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tv   Bloomberg Markets Middle East  Bloomberg  September 7, 2016 12:00am-1:01am EDT

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manus: saudi arabia aims to shrink the biggest budget deficit among the world's top 20 economies. projects worth billions may be scrapped. angie: winning temporary protection from creditors. stranded vessels can now enter port. makesap oil [indiscernible] more attractive. time to do more deals.
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angie: the fed president said the u.s. economy is in good shape and a rise is warranted. angie: it is just past noon. welcome to bloomberg markets middle east. williams ining -- his remarks. talking about not necessarily saying whether he is on the side hawkishg or being more when it comes to raising rates in september. he did note very importantly is at fullbor market employment and that there is no reason why the fed should not cut. all coming off the back of the latest active
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data, the latest in a string of unexpectedly weak data. the ims index there, just for a fedof a backdrop to the comments. what you are looking at here is of course the services gauge by the institute of supply management. that is at a six year low. what i have done here is i have broadened the u.s. gdp line and you can see the weight the non-u.s. index has. off the back of this what we're paringis traders are their bets for the possibility of a september rate hike. the implied probability fell from 34% to 24%. let me quote the san francisco fed bank president john williams saying that in the context of a strong economy with good momentum, it makes sense to get back to a pace of gradual
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increases, probably sooner than later. he still maintains that overall them picture is one that is positive and the federal reserve should move forward as soon as they can. let's switch to this part of the world and get you up to speed with the action in the equity markets. we are under two hours away from the opening of the emirates markets, dubai and abu dhabi. it was a mixed picture in this part of the world. dubai just load the flatlined there driven down as well by [inaudible] capital. abu dhabi on the upside and qatar resuming its losing streak. 151%.s are down some of the lowest values -- volumes we're seeing. what are you looking at? angie: despite what john williams is saying keeping an
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eye on the september rate hike as a possibility. asian stocks are betting that the fed will keep rates low. we are seeing across-the-board gains in the region including there in india but exception is hong kong and japan notably. as the yen strengthens against -- as a weaker u.s. dollar. checking in on first word headlines from around the world, here is juliette. the economyth growing and annual 2.3%. the growth was written by higher government spending even as the rva cut interest rates twice in the past four months. the report is a list for the prime minister in a parliament where he holds the majority. the central bank has taken another step to give its economy a shot in the arm. it lowered requirements i 50
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basis points. the third cut. it reduced the amount of foreign exchange and goal that -- that lenders must keep. the changes will add around $1 billion of liquidity. rescueactivists and workers in aleppo have accused the government of dropping bom chlorine bombs. least 80 people. a u.n. report has said 80,000 people are trapped across the country. saudi arabia's top cleric that said iran' latest [indiscernible] revving up rhetoric. the supremending to authoritiessaudi
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were responsible for deaths at the hadj. this is bloomberg. saudi arabia could cancel tens of billions of dollars worth of government project in an effort to shrink the largest budget deficit among the world's 20 biggest economies. saudi arabia has been cutting $20, this latest news of billion in cost cutting. is it enough? i have brought the ecfv function. for 2016.ian n, they not enough the need to move faster and more aggressively? budget have a sizable
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deficit and the target is to balance that deficit. last year was 16% of gdp. in this plan that we broke yesterday there are a couple of aspects. one is the project spending which is reviewing thousands of projects worth $70 billion with a view of canceling one third of those. consideration. the second part is a separate plan that would probably cut the spending of some ministries by about quarter. maybe merge some ministries and cancel others and to bring that spending down. as to your question it is understood that they need to keep cutting spending. of course that is not -- even that is not enough. you have oil prices need to rebound at least moderately for them to be able to balance the budget by 2020. there are other aspects in the spending cuts they need to consider. the decision-makers we
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have spoken to are concerned about the fundamentals of the saudi economy in terms of the vibrancy or lack thereof in terms of economic growth. the momentum there, how much of an impact is this cost-cutting going to have on economic growth estimate this is not a case of expansionary austerity, is it western mark -- is it? guest: we are seeing the cuts on the economy. percentctation is 1.5 growth and excluding 2009 which was the global recession this is the slowest in about a decade. some people predict contraction this year. probably haveill a deeper impact on the economy because the product sector, the non-oil industry has been done government spending to grease the wheels and create the demand. contractures could hurt definitely because of the cancellation with the project so that is the downside. withoutdrivers,
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alternative drivers of the economy it will be a problem. the government needs to continue spending cuts to shore up public finances that it has a downside effect. yousef: we will see how it works out. --ie: shares are searching surging, what are the details? they need to do is file more documents ahead of the final hearing on friday. essentially it will allow them to dock in u.s. stockyards. it has been a concern because customers do not want [indiscernible] it does not necessarily mean
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that ships cannot just go and offload their cargo. parties may need payment and that is not part of the decision. something -- [indiscernible] goodsbout $38 million of sitting on 200 ships. it includes items for visual display, in other words television. it will have to find other ways to get them off including charter planes. it is passed down to u.s. retailers and in the end to u.s. consumers. in its court filing it was -- there is ae
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bankruptcy petition. there are 17 container ships and 50 ports in 26 countries. some are [indiscernible] because of this concern. also because there are concerns about paying. angie: how does that help competitors? >> they make it a benefit in the short term. this is because the cost of protection against non-japanese shippers is falling. their credit default swaps have been falling at the same time as the rates have been rising. short-term. in the end there is overcapacity in the shipping industry. economy is in trade.
