tv Bloomberg Markets Middle East Bloomberg August 31, 2016 12:00am-1:01am EDT
♪ yousef: no broncos ipo would result in a company work -- aramco's ipo would result in a company worth five times as much as apple. >> saudis oil minister says the cofounder expressed interest in investing. itsef: crude is heading for biggest monthly gain since april on action to stabilize the markets. >> much of that oil in sub in
china. beijing has been buying at record levels this year, but no one really knows why. it's 8 a.m. across the emirates, 5:00 a.m. in london. angie: welcome to "bloomberg markets: middle east." what are you looking at? yousef: i am looking at the reality of negative yields in different parts of the world. the latest comments from stanley fischer. we are still digesting a lot of that. still digesting a lot of that. he is saying the federal reserve is not planning anything in that direction in terms of negative interest rates. this is the world we live in. as a reminder, you have your german five-year, you have your swiss 10 year, the danish three-year, and the japanese five-year.
in the span of less than a year, all those returns have moved into negative territory. but there is a caveat. with some of those comments, he thinks the central banks using them are doing so quite successfully. all of this comes down to the data. what are the jobs numbers going to say on friday? the consumer confidence numbers we got overnight reinforce this strength we are seeing in household spending. this chart is why there should be sufficient appetite for those bond issuance is expected later on in this part of the world in the autumn. angie? thing to is a curious say from fisher, that other central banks use -- say negative rates are working. the boj is meeting. there is a lot of speculation that negative rates have not been enough, that in fact it has had a negative impact. perhaps needing a little bit more firepower, perhaps in the form of helicopter money. that debate continues.
the markets.eck at mumbai has been trading for almost 20 minutes now, but it is joining the rest of asia. gains seeing fractional in hong kong. the topics once again, you are gains ong games -- big the heel of a weaker yen. itsef: in the middle east, is just under two hours away from the opening of the emirates markets, dubai and abu dhabi. a mixed picture, slightly more positive than negative. to buy up why more than half of than halfi up by more of 1%. that rally,tinuing best-performing index this month. that, we are expecting final confirmed list of stocks from the ftse emerging markets. a lot of that has driven the interest from foreign investors. overall, the bloomberg benchmark
gcc 200 index losing just a little bit of steam, but on the month it has been able to outperform the emerging markets msci index somewhat. let's check in on the first word headlines from around the world. apple says they will fight a human commission ruling ordering the company to pay $14.5 billion in back taxes to dublin. it is the largest eu crackdown on corporate tax avoidance. the government says it will continue to support foreign investment. voted tof shipping has file for receivership this afternoon. it would be the next are $1 billion -- would be an extra $1 billion even. shares fell on news that they
would seek to buy some of their rival's assets. japan's industrial production was unchanged in july, falling short of even the most pessimistic estimates by economists. outflow did not change in july, in june. a 2.3% gain however, south korea has reasons for optimism. factory production rose 1.4% on the month, ahead of forecasts. and saudi arabia's national industrialization company is said to be refinancing around $1.6 billion of debt in its titanium unit. sources tell bloomberg the new debt will have a duration of three years, but the options extend to five. expected to come to an agreement with lenders in the next be weeks. than 26by more journalists in more than 120 countries, this is bloomberg. journalists in more than
120 countries, this is bloomberg. angie: japan is hoping to get what could be the world against ipo. officials one saudi aramco to invest in tokyo. our energy reporter joins us right now from tokyo. aramco listing mean for japan-saudi relations? it would be huge. it would be a very big deal, and it would definitely help relations between both the countries. first, we have to look at the size of an aramco listing. it would be the biggest ipo ever , and not by just a little bit, but by a lot. because of that, you have to see the it would really help stock exchange in japan not only gain a little bit more clout, but with all this trading they will take a little bit off the top. that's going to help japan. this strategyas
where they are going to different places where maybe they want oil demand or saudi crude to rise area do if you list aramco on the tokyo exchange, and japanese countries -- crude to rise. if you list aramco on the japanese exchange, and japanese countries are buying in, maybe they will say, we are invested in aramco on the exchange, maybe we should expand our contracts with aramco. it is a win-win for us. it helps everybody involved. that's two wins. from the tokyo in japan side, they win by having a historic ipo, and on the saudi side, they win because that will hopefully spur demand for oil in japan. it is really important for both sides. yousef: you mentioned the sheer scale of the plant ipo, arguably a win for any exchange around the world. who else has expressed interest?
