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tv   Bloomberg Markets Middle East  Bloomberg  August 22, 2016 12:00am-1:01am EDT

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yousef: oil and its longest winning streak in four years. iraq decides to raise exports. crude has climbed 16% in seven sessions. new central bank governor will pull up the reins. will endran signals it its control of its currency.
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rish: indonesia has 250 million people. only 900,000 filed a tax return in 2014. a.m. across 8:00 the emirates. i'm use of good to bidding in dubai. rish: welcome to "bloomberg markets: middle east." we do often talk about the fed. no doubt the fed is looking at what is going on with the oil market. we've got reports that iraq wants to boost its output by something like 5%. you know, a lot of sales will be tasted what happens there with the future oil price. we have to move -- we got a moved to the downside as we are reporting. yousef: if you look at where oil is trading at the moment, coming , in the case of
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dubya ti, holding above $50 per barrel. you have to bear in mind what we are coming in with. if you look at the futures market, how hedge funds have been positioning themselves, what a change it has been. i pulled up the chart on my bloomberg. .ou can do the same, as well those hedge funds are trimming short positions in wti futures 56,000ions by 56 -- contracts. the key here is the scale. that is the latest bar in blue. that is the most going back all the way to 2006. net longs are up 56%. that is the most since july of 2015. petrol matrix adding that you should consider a crude hedge fund, or rather hedge by the end of 2017. you can see the kind of impact that the opec or the possibility
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of a freeze at the informal opec talks in algiers has had on the market. rish: yeah. we are going to check on the state of play in the markets. take a look at what is going on in hong kong. japan and hong kong, closing out the morning, down one third of 1%. just two hours away from the open for the markets and the .mirates for delhi anddown dubai. let's check in on the first word headlines from around the world.here is shery ahn . shery ahn: china wonka saw a 10% jump in profits. net income rose to about $800 million, 5% lower than what analysts were estimating.
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the company's management has been under pressure since bond on became the developer's biggest shareholder. lower costs and higher margins have helped afford askew metals become the best performer. for your profit jumped ninefold. the market outlook for 2017 is positive based on demand from china thanks to its infrastructure plan. pfizer is said to be nearing a deal to buy u.s. biotech company medivation for $14 billion. sources say an agreement could be announced as early as monday, and pfizer is expected to pay a premium of 30% on the company's friday close. pfizer has been relying on new brands of treatments, including cancer drugs, to boost revenue. taiwan is to investigate a bank whose compliance program the u.s. despite -- described as a hollow shell.
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the bank was fine $180 million by washington. suspicious transactions flow between the banks u.s. and panama branches, and a substantial number of customers were -- [no audio] global news 24 hours a day powered by more than 2600 , i amlists and analysts shery ahn. this is bloomberg. rish: a bit of a mixed bag. session,ad quite a fluctuating between gains and losses. here's david. david: we are midday, but the latest market to open up here across the asia-pacific is india. we are looking to get the first jab from investors on what they make of the new central bank governor. if you look at what is happening, the talk is about continuity.
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.e is a respected technocrat as far as what investors will be feeling, not a lot. they won't be feeling a lot of change. sent sex is up 1/10 of 1%. asia is looking like this. if you look across most of the markets, we are not really meaningful price action. if there's one thing we are looking at across asia, non-. if i had to pick one, volumes are light. that's a key take away. have a look at the dollar index. this is where the action is, and it comes down to the fed. that market may have priced out too much, if there is such a phrase. it is rare we see this much of a move into the dollar index.