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it is not necessarily going to help. angie: things looking good for the most part. mostlywe're looking at -- we are at a one-year hike. saw -- we had a -- itense that september was supported by a lot of these long dollar bets. in favor of asian equities and emerging-market assets and we
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are seeing down across the asia-pacific. want toew things i mention. we had gdp numbers out of australia. a strong japanese yen, when the dollar starts to fall. that is going to have its toll on the nikkei 225. it seems to be down to valuations here. this rally is at the highest level in 13 months. market will get scaled back after entering what people were calling on the overbought side. these fed rate hikes that are getting scaled back and it is playing off fairly clearly when you look at houston on these asian currencies are trading, dollars falling the most against the taiwan dollar and the yuan. yousef: thanks. still to come on the program.
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as oil companies grapple with heeaper energy prices, t sovereign wealth fund is saying this as an opportunity for potential deals. we will have all the details for you. australia's economy grows at the fastest pace in four years. is all of this sustainable question mark we will be live in melbourne. this is bloomberg. ♪
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yousef: welcome back. angie: i am angie lau in hong kong. france says it supports opec's efforts to stabilize oil prices but repeated it must restore production lost during the years of western sanctions. opec's website sites the resident saying they suffered greatly and it is vital for the country to make up for the loss.
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there is speculation that oil producers may agree to freeze production when they meet in algiers later this month. the owner of the world's largest indoor theme park is said to be considering an ipo and is seeking funds. devise img group is working with j.p. morgan chase on the listing but a final decision has not been made. the company's world of adventure park cost a billion dollars to build and stretches across 1.5 million square feet. emiratesr found the plane crash at dubai international airport was caused by failed landing attempts in strong winds. upper limitary study said the trouble seven tried to touchdown too far down the runway in a 16 not tailwind. the pilot attempted to take off again to one firefighter died in the subsequent blaze while 340 people on board were injured. down 10% from just a
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week ago but san francisco fed john williams said the economy is in good shape and a hike is warranted. joining us now from melbourne is the cio at [inaudible] asset management. looking at the interest-rate -- 24%lities down to 20% for september. what do you make and what do you make out of the eight it out of the u.s. overnight? little bitdata is a weaker at the margin and the probability on the function has features falling accordingly. raterobability of the fed -- rate hike needs to be around 50% but definitely two thirds or 66% or greater to have a higher mobility of the fed moving.