that simply, but everybody. everyone wants a piece of it. it makes sense. it is a huge ipo. sources, to reports, the ones in the running our new york, london, and hong kong. there is another school of thought saying maybe saudi arabia and aramco will just kind of skip over new york and london. their oil demand is going to be following, especially demand from saudi arabia, whereas china and japan, the need for that oil will only increase, and asia is only going to become more important, so maybe doing a dual listing in asia is the way to go, according to some of the analysts i've been talking to. of course, it's not going to be easy. force is going to
want this listing. according to our sources, japan will be sending some officials to saudi arabia to try to get a little bit of an as in, but it is going to be a tough battle. yousef: one of the more exciting races to watch. in tokyo.udzinski let's continue the conversation without a ball that -- with alibaba, who may be setting its sights on saudi arabia. jack ma is extremely interested in investing in the kingdom. anthony has been tracking these developments. what do we know about alibaba's willingness to invest in the country, and what areas might they be looking at? it iser: right now, basically an expression of interest by ma looking at saudi arabia. and it's interesting that it's him who comes out and says this, because the aramco ipo is going to be the biggest ipo ever, and the other biggest ipo, the one it will eclipse, was alibaba's
ipo, so we are looking at aramco being about four times as much when it comes to market, based on the estimates and forecasts that we have. so it is an interesting thing that it is mom coming out -- ma coming out and saying that. these things they are talking about in china, as i've said, --y've signed many in ou's mou's. they are starting these discussions. it is too early to say. we know that alibaba has talked of investing in servers and cloud computing and data storage here in the middle east. we know that saudi arabia wants of theset more knowledge-based and technology-bed industries into kind ofabia, so this is a conflict of interest by these two parties, so it may be an
area beta site to cooperate in the future. mou's.you mentioned does that agreement help both parties? reporter: depending on what the details are that come out of that, it could be potentially beneficial to both parties. ofmentioned a lot of buying crude oil from china, and that has been one of the big stories of the oil market over the past year. as prices decline, china has been buying, and that has helped support the market. one of the ideas there is that china is filling up its strategic trillium reserves -- petroleum reserves, filling up the reserves of oil they would use in an emergency if they were cut off. that's one possibility where saudi arabia might be talking about supplying oil into that strategic reserve. on the other hand, countries like saudi arabia have storage areas in countries like japan.
they have talked about storage areas might india and korea. it gives them access to storage tanks that they can use for trading. it gets them closer to their clients, and it would be a benefit for both of them, depending on what they decide in the end. angie: anthony, thanks for that. let's get the latest on the markets. here's juliette saly. juliette: we had a bit of a mixed on wall street, those comments that any rate hike would be dependent, i guess a little different than what he said last week, but we know that investors are awaiting the payroll numbers coming through on friday. upside oning solid the japanese sharemarket, up 1%, now on track to erase losses for the month of august, and actually beat out a small game. near 103.alled
a little bit weaker and more stabilization in that yen, holding that a one-month low. looking at hong kong, it is pretty flat at the moment, but it has had a very solid month. share up about 7%. this is led by gains in the tech space. it is likely we could see an interest rate hike in the u.s. quickly looking at korea, lower by one third of 1%. but look at hyundai merchants, up 23%. this is as tangent shipping said it could start buying some of its assets. mining stocks pulling australia lower at the moment. angie: juliette, appreciate it. you can get more on that and the rest of the day's news at our digital destination, tailor-made for the middle east. there, you will find in-depth reports and market data, plus
you can watch all of our reports, interviews, and special content, only available online. yousef: later in the show, suffering a setback. we will take a look at why were right sharing services are being forced off the road -- why write sharing services -- ride services are being forced off the road in opera dobby. -- in abu dhabi. this is bloomberg. ♪
yousef: welcome back. angie: federal reserve vice chairman stanley fischer says negative rates are not on the table in the u.s., but they do seem to be working in other countries. on bloomberg television, fisher said america is fortunate that it is not in a position that it will have to consider going negative. he also said that decisions made
by other central banks impact the u.s. becomingrld is increasingly interconnected, particularly the capital markets, so what we do affects many other countries. that was always so. it's also true that what they do affects us. so we are dealing with we arennectedness, and probably the most important of the central banks. yousef: joining us now in the studio is the head of sack so bank to buy -- dubai. next for coming on the program. if you were out, you would have missed quite a lot. first, we had comments from janet yellen. is speakingfischer to bloomberg. where does that leave your out both? guest: wanting more comments. fischerellen using more as a surrogate. there are probably going to be hikes, possibly september, for