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at some of these key pairs across the asia-pacific, and we will show you a chart -- dollars gaining against the yen. have a look at these expectations of a federal rate hike. a historical analysis of what december is supposed to look like, and as you can see, a little circle on the right side of your screen has come back. not in the biggest of ways, but it's back and play. we are about 40%, 50% on the probability the fed it might cut rates. they've talked of the possibility they can move to normalize rates further before the end of this year. yousef: thanks, david. let's pick up the conversation with the head of middle east
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research for credit suisse. let's dig into the latest comments from stanley fischer. fairly positive on the health of the economy and the possibility of a rate hike by the end of the year. i didn't get too much detail about the timeline. what did you read into his commentary? >> i think is interesting we are getting more hawkish comments out of him at this time. at a point we saw expectations of a rate hike decline. in-house, our view isn't that high conviction towards a rate hike. we think it's at best 50-50. overall, i think we can look in -- at this in a number of ways. there's been a history of the fed to test waters. just setting the idea in there so there isn't much of a surprise when events take place.
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yousef: i've pulled up this charge us to underscore how the market is position. david mentioned this. this shows you the probability of a rate hike by the end of the year. what i've highlighted are some key events. expectations dropped it down and have recovered a little bit. where do you stand in this spectrum of probability? do you think there will be a rate hike before the end of the year? >> before the end of the year, basically by december. earliest the fed will raise rates will be the december meeting. we don't see it occurring before then. there is still a 50% probability for that meeting. on a 12-month view, we think it's good for two rate hikes. the december 1 is one where we don't have a particularly high conviction. rish: how would 25 or 50 basis
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points in the meeting next month make any difference? why not just do it and get it over with? >> i quite agree with you. it shouldn't be this big of a deal to have a 25-point rating increase. i think this chart is very theructive, looking at how probability fell after brexit. situation where we have a great deal of consideration. it makes it difficult for the fed to raise rates even by the small 25 tips you are mentioning. rish: stanley fischer did kind of contradicts himself. he did talk about conditions getting there for a rate hike, but he said growth has been, well, terrible. what gives? >> if you look at the macro data in the u.s., it's been robust. it's been very good.
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it's been at the global and where we had concerns, especially in europe -- sorry come also china -- where we have had concerns over slowing growth . it hasn't been a u.s.-centric concern. the only issues we had been concerned with in the u.s. have been on the wage growth side. we have seen some encouraging signs. if the global picture wasn't where it was today and it was a matter of looking at u.s. economic data, and think the case is strong for a rate hike. it's the international picture that makes a prospect for a small rate hike more difficult. rish:rish: stick around with us. we are going to talk oil coming up. president erdogan plans to complaint to the united states in the delay in extraditing and islamic cleric, but we've got this next. iraq is saying it will increase
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its oil exports in the next few days. we will talk about the implications on energy markets. ♪
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rish: a bit of breaking news coming through from china. net income here, $90.7 billion. that works to about $2.5 billion u.s., promising an interim dividend. that is china overseas land. a quick check on the business flash headlines. there are talks to buy u.s. chipmaker intercell for as much as $3 billion. no agreement has been reached. friday's market close, giving intercell a market value of just over $2 billion. japan airlines says it has canceled 185 domestic flights
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because of typhoon min. it's expected to make rand -- landfall in the tokyo area. ja says more than 33,000 passengersl have had their travel plans disrupted by the typhoon. indian textile manufacturer well spun is reviewing its supply chain processes after target severed ties. who's accused of passing off premium sheets as egyptian cotton for two years. nther leading welspu customers include a bed bath and body works. iraq says yousef: it will increase crude exports by 5% over the next few days after
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reach an agreement to resume shamans from three oilfields in turkey. here is sam walton. >> good morning. there's been a ban in place since march when the central government stopped exporting government through the northern pike line to turkey. that type line is controlled by the kurdistan regional government, a semi-autonomous administration that has a long-running dispute with the central government over oil. dispute.mplex it goes to the heart of the legality of who has the right to produce and export oil and how much of the federal budget the k urds are eligible to receive. there was no agreement reached in december of 2014. there have been frequent disruption since then, and most recently in march when exports stopped again. yousef: i've pulled up a chart you have put together, which basically shows wti, brent. those are your lines in blue and purple, and the white line is production.ll
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give us a sense of why now. what has push of them to try to resolve the issue at this point? march, they were anomalies because of damage to the pipeline, but from march onwards, you can see a steady decline in oil exports. that is from the disruption to that northern pipeline of the 150,000 barrels a day of kirkuk crude not going to the impetus seems to be the appointment of a new oil minister in baghdad. he said, maybe we can find an agreement with the kurds. here we are a week later, and they seem to have made some progress. also, we need to look at the long-term. oil prices have been relatively low the past two years. iraq is running short on cash. it's fighting a tough fight against islamic state militants, and so are the kurds. maybe the pieces are in place for an agreement. rish: what does this tell us about the dispute with the kurds? where are we with that?