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we went away from that market has,. there is a bit of a binary reaction. the data not was sought -- notwithstanding, the data has been ok over the medium-term and there is enough raise in the rationale to do that [indiscernible] having said all of that the hope is to get out there and make the case with a rate hike area december seems better timing but acceleration of that probability factor and the final point here you need all the equity to rally from here. growth policybal suggesting our vision -- a revision upward. september is very unlikely and december seems to be the most rational one. yousef: if not september when do you think they will hike? john williams thinks it should
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happen sooner rather than later. guest: exactly. the hope is sooner rather than later. december seems the most possible. it gets the election out of the way and i think that misses the window, brexit was most untimely the power given them play to do that rate hike. dependent and it is not going to go away too much. that is rational and reasonable. angie: some mixed reaction to the australian gdp figures. tony five straight years of no recession but underlying that growth, it is one time government spending. how sustainable is that growth, what are the headwinds here? good observation. it is a great number in the sense of 25 years, good momentum. that number is held as --
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rightly with government spending. this is a revision in the economy from the previous quarter. that was your on your negative earnings market cap adjusted. earnings contracting from a year ago therefore tax receipts lower, government stimulus, therefore is it sustainable? sustainability of gdp in this country is dedicated on a number of factors, export volumes of inr, coke, and coal if they notinue to be robust on -- on value terms. they picked up from december levels last year. and a lower aussie dollar. robust,olumes staying notwithstanding value and i do not have the capacity to cut interest rates further. if you get them working together you can create sustainability to that number. could the fed rate hike
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help out to weaken the aussie dollar but what about the bank of japan here, they need some help. the bank of japan needs an awful lot of help. if i did not do additional stimulus in july, why would they do it in september? a half given some sort of early indicator that could tolerate a straight -- stronger yen. that, until the fed do their move, unless they are clear about september and everyone is on board for december, japan can get a clear window. also the ecb will get a clear window. the bank of england need to cut rates between now and year end. the fed will get on the other side of the september meeting increasing the probability of a rate hike in december. let the hope get long [indiscernible] and bank event -- bank of
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england can cut and take of japan can look at innovative policy. evaluations are not cheap. all flows downhill from there. thank you so much for that. africa dodgesth recession. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. angie: south africa's it economy expanded the most in two years in the second quarter lifted i rebounded mining and factory output while the rand gained the most in two months. we have, joining us from johannesburg. what does that mean for its growth respect in the months to come?
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>> gdp rose through points 3%. that compared to that one point to contraction we saw in the first order. analysts are saying this really and economists forecast it may not necessarily be sustainable. economic drivers are so particularly week my we saw that increase in manufacturing and 11.81 eight point -- increase. it may undermine any further growth that we may be able to see as it progresses. yousef: what has the market reaction then? the rand has already in on a bit of a tear here.
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the rand strengthened quite significantly, up 2.6%. yesterday following the news and leading global currencies, that is 150 currencies that bloomberg tracks. it was leading gains yesterday. government local benchmark bond strengthened yesterday. another thing we have noticed is the reserve bank is expected to meet next week. make a rates decision announcement on thursday. the rand house gains on tuesday could give the south african toerve bank some more room change rates about 7%. yousef: we will leave it there. live from johannesburg. still to come on the program. a latest on the megamerger between two of abu dhabi's weakest and. stay tuned for all the details. this is bloomberg.
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angie: 1:30 p.m. in tokyo where we are seeing an up session --oss asia except for topics topix. you can blame the stronger yen. .1 of 1% lower. the top stories on bloomberg markets middle east. recent underwhelming data. the head of the fed has resized
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-- revised expectations a hike could be imminent. economyms said the u.s. -- williams said the u.s. economy is in good shape and the rate is sooner rather than later. may havemployment [indiscernible] icbc and two other banks have thousands of jobs. cost is eroding staff numbers. angie: saudi arabia could cancel billions of dollars of projects to cut its deficit. they are reviewing thousands of project valued at $69 billion and may cancel one third of
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them. the world just oil exporter is taking unprecedented steps to rein in a budget shortfall. it is the highest deficit among the world's 20 used economies. -- biggest economies. in hong kong. yousef: it is 830 in dubai. are going to be talking a lot about central bank policy in the u.k. because mark carney will be in the hot seat. he is the governor of the bank of england and he will be facing u.k. lawmakers, the governor testified for the first time since britain voted to quit the european union. he is the one to watch in terms of the interrogator of our carney, he is leading the charge inc. -- accusing the rank of
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releasing stimulus without sufficient evidence. his secretary will be there by two officials.ll lots of questions will be asked of them as to whether they are reconsidering their recently revised weaker assessment of the u.k. economy in the light of some of the data that has come out by the sentiment measures. since theyebounded got the brexit vote. we will be looking for any clues there. they will want to get an assessment and markets will be interested to hear whether the members of the mpc are testifying or have had a tothink see in -- re-think give more stimulus. what will they do and how is the qe program going, is it proving too expensive? yousef: the u.k. chancellor has said -- is set to meet
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representatives. do we know what to look out for here? anna: we will have the exchequer meeting senior bankers. several members of that committee at downing street. he wants to sit out the plans to support the economy and get their views on post-exit britain. bebers of the bank will the sector feelers -- fears is a scenario where they lose access to the eu overnight. according to the u.k. government there will be a series of roundtables in the coming months between the treasury and various industry groups and technology and retail ahead of the autumn statement to sound each other out on what they are looking for.