sure before december. yousef: i have pulled up the economic workbench. this is the market-implied videos. you can see the -- market-implied yields. you can see the compression in terms of the expectations. how many rate hike steel expect? is something going to happen in september? the bloomberg probabilities we are getting from the surveys would indicate that september is on the table, 42%. guest: we agree with you, possibly in september, and we agree it is likely before december. if it happens in september, there could be a second one in december. yousef: how does that change how you treat currencies? guest: for us, you can be on both sides. you can go a long and you can go short. currently we think the u.s. dollar is going to gain ground. it is probably going to get stronger before the end of the
year. angie: mario, i want to get into my bloomberg and talk about emerging markets right now, because when you take a look at investments, yes, you can take a look at the middle east region to be sure, but if you take a look at the global stage, it really also means that emerging markets are due as well. take a look at the emerging markets stock in bonds hiding in the face of rate that. where do you see emerging markets as part of the investor portfolio? guest: it is probably a good entry point right now. i think a strong dollar will higher-yield. emerging markets are probably going to be hurt by a strong dollar, which means you will have to pay bigger yields on the bonds, which i think is good as an investor. if you want to go in now, it's probably a good entry point. angie: what about the price of
oil, how does that impact emerging markets as well? guest: some of the largest energy producers outside of the u.s. are emerging markets. i think the price of oil is going to be hurt because of the strong dollar. that, our experts tell us we are a little bit bearish on oil. we think any time the price turns above $50, the u.s. on a lot of reductions, so that will probably give a hard feeling on oil. yousef: the upcoming opec talks in algiers, where you stand on this conversation? are they going to get it right the second time around when they meet? guest: i don't know about getting it right. i think that opec is not ask -- not as cohesive as it used to be. only cointreau opec
members -- only for opec members are in the top 10 oil producers. you have mexico, brazil. we also have canada. i think it is very unlikely that they would go to opec. right now, we see saudi arabia, iraq surprisingly came around and said they support control. what we are hearing is all energy ministers saying they should have control as long as it does not affect production. i think it is likely they can reach an agreement to halt production. if they did, you have the u.s., the second-largest producer in the world, wrap up production if the price of oil hits above $52. yousef: staying with commodities, we are seeing a lot of pressure in the pressure he -- pressure in the precious metal space on the back of increased rate hike expectations. how would you place that? guest: i think gold is stable. it's probably going to remain
stable. it has lost a little bit of ground because of the strong dollar. i think currently the price is 1300. $1300 floor is not broken, that it will probably remain at that level. if it is broken, we will probably see a rally down to $12 50, but we don't think it will go below $1250. yousef: thank you very much. we believe that there. coming up, stashing away supplies. we will look at why china has managed to battle the oil market. this is bloomberg. ♪
its bark sized dollar islamic bonds. and others abu dhabi will manage the sale. the benchmark usually raises at least $500 million. in 2014, 700 50 million was raised area telecom egypt -- $750 million was raised. telecom egypt will sign a deal for 4g. authorities have set basic a september-- set 20 second deadline to pay for licenses. they say telecom egypt's arrival in the market will add to competition, and customers will benefit from better prices and services. iran invites international oil companies to submit aids in october. it is part of tehran's plan to receive billions of dollars to
raise production following years of sanctions. they expect to sign three next month, worth a total of $10 billion. the big concern is iran's southwestern border with iraq. theo electric shares jumped most in a year after a politician opposed a restart of one of his reenactors dropped his election bid. the politician was against plans to restart the nuclear plants, which was the world's largest. by assays it profited much as $97 million a month. a prosecutor looking at bhp's disaster in brazil says he to propose charges by the end of september. the examiner is examining alleged negligence that may lead to charges of involuntary
negligence. nine people were killed when the dam collapsed. ceo andrew mckenzie will lose his bonus, and other executives will have there's reduced. let's check in on trading across the region here in the asia-pacific are you right now, because we are seeing asian stocks rising on the last trading day in the month. over in sydney, though, it is losing out. it is being offset by japanese shares. also seeing losses over and south korea. but if you take a look at the msci asia-pacific, it is climbing just one part of 1%. take a look at hong kong right now -- one third of 1%. take a look at hong kong. it is looking fractionally higher, but it is really the strength of tokyo right now. it is raising its losses for the month. -- it is he raising its losses for the month. the yen25% higher as