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sam: it's not fully resolved yet. we haven't yet seen a response from the kurdistan regional government to this latest of element, and we haven't seen details of any payment mechanism or what this agreement might entail. it's a unilateral move by the startd government to pumping oil and kickstart talks to get this resolved, but we need to look for signs of a more lasting and more fundamental agreement between the two sides. we need to look at where the money is flowing, and we need to look at whether there's an agreement on the legality on the fundamental issues. rish: thanks a lot for that, sam wilkin. with ourk about this guest, the head of middle east research for credit squeeze. a 5% increase in oil being pumped out of iraq, what does it do to these informal talks coming up in opec? moreare gaining more and
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importance, it would seem, especially with more market participants. >> i think it's difficult for opec to talk about freezing output at this stage given what has been happening and given what we have seen coming out of opec for the past couple of years now. if you look at the change in supply we have seen, supply growth has been coming off, and the main driver for that has been predominately the non-opec producers, and within the opec u.s.ucers, it's been the ex- oil producers. for us, that is where the attention needs to be. that is where the big change in supply has been coming from. shery: rish: absolutely. -- rish: absolutely. who is being affected most by this drop, especially in these gcc countries? all of them have to revise their budgets. fahd: absolutely.
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it's been a key theme we have seen since the oil price collapsed, of discussion of subsidy reform, implementation of subsidy reform, a cutting back on the expenditure. the most affected has been saudi arabia. they had been playing catch-up on subsidy reform, engaging in an unprecedented level of change. the impact has been pretty material on the economic growth front, not to mention the consumer sentiment front, and that is visible on the stock market when we have seen saudi arabia underperform the rest of the gcc as a result. yousef: what do you expect going forward? it appears investors were quite impatient with those reforms being executed. you mentioned the benchmark index has been underperforming its peers in this part of the world. is there any hope there will be a renewed sense of vigor, or does this come down to the oil price? fahd:fahd: the oil price will
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definitely help. historically, there hasn't been any kind of correlation between oil prices and local equities. of course, things are quite a bit different. i would imagine the recovery in oil price has a bigger effect than it had before. i think we are coming to an inflection point, and there are two key things to keep an eye on. number one is the uncertainty relating to further announcements of subsidy reform. that is something holding back investor sentiment quite a bit. over the last month, volumes have picked up, but it's nowhere near the levels you would expect to see as we come out of from a on, as we come out of the summer period. the other is, if you look at the central bank data and the consumer spending numbers that have been coming out, they had been under tremendous pressure, but actually the last two monthly readings we have had come out have shown a decent rebound. resultsook at quarterly
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for some consumer discretionary names, they have come in quite solid. there is a feeling that potentially we've seen the worst of the slowdown in consumer spending, and we could see a normalization. in terms of yousef: david: regional upside, you david: are quite bullish on qatar and the united arab emirates -- yousef: in terms of regional upside, you are quite bullish on qatar and united arab emirates. valuations are looking a little bit rich. even the technicals are looking a little bit overbought. but enoughngly so, to warrant some profit taking. yousef: all of this is related to the oil price in terms of sentiment. enis here with the ceo of had to say on the current state of play. there news we can find an agreement.
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it will have an impact on the price. i think it can re-stabilize. the market then, clearly nervous. run us through your thoughts in terms of where you think the oil market is headed. bulls andou have the bears pulling ferociously in opposite directions. fahd: definitely. there is a great deal of uncertainty about where we are going. we think oil in the short term can run up higher than it is now. our 12-month target is around the 53 mark. we are effectively at that long-term target. short-term, we would be expecting a bit of profit taking, but this would be profit-taking within an upward trend.