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concern that the financial services industry have in london highlighted yesterday by comments from ubs saying that they may have to transfer 1500 jobs to elsewhere in europe if there were to be a loss of access to eu markets. we will continue to watch the financial services story and brexit. uae has emerged from the summer with [indiscernible] the sovereign fund is merging with international petroleum investment company to create a $125 billion company. joining us now from abu dhabi. ceo and heith the seemed to hint at even more energy action. guest: yes, good morning. and did, we should expect at
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least he has hinted to that, we have seen for the past couple of takenhow oil prices have heavy tolls on the energy industry in general. and what he is saying basically that they are going to look at these assets, at any possible assets with low valuations which indeed there are a lot of them available and see if any of them fit their portfolio. and includes them. but of course it is all the same bee the new entity comes to they will look into other opportunities beside their traditional sectors, that is energy. yousef: has he given any hints about plans for the mergers of the sovereign funds? guest: yeah. he spoke a bit about that. there -- i saw some of the employees wearing some of their
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pins on their chest with the logos of both companies and you could feel a sense of activity. he said the merger itself is going to him ahead, that they , theted to be completed process to be completed possibly by first quarter of next year or even the fourth quarter of this year. our abu dhabis -based reporter joining us live. let's check the first word headlines. asean conference on the agenda. that is bogged down in national parliaments and is unlikely to
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pass soon. it will be followed by talks with other countries including the u.s., china, india, and japan. closer?a get a step commitments from 17 lenders for a $12.7 billion loan to finance its purchase. can china agree to buy chem china? it would become the largest supply of pesticides and chemicals. the navy says one of the ships was harassed by the iranian gu ard. americandowed the ship. a navy spokesman said the boat maneuvered to narrowly avoid the ship that cut power 100 meters in front of it. global news to be for hours a day collected by more than journalists.00
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this is bloomberg. angie: staff numbers fell the most in six years in the first half and we have juliette following the story. jobs, jobs, and they are going away. have millions of employees combined. we have seen 25,000 employees lose their jobs but that is 1.6% of the total workforce. if we have a look at this chart you can see over the first half how many jobs were lost, ag bank saw the number of employees fall below 500,000. staff numbers dropping at the other major banks as well. this decline in banking jobs is the biggest we have seen since 2010 and this is as we see technological advances, mobile
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banking and all of that is really taking away the need for more humane interface. is in the second half we could see more of a pickup coming through in the number of jobs added to banks as the take the crop of the pit -- pick from university graduates. angie: the fear is this trend will continue. andhey are saying citibank goldman sachs and/or to group not cutting their employees. so far chinese lenders have avoided a lot of the other problems that their u.s. cut up to face but they are under pressure and a number of analysts we have spoken to we could one from boc, see these ends continue. on the one hand you have flat revenue and raising pressure on asset quality. banks are trying to keep their costs under control.
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is wage cutsng coming down as well. in the first half the big fallbacks cost anything including salaries and they were down by two and 6% from a year earlier. developed countries are grappling with a populist backlash against trade. canada's prime minister insists the country it's to be more open. i spoke with just intruder on a wave of protectionism and whether there is a trade-off between human rights and pursuing economic interests in china. quickly think canada is a inntry that needs to draw foreign investment. we need to draw in global investment as a way to properly develop our resources in ways that are going to create a lot of jobs in canada. we have to think about it in terms of where do the benefits,
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what are the labor standards, what are the environmental impacts and we have to analyze every deal and have a high degree of confidence that it is going to be mutually beneficial. anyone cant think imagine that we would do better by closing ourselves off from the world. you engage that balance because human rights is near and your to the hearts of canadians and the global dear to the hearts of canadians and the global community. time you're trying to engage more with china with economic interests. how do you balance that, is there a trade-off? minister: balance makes it sound like you are making a trade-off. i'm going to pull back a little on human rights to be able to do this. i think you have to talk fully and frankly to human rights and engage in talk about the
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challenges. i do that in private and public. it is something that quite frankly is part of canada's identity and appeal to a certain sense. we are very frank about our positioning and our strength on the values that make us successful, values of openness, inclusion, creativity, different perspectives, all those things are a strength. and at the same time we are looking for -- to engage in ways that are beneficial. i do not think you have to choose. >> they are speaking to the canadian prime minister. still to come. the developer of the world's tallest skyscraper is moving on to the next project. we will have the full story for you. state tuned. -- stay tuned. this is bloomberg. ♪
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yousef: welcome back. i am angie lau in hong kong. a quick check of the latest business flash headlines. the chinese owner of new york's waldorf astoria has pressed pause on spending. switching strategy from chasing deals to incorporate the company. preparing to list its life insurance operation in hong kong. some banks have concerns that it details provide enough on its ownership structure. singapore has stepped up instructions on banks to catch misconduct. they save responsibility for insurance -- for ensuring compliance lies with each board. lapses were found at lenders over transactions linked to the mvb --
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a u.s. lawsuit over volkswagen's cheating device demands that the parts may it -- parts maker it be provided with legal cut. diesel vehicles to full tests. yousef: amar properties and [indiscernible] tfor a newng project. very exciting times in dubai. i would like to start with getting a sense of scale of this new project area this is --
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project. this is a chunk of dubai's future. guest: this is true. has the airport that will have eventual capacity of million passengers. course there are a lot of components as part of it. you have the logistics, the aviation side of things, and you have a lot of people [indiscernible] yousef: how much progress have you made on this new city? >> it is a big project. if we are talking about the airport, there is a small airport there. we are expanding that am five million to 26.5 million. is adding capacity.
