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tv   Bloomberg Markets Middle East  Bloomberg  September 8, 2016 12:00am-1:01am EDT

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♪ yousef: the fallout spreads from the field coup in turkey. oil is being blamed. angie: signs of stability in china. exports fell less than forecast last month. the trade surplus topped $52 billion. yousef: oil is on the rise as you knew data shows -- as new data shows that oil stock piles have fallen. and expansion in saudi
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arabia as banks jockey for a role in aramco's anticipated $100 billion ipo. it's 8:00 a.m. across the emirates, 5:00 a.m. in london. where i'm in hong kong, it is just past noon. welcome to "bloomberg markets: middle east." we will take a look at the markets in asia. we are seeing a little bit of a gift back, but what are you watching in your part of the world? yousef: angie, my eyes are on a wheel at the moment. brent breezing past $48 a barrel, a big spot move, 1.6%. and this time, not so much driven by the commentary out of aboutnd iraq, but u.s. inventories.
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the api is said to report a drawdown from the highest seasonal levels in three decades. this is these charts you should pull out on your bloomberg. this puts everything into perspective. what you're looking at is u.s. crude inventories and wti as a reference line. we will get the eia government data later today. the bloomberg median estimate is for a buildup 900-5000 barrels. to report aaid drawdown of 12.1 million barrels. if that is confirmed, that would be the largest since 1999. angie, what are you looking at? that this is something a lot of our audience in the middle east is trampling to hear about. it is apple. , but theating a buzz buzz they are trying to create
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is not necessarily the kind of was that china is going to deliver on, because once upon a time, when china just used to buy the iphone or iphone 6, there are a lot of competitors these days. take a look right now. it is on the wane. if you take a look, apple has lost market share to local chinese brands since the iphone 6 debuted in 2015. the caveat to this is the wealthier, aspirational population still loves the iphone. let's see if they buy the iphone 7. let's check a quick state of the play of the markets right now. the apple iphone giving a little bit of a bump. mumbai has been trading for almost 20 minutes. the asian stocks drop in the first time in four days. raw material producers and health care companies driving the losses. you, yousef? the middleie, in
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east, it is still two hours away from the opening of dubai and abreu dobby. religious hobbies are around the corner. dubai is downes, three quarters of 1%. managing to hold on to the mark. saudi arabia is seeing the lowest volumes of the year. down a intensive 1%. investors are still uncertain about the economic -- down 8.1%. investors are still uncertain about the economic conditions. let's check on the headlines. here's elliott. reporter: japan's economy is showing signs of life. it grew by an annualized .7% in the second quarter. the government's initial reading was just 2/10 of 1%. this gives the bank of japan something to think about ahead of the closely watched meeting later this month, when policymakers will release their review of the boj's strategy and
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decide whether to expand monetary easing. the u.s. house of representatives plans to vote on legislation that will allow families of those who died in the september 11 terrorist attacks to sue saudi arabia. both react and the obama administration rejected the bill, with the white house saying it is strongly opposed. sent to thel be president's gasquet tickets roh e house. -- the president's desk if it makes it through the house. the u.s. has denied secretary of state john kerry will meet with russia's foreign minister to pin down a cease-fire for syria. the state department says while they plan to meet at some point in the future, it will not be for the talks russia previously announced. a spokesman says there are still challenges to be resolved, and he could not say there is much hope for success. day,l news 24 hours a powered by more than 2600 journalists in 120 countries. i'm elliott gotkine.
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this is bloomberg. prosecutors say the country's central bank is dominated by people loyal to the --ric accused of the good accused of the failed coup. our middle east economics and government reporter has more from istanbul. when itthe accusation comes to the central bank, and what kind of evidence to the prosecutors cite, exactly? reporter: good morning, yousef. the central bank is dominated by the organization of fed to look good when -- fetullah withn, who is charged organizing the field coup in july, according to this indictment by a turkish prosecutor that we have seen. the main piece of evidence cited the arabocument is
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bank notes that the central bank has been printing since 2009. we thought this was due to key elements of the turkish blank. according to this indictment, this symbolizes how these comments, which are significant s followers because of their belief in the messiah and that the messiah will emanate from a specific comment. -- all all include according to the indictment. by putting a stark on turkish lira bank notes, it flags their president, according to the prosecutor. yousef: we know that there have been purges against alleged followers of this movement since the failed coup. how does this affect the central bank itself and its employees? yousef,: as you said,
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the government has began an extensive purge against nowowers of gullen, considered the head of a terrorist organization by the government. more than 80,000 civil servants have been either suspended or completely fired from their jobs. so far, the central bank seems to have remained immune to this phenomena, and their has been no acknowledgment of suspensions, firings at the bank, but what the indictment shows is that there is a possibility. this into aut little bit of perspective, though. the legal document was prepared before the coup attempt, and it is more than 1400 pages long, and there is one paragraph about the turkish central bank, and none of these 73 prime suspects cited in this indictment is a bank employee, as far as we
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know. yousef: tell us about the view of the central bank in the past. and now we know there is pressure to cut rates, but the indictment is a bit of a different level of pressure, and it is all in the run-up to the next central-bank meeting on september 22. reporter: as you said, the central bank is in a delegate place. -- delicate place. it is under frequent attacks by politicians, including the president himself. basically, the main point of criticism against the bank was that it slowed economic growth by keeping interest rates too high, but to be fair, criticism has been muted compared to the since a new governor was named back in april, but as you said, there is still a strong expectation by politicians that banks keep cutting its main interest rates, even in the future, and keep growth in line.
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yousef: thanks a lot for your update. latest trades figures suggest it is making a comeback. are much higher than anticipated. that's good news for the domestic economy. terms, importsan were at 10 point 8% against expectations. in dollar