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yousef: thanks a lot for your insight. that is from credit suisse. still to come, investors are looking for a new economic yardstick as gdp shows its age. you have the details for you next. this is bloomberg. ♪
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welcome back. you are watching bloomberg. rish: i'm rishaad salaam it in hong kong. these questions about gdp and its relevancy, malcom scott is with us now. what is the problem with gdp? it is looking increasingly outdated. it's not keeping up with the transition to services. new technologies are undermining its accuracy, and we are seeing these widening revisions, which raises questions about its accuracy. rish: you mentioned to me earlier, you can buy a cd for $10, but you can go on the
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website and have unlimited streaming for the same price. malcolm: things like capturing that activity -- airbnb is another great example -- capturing that activity is incredible he difficult. rish: what are the consequences if gdp does have these problems? malcolm: number one is the loopback to markets. markets are reacting to the most inaccurate reading of gdp, and increasingly, they are looking come after you get the benefit of these revisions, like they are less accurate. yet that feedback loop of the negative market reaction can have economic consequences. rish: like this one, the bank of japan adjusting gdp. what would people think? malcolm: there's an increasing it better.ry to make if they can't make it better on
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the investor side, more people are looking at other ways to bolster their readings of the economy. satellite imagery, sentiment reports. rish: electricity use, railways. thank you very much. coming up, iran's latest attempt to rebuild its economy may mean
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♪ 1:30 local time in tokyo. the last 90 minutes of trading. bouncing along the gain line for much of the session earlier. this is how it stands at the moment. top stories on timber markets. iraq moves to increase exports despite a global supply glut, seeing oil and its longest run of gains in four years. crude entered a bull market on thursday, but fell after baghdad
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announced plans to boost deliveries by 5%. nigeria also will increase assets after militants said they would stop attacks on oil installations. central banks signals it will loosen its grip on the rial, seeing the end of a dual exchange rate system, with one set by the central bank and the other by the markets, seen as an obstacle to turn foreign investment. such action would likely lead to more cash entering the banking system rather than circulate through exchange houses. rishaad: kuwait is reportedly lowering its projected deficit to $23 billion. finance ministry documents claim higher-than-expected oil prices helped reduce the country's shortfall from $27.8 billion. kuwait will raise money through bond sales and islamic financial instruments to plug its deficit. it is just past 12:30 in hong
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kong. i am rishaad salamat. yousef: it is 8:30 in dubai. you. good morning to we are counting you down to the start of the european trading as well. just a quick word on what we will be talking about here in europe, as we go through the day. big meeting taking place off the west coast of italy, with france for a long -- francis holland accompanied by angela merkel, coming to meet the italian prime minister matteo renzi, taking place later on today, bringing together european leaders to talk about a host of challenges they face. the relationship in the context of the refugee story, budget flexibility, and defense spending, all on the agenda. this man, matteo renzi, the italian prime minister, facing no shortage of economic challenges. we have a great story on the bloomberg overnight talking about challenges he faces. the italian government needs to
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deliver the best six months of economic growth since 2000 if they want to meet the demanding gdp goals they have set for themselves. italy is facing a stagnant economy. they have emerged from the longest recession since world war ii, but the economy is still barely stagnant, and banks are indebted and face increasing challenges to matteo renzi's leadership, adding up to italian matters on the agenda as they meet on the west coast of italy. that is one thing we will be focusing on during european programming. yousef: anna, some interesting stories over the weekend also. the fact that the fallout from the brexit vote could be hitting the city of london? anna: specifically, we will talk about -- i'm sure there are many viewers in your part of the world interested in what's happening in the u k property market. we have numbers from countrywide, forecasting the london housing boom will end in homeas brexit bites, with
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values falling for the first time since 2009. growth in home prices will slow to 3.5% this year, and drop 1.25% in 2017 according to countrywide. in prime central london, a drop of 6% this year, and little change in 2017 according to the forecast. but don't fear if you are long asthe uk housing market, they forecast greater london home values will rise by 2% in 2018 as the economy improves. as with any forecast around the u.k. economy, there's a lot of unknown unknowns and known unknowns because of the extent to which we don't have clarity around the relationship between the u.k. and the eurozone. yousef: thanks, anna. plenty to discuss. in other stories, the incoming indian central bank governor is known to be rather low-key compared to his predecessor.