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that one is expected to be finished by 2025. yousef: give us a sense of the demand you have seen from foreign investors outside the airport to be part of this story. sector is one of the main catalysts. if we really look at for example [indiscernible] mainly it is what we see now in two areas. we see logistics and [indiscernible] when they came to us early they had an option to grow and a second option to grow. they are in the sales option of growth. they're doing well.
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we like that. if you look at the aviation side we have the main players in the beingtem of aviation spare parts distribution, being [indiscernible] just finished now. what is really happening is double digit growth all the way through. angie: i want to focus in on the property angle here. this is a large project with a huge amount of homes that will create a lot of inventory there except there is a lot of competition. how can you be confident that the demand will be there? guest: if we looked at an airport, and if it a catalyst for growth. if you look at the capacity of an airport that will be 260 million passengers, you will have a lot of employment.
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not just of element and real estate. we are way beyond that because we have the catalyst behind it. that is where we will go. we expect to have 500,000 employees in that area and we expect to have about double that number would be living in that area in happiness. we would like to make that happen. people would like to come work there and live there and have a good time there. that is our policy and that is where we are going. that is what we are to build. rentals as much as we can and human happiness including the human scale in there too.-- you're looking to increase airport capacity to 130 million passengers to be completed by two hb five. his -- by 2025.
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could you scale that back if demand starts getting weaker? it is a pretty line -- long timeline for phase one. guest: phase one, we're looking existingrports, and airport that we are expanding its capacity from 5 million to 27 million. we have more people, nobody is mentioning that one and we are not talking about that. we're talking about the big airport. this is the airport that will shine on the whole of the region. the first phase is 130 million passengers. actually, we are not worried about the future because our existing airport is growing very fast. we are doing all of this interim steps now only to ease the pressure on our existing
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airport. moving some of the operators. yousef: we will pick up that conversation. pretty more to come on bloomberg markets middle east. -- plenty more to come on bloomberg markets middle east. ♪
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yousef: welcome back. excellency, executive chairman of dubai citicorp is still with us as we take a look at this huge project of livingon with a goal of and inhabiting one million people there. what about investors here, you ,ave got the funding originally
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10 from government, 10 from investors, what about the next five years? are looking at two areas, looking at building the airport as an airport, that is government funding and is not really in our mandate. we are facilitating part of it but it is not our mandate. if you look at existing and all other areas we are talking about and we have so many components in the international airport or dubai south. are some part of it that is self financing. we have a lot of real estate as we built with that one. we have also core developers that has taken part of the [indiscernible] are coming with us and we are working on that. we have some core developers in
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some areas. wesef: even just briefly, have seen the stress that has come as a result of the lower oil prices in this part of the world. how has it affected you? not affected us as such. however aviation industry is really growing and it is continuously growing. it is the main player in our economy, it is quite a lot to our gdp. -- seeing anying slowdown in all the components of the city we are building. everything we have and all the components are double digit growth and it will grow beyond that. we do not see that part of it because the demand is driving what we do. yousef: thank you for stopping by on the show. the executive chairman for dubai aviation city corporation and dubai south. angie: that is it for us on this
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edition of bloomberg markets middle east. anna edwards and manus cranny will have all the top stories from london. "countdown" is next.
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anna: emerging-market assets rally after weak u.s. data quells a rate hike. and john williams insists that is world's largest economy in good shape. preparing to meet senior bankers to set out the government's plan to court the economy and sound out their views for a post-brexit. carneyile, mark forifies before u.k. mp's the first time since the referendum. and in technology, all eyes on apple. the world's most valuable company will present a new line of products tonight, incng


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