ipo. the offer is said to the disgust during -- said to be discussed during the saudi arabian princes visit. it could have five times the market value of apple. for itscrude is heading biggest monthly gain of april on hopes the next months opec talks told had for action stabilize markets. iran says it would support a proposal to freeze output, a week after saudi arabia described a production cap as positive. thiss are up around 11% month, despite expanding u.s. stockpiles. to file for court receivership this afternoon. creditors rejected a restructuring land that would require a next her $1.1 billion. newsai merchants soared on that it would buy some of the
assets. it is 12: 30 here in hong kong. i'm angie lau. --sef: it is a: 30 in dubai 8:30 in dubai. anna: just getting you started on the european trading day ahead. good to see you. let's start off with the macro agenda. we've had weeks of silence in the ecb. mario draghi not speaking for many weeks now. investors are left to her through the details of the latest releases. we get a couple of key ones today. see0:00 u.k. time, we will inflation rates of the eurozone, unemployment data also dueut. will it be much of an impact from the brexit vote, or is it too early to see an impact? the council next meets on september 8. the data hasof suggested that the 19-nation
euro zone is showing few signs of losing case. jpmorgan and deutsche bank are among two of the banks that have pushed back their projections of further easing from mario draghi. is something to talk about with extent to the eurozone gross story. that will be the focus. yousef: that's on the economic front. without anybe a day political drama in europe. what are you looking out for? politicalplenty of drama, in many quarters, it seems. in france, the reformist french decided toister has resign from the government. he announced this yesterday evening, prompting much more intensive speculation as to whether he will broaden to become president of france in 2017. he has been keeping investors testing since april as to his intentions. he stopped short of declaring himself a candidate for 2017,
but he says he -- he certainly does not give the impression he is stepping away from politics, and he is the second most popular politician in the country. says the mariano rajoy very integrity of spain is at .isk he emphasized the integrity of his borders. of anfacing day two investor to her -- of an investment debate in madrid. there have been eight months of political stalemate. he wants to become prime minister for a second term. he wants the support for the socialists. is back toeresa may business in the u.k., as she gathers a and other top officials to talk -- a cabinet
and other top officials to talk about brexit. she has said many times, what does brexit mean? if that's not a confusing way to start the meeting. that's what they will be talking about as they head to the g-20. will face pressure coming from home and at the g-20 as well, no doubt. angie. angie: yeah, when are they going to invoke article 50? the world's best performing stock fund is discovering the downside of success. blackrock india joint venture lasteturned 275% over the four years, but it is running out of good stock. we are joined from mumbai. what does this tell us about the indian markets? us ther: this tells stocks, which offer growth and our chie -- and are cheap, are difficult to find in this market, where caps are raising
to a record every other day. it also makes it difficult for fund managers to find investment ideas. that is exactly why the flowsock fund has limited as well. funds around the world are struggling to prevent withdrawals. has this led to, dan, in terms of frenzied buying in indian small and it cap stocks -- mid-cap stocks? reporter: that's right. the biggest boost for indian stocks is the growth. world's fastest growth, currently at 7.6%. also, the leadership of prime minister -- of the prime minister. when he took over, stocks started rallying. small cap companies are more exposed to the domestic economy than large-cap countries --
companies, and they have significant linkages to the outside world. they are participating in this frenzy much more than the larger caps. this has also drawn global indian small caps. angie: give us a sense here, which sectors and which stocks have outperformed the broader index? selectr: especially the pockets of value life in cement, financials. then there are chemical countries, which have a large market in china and europe. and some of the metal companies, because of the uptake and demand. uptick in demand. angie: ok. thank you so much for that. yousef: egypt's parliament has
approved a new value-added tax law seen as key to our blocking billions of dollars in health, plug up the deficit. and pressures are growing for the pound to alleviate that dollar shortage. is the us over the phone vice-chairman at beltran financial loadings. the latest measures, is that going to be enough in your view? guest: good morning. [indiscernible] yousef: what about the devaluation that is expected to
be part of the measures, part of the broader agreement with the imf in terms of restructuring? what is the extent of the devaluation you are forecasting? i think that the was in the range. [indiscernible] i agree that it is unstructured ground. -- on structured ground. [indiscernible] pressure will be more modest than everyone expected. [indiscernible] we will leave it there for the moment.