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but like his predecessor, urjit patel is an inflation hawk. dr. patelll us about and how investors are reacting. go by the you reaction since equity markets opened, they opened on a high but then sold off. bond investors, most investors we spoke to believe that dr. urjit patel will keep inflation under control and interest rates could move lower, which comes as good news for investors in debt. dr. urjit patel is a well-known inflation hawk, seen by the market as that.the government has clearly chosen the path of continuity over change. atel was the author of the inflation targeting regime, someone who led where governor
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been.an has the situation in india is slightly different.oil prices are inching marginally upward, with prices at a 23 month high. be looking at what expectations are before he takes any call on interest rates. yousef: thanks, harsha. at the end of the day, will he play ball with what the government suggests? will he cut interest rates? that is something the modi administration has been really calling from from rajan in the past. harsha: you hit the nail on the head. it's about personality. dr. rajan was an outspoken personality, and often spoke about social issues, stuff that was unrelated to monetary policy, which is part of the problem. urjit patel is known to prefer a
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low-profile. he does not give too many interviews, and he's likely to keep, operate within the orbit of what the central bank is usually due, talk about monetary policy and interest rates, which might keep him away from controversies with new delhi. the equation with new delhi will be critical, because there are two important elements taking place. one, inflation targeting, and the second is monetary policy. it will not be one man's call on the interest rate. the situation with new delhi will get even more critical. yousef: harsha, thank you so much. in mumbai.ramaniam bluescope steel is at its highest in five years after the australian producer said they will see improving prices in asia. the stock is up 2.7%. blue scope reported underlying
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profit of $222 million below analyst estimates, and they expect higher pricing for australian steel products next year. major league baseball has approved nintendo's sale of its majority stake in the seattle mariners. nintendo will hold on to 10% of the team and the regional sports net, and the rest of its holdings have been sold to other members of the current ownership group, first avenue entertainment. the financial impact of the sale will be included in nintendo's next quarter financial report, but no terms have been disclosed so far. of a bank management unit has quit just a month after being appointed. he left last month, but did not give a reason for his departure from mashreq. he replaced the chief who left after 10 years at the bank for personal reasons. global news, in more than 120
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countries. im shery ahn. this is bloomberg. rishaad: the central bank of iran has signaled it will loosen its grip on the rial. there's currently a dual exchange-rate system, with one set by the bank and the other by the markets. andrew, tell us about the system, and why the bank might change it. andrew: iran's economy, under the sanctions, was a pariah, but economically and politically. so they needed to devise all these band-aids to try to keep their economy running as they were removed from the rest of the world. some of those band-aids you rip off quickly, and others they are taking off a bit more slowly. and in this case, what it is is they need foreign companies to come in and get their economy going. i can imagine ceo's thinking of going there, having
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conversations about well, if we go in, we can build with this rate, and we repatriate we have to come out with this rate, and is maybe too, hit for them. so this is perhaps the beginning of the emanation of the dual -- elimination of the door rate system. yousef: it is a radical change. they have been running the dual rate for a long time. what risk is rouhani running? andrew: a big risk, because there's a presidential election next year and there are woes lurking. the conservatives really only have to run a popular candidate to pose a real threat to rouhani, so every step he makes, every measure he takes before he, before we go into this election cycle, runs a real risk for him, and the euphoria we saw when the sanctions came off is slowly going away. yousef: that's a good point, in terms of how iran's economy is
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faring at the moment. where does the country stand? you said the euphoria has faded. andrew: oil is up. fdi is up. inflation is down. companies like boeing are coming in. these are good things. at the same time, oil prices are way down and fdi, they are looking for 10 times the amount in the first quarter. youth unemployment is really high, so there's a lot of challenges for rouhani left, and it's always like these final steps are the most difficult. you need short-term pain for long-term gain, and it's not clear rouhani has the time or inclination to carry these out before the election. if he does, he runs a real risk. yousef: thanks a lot. joining us for some real insight on the story coming out of iran. the hits keep coming for turkey. fitch is the latest to put the nation on negative watch as political instability rattles investors. we'll get you all the details. stay tuned. this is bloomberg.
