the most important thing for us is the end user. repeat visitation is a key factor that i want to maintain. for us, we introduced the holiday home regulations and made sure that was an opportunity for people who invested to rent them out for short stays. that worked perfectly to get
airbnb to link into that. yousef: plenty to look forward of the dubai corporation for tourism and commerce marketing. a quick check of the markets. the tokyo market is down. that weak gdp number making itself felt. initially it forced the topix to flirt between gains and losses. a decent 2.3% rise. this is sydney and wellington, both higher after struggling to get anywhere in the early part of the morning. this is a look at taipei. singapore, kuala lumpur, and manila as well. manila down by 0.75%. that is it for this edition of bloomberg markets middle east. yousef: manus cranny will have all the top stories from london.
manus: japan disappoints. business spending contracts, exports struggle. stocks are lower. $50 oil in sight. brent crude rises 43rd day. -- rises for a third day. london properties are taking longer to sell this month despite a summer price cuts. a focus on results in an hour. brexit gloom. the data this week that will show the early effects. first account, infon