we apologize to our viewers for some of the audio issues there and the clarity. let's now cross over to angie. what do we have? angie: thanks for that. we are talking about china here, famously difficult to read, no matter the attempts we make here and across the region. but that also includes its stockpiles now. it has been reporting crude in a network of storage sites, but it is not clear what the government plans to do with it. our bloombergby energy reporter from singapore. what do we know, and more importantly what do we not know? , as you know,e the chinese oil buying has become increasingly important to the oil market. oil reserve has become important to chinese oil buying. back in 2009, 1 of the chinese refinery executives let slip that china was planning on building a strategic reserve
much like the u.s. has, equivalent to 100 days of import supply. we have not heard more since then. there have been drip sandra adams of information. they have not updated how much oil is in the reserves since last year. it is up to analysts and traders to try to figure out how much oil is already in theire, how much space is available, and how much buying for the reserve will happen, and will that help prop up prices? analysts how are trying to figure it out? reporter: they are doing everything. they are diving into a government data. they are tapping into sources on the ground in storage sites and talking to traders who are dealing with these people, trying to get a sense of what level of buying is happening. some of these analysts are incredibly bright. aspects, theyy are coming up with really different answers from the same data sets.
arergan thinks the reserves almost full, and china could stop buying, and it could deplete their demand and 1.2 million barrels a day. the buyingcts things has not been as aggressive and there is still more room to go. the difference between their outlooks is like the difference between the country of australia's oil demand. for a market chunk that has been steadily recovering to deal with. yousef: so a sense that a lot of the chinese oil lying as supported oil prices, especially in the first half of the year. how will this affect the markets as we close out 2016? reporter: you are exactly right. the markets recovered from the $20 range, the $50 range largely because of supply restrictions, but also because of increased buying. china has been importing a record for the first half of the year. in some months, it is the biggest oil buyer in the world,
even exceeding the u.s. a lot of that is based on strategic petroleum reserve demand. as that demand falls off, it can be bearish. that's what everyone wants to know, will china continue to buy at this pace? yousef: still to come on the ,rogram, the chinese skyscraper or rather, let's rehash that. the world's a stage. celebrates its new opera house in the shadow of the burj khalifa. that's next. this is bloomberg. ♪
bloomberg news tech reporter lulu chen spoke to jonathan ward from the company who designed the building, and asked him how tencent operates. >> inside the company, the culture is very dynamic, very vibrant. the employees are always trying new ideas out, pushing the boundaries of technology. they are looking for a place academict sort of coulter can happen in a high-rise building. tony mock, what struck you about his character? >> his curiosity. he does not come across in a very strong way, but he comes across extremely curious, and ask a lot of -- asks a lot of interesting questions.
tencent has developed a whole series of digital technologies that allow them to control their whole environment area everything from booking meetings -- whole environment. everything from booking meetings, but also finding out where your environment is. in-housell being built right now. it is amazing. it allows them to use a laboratory for their future technologies. was design partner jonathan ward speaking to lulu chen about $.10 new headquarters. 10 sent -- 10 images of its spaceship like facility under description -- under construction in cupertino, expected it to be completed by the end of this year. and facebook is already moved into its design headquarters, known as mpk20.