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rishaad: you are watching bloomberg. -- inishaad salamat for hong kong. yousef: a quick check of the latest business flash headlines. saudi arabia is moving ahead with its ambitious plan to overhaul the economy. an official from the stock exchange says it is planning an sme market earlier next year, and a secondary market will operate parallel to the main bourse, with fewer requirements for offering or listing. several companies already expressed desire to join. israel's largest money managers are turning to the stock market as the bond rally slows. equities has started to arrange the steepest discount in 18 months. the tel aviv bond 20 index is on course for its worst month since
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january. one of israel's biggest investment houses says there's a buying opportunity in the stock market. erdogan hasident promised to step up pressure on demand for theis extradition of the x out cleric they say was behind last month's failed coup. he says that washington's isition on fethullah gullen undermining the relationship with nato allies. a look at turkey's prospects ra.h an analyst from nomui the latest news from fitch, holding that key investment grade but moving to negative. is there cause for optimism, or concern?
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>> well, i guess it is both. you know, we all expected the rating as such would remain intact, so that's good news. but of course, changing the toion -- outlook from stable negative is a negative. i gave it a 50-50 chance. it seems like the decision was made completely on political grounds, so we will have to see. it is both. a mixed bag, but the fact we are keeping the investment grade is positive. yousef: that might be a positive for now. a lot of focus on how movies will react to all of this -- moody's will react to all of this. will turkey be able to keep the investment grade ranks it needs for portfolios and funds to allocate money in turkey? open sortl, it is an of question. obviously there's a major risk
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that moody's could follow this in the next two months with a downgrade. i think it all depends on the policies. unfortunately, politics is still too unstable to be focusing on policies, so that increases the risk. but i guess at the end of the day, fiscal policy is one critical anchor here. as long as they don't see obvious signs of loosening there, turkey may be lucky enough to keep investment grade. we are all concerned more about moody's now, because we are within the deadline. by mid-october they will have made a decision to downgrade or not. so, i still say it's a 50-50 sort of story. murat, withishaad: the coup attempt taking place and the subsequent detainment of several thousand people, has that played out at all when it comes to, not just the concept
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that foreigners have, but the concept of people living in turkey have in their own economy and system? how is that playing out? the public-sector, of course, will have a major impact, but it's more of a longer-term, or medium-term story that we will see unfold. but the corporate sector is creating a lot of uncertainties. lots of linkages between corporate's and banks -- corporates and banks, which will have an impact on both confidence and actual credit. because as long as there is an open-ended purge going on in the corporate sector, banks will continue to be cautious, and that cautiousness will affect them and their growth. that is something we are a bit more concerned about. we have to see the light at the end of the tunnel, if you will, as to whether the purge in the corporate sector with aend.
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of course the public sector is just as important, but weakening of that capacity will show more in the medium term. corporate sector is more imminent. rishaad: do you see more weakness for the currency looking at, or have we gotten most of this priced in, if we know what is being priced in at all? murat: well, i think the key uncertainty is the central bank here. thepect them to lower overnight lending rate by another 25 basis points. and that's a bit risky. i think as long as they continue leadingat, we will be up to some sort of backlash, so that is an uncertainty. and the emerging market environment is so bullish, i think they have been muddling through fine. as long as we avoid major policy mistakes, probably the worst is over on the currency front.
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but the central bank is one big uncertainty, i would say. and of course, if movedy's decides to follow -- moody's decides to follow up with a downgrade, we will see more uncertainty, but general bullishness is helping turkey. yousef: run us through more of the thinking for the central bank. the decision is coming up on august 23, and it's not just an economic story, but also a political story, because the relationship between the central bank and the incoming government has been very tense in recent years. what do you read into that? how will this play out? how is the central bank likely to move, in light of that, at this meeting and going forward for the remainder of the year? murat: i think the pressures are there and very likely to continue. the key concern for government right now is growth. credit growth is not accelerating. lending rates are not responding much to easing so far. so as long as we have this
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problem of growth, and the focus remains on growth, pressures will continue, and the central bank will frankly have a hard time resisting those pressures, so they have to continue. we are talking further accommodation, unless the market shows its teeth somehow and sends a threat to the central bank, that this is becoming pretty risky. as long as the accommodation of the market is there, the central bank will continue accommodating growth and policy. and talking on politics, we had fitch look at this, and one reason they gave for the downgrade in the outlook was political uncertainty. how would you get the administration, and does the administration acknowledge they have to give clarity, some sense of assurances to potential investors? murat: well, it's a very tough one. what we're seeing, this whole
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dialogue continuing among parties, unfortunately hdp is excluded, the kurdish party, but the's happening between main parties isn't urging and has to translate to concrete action. some joint projects. academic,a little but they could sit down and write an economic program about what turkey once to do from this point onward. so they need some concrete signs that they are actually able to work together. that would be a very positive thing. the second leg of this is obviously the gullwen purge. that has to end somewhere, at some point. and this whole tension going on between turkey and its major western partners, u.s. and eu, that also has to stabilize. these are the concrete actions on the side of political parties, the main party working closely with the opposition, the lowering of tensions between turkey and foreign partners,
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those are the things that we will be looking at. any positive sign in that direction will send the right signal, but it's very tough stuff. we just had a coup attempt. it takes a well to heal the wounds here. murat, thank you so much for joining us today. coming up, indonesia's finance ministers vowed to crack down on tax cheating. ♪
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rishaad: indonesia's returning finance minister sri mulyani indrawati has vowed to crack down on tax avoidance. >> by constitution, the government has the power to collect taxes. by constitution, the people have to pay tax. >> but there was a shortfall last year. >> there was a shortfall. that's what we saw the shortfall
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which can be explained by the weakening of global trade, but a shortfall which cannot be explained by that, our ability to collect. whether it's related to efficiency, effectiveness, conduct, corruption, all of them. >> what would be your message to those who might be even dating -- evading taxes? >> in the right to do business, we are improving ourselves,, but if you are not in compliance i will take it very seriously, domestic and internationally. it is time for indonesia to have this, what do you call it, the compliance level of all parties. it is not acceptable for a country like indonesia to have a tax ratio that's very low. this is not because we are poor. this is not because we don't have business people, but because both the taxpayer and for us as the government, we are
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not able to establish a relationship based on trust, confidence, and credibility. so i'm going to do my homework, but i also expect all the business people to also do their homework. >> how much tax reform do you think can get done? for example, the revealing of bank accounts or credit card transactions. you need banks secrets he lost changed. you need to get the legislature on board. unfortunately, a lot of national and regional legislators have been the target of these corruption probes, and even arrested. >> this is like a chicken and egg. indonesia is always formidable with this low trust perception of everything, and that is exactly the biggest and the toughest job. returningndonesia's financia, sri mulyani indrawati, talking to
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our colleague stephen engle. that is it for this edition of bloomberg markets middle east. yousef: anna edwards will have all the top stories from london. "countdown" is next.
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anna: fisher feeling hawkish. the dollar strengthens as the federal reserve vice chairman signals a rate hike is still on the cards, saying the u.s. economy is close to meeting the central bank's goals. bank of japan governor kuroda says there is sufficient chance of more action at next month's policy meeting. crude falls after the longest run of gains in four years as iraq seeks to increase exports. and pfizer is said to be close to buying medivation for around $14 billion.

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