its tiringoud of skyline.- towering itsght is the opening of first opera house, built in the shadow of the burj khalifa. it is a big day. i would like to say i have tickets for tonight's opening gala. i don't, yet, at least. what has been the key challenge of bringing this together? guest: the key challenges that downtown is a dense neighborhood. we were asked to design a building in the shade of the burj khalifa. which is,a building in comparison to its neighbors, a relatively short building. we had to find something that was really spectacular and really resonated with the leadership in dubai. we looked at inspiration and
took inspiration from the arabic dao. the building is a very modern building. it is glass and steel, with an auditorium inside. looks likeium itself it is sitting inside this glass skin. yousef: what has been a compromise you have had to go through? you talk about inspiration at the beginning of the process, but then there is a bit of a reality check, and you adapt to budgets, you adapt to expectations. the compromises that have been made. guest: honestly, i don't think we have had to do a lot of compromises. initially, we were to do an opera house. along the way, additional functions were added to the brief, so we started out doing a traditional theater with a
stage. then it was added, we would like it to be one-of-a-kind in addition to being able to do concerts, so we had to create an architecture that could change, allowing us to have a concert hall, and in the concert hall, the performers are in the same space as the audience, so we had to be able to open up and move it to allow this to become one big space. when we thought we had solved all the challenges, his excellence came and said, actually i would like it to be a flat floor as well. i would like to be able to do conventions in their. so we had to create a flat floor event, which means that all of the boxes inside are moving in order to create a room which is 36 x 56 meters. it sounds innovative, brilliant, beautiful, but how does this compare to other global performing arts centers? guest: honestly, i believe that
this is setting new standards for opera houses around the world. this is really taking opera into the next century. it is allowing us to do different things that you could not do in a traditional opera house. jasper, the chief executive of house, isaus -- opera setting up nutcracker on ice, so you can take the seeking out and create a completely different stage environment. angie: do you think it is leading to buy -- leading dubai and the middle east to change the template when it comes to architecture? guest: i'm sorry, can you repeat that? change,ow does this perhaps, the trajectory of style of architecture in the region, or does it? of architecture is very contemporary. we tried to create a building that is very transparent. when you look at other buildings
in dubai, most of them are skin that you cannot look into. the opera house is designed with measures that allow us to have a completely transparent facade. that means when you are walking around the building, you can look into the building. when you're standing on the balcony at night, you can look out. you are not just seeing your own reflection. you are able to see the burj khalifa, you are able to see the dubai fountain. the audience coming to the opera and being inside opera building the comes the performance of the neighborhood. they are the ones that create the life and five of the new be of -- life and vi the new dubai office district. angie: good luck on tonight's opening. coming up, the rules of the road. white uber and its rivals have suspended service in abu dhabi. this is bloomberg. ♪
angie: welcome back. you are watching bloomberg. bloomberg's middle east rival may be back on the road soon in abu dhabi. it should be working again in a few days after its services were suspended. has caused the suspension? both companies did not come out and tell us what happened, but we heard that around 50 drivers were arrested and 70 cars were inbounded, and here in the uae, the way things work, basically these companies work for drivers, and then they can work for either company. it seems like both companies were a little bit shook up at this -- choke up why this. -- shook up by this.
yousef: so where do they stand legally. by abur: it was assured dhabi of its legal standing, but it seems there is some vagueness. so far, the abu dhabi executive executivehe. did -- council did not give guidance. it seems this is not settled yet. maybe they are changing regulations or doing something, but so far they have not given enough on how things will change or why they have arrested so many drivers, and on what charges. angie: has this hurt their funding in the region? , for all theually kind -- for all the controversies these companies have faced, we are able to see they are getting big funding from saudi arabia. $3.5 billion was pumped into uber from the government of
saudi arabia. also, we know that saudi arabia and women cannot drive. and a lot of them are starting to work. as a result, the government is seeing this as a way to enable a lot of women to have more mobility. were able to get funding of around $60 million, and that's from one of the biggest companies. for all thet controversies these ridesharing companies have, they are still able to get funding, even here. angie: very interesting. please keep an eye on us -- i on it. it.eep an eye on that is all for this edition of "bloomberg markets: middle east." afterwards, manus cranny will have the top stories. "countdown" is next. ♪
♪ draghi's dashboard, the readings on inflation and guidancet for ahead of the ecb meeting. the uk prime minister gathers cabinet ministers and top officials to get back to work on brexit ahead of the g-20. and the ruling on apple could be the twilight for easing european tax deals, but ireland's finance minister says his government will fight the decision. >> they could take several years, and i have no doubt this will be a matter for one of my successors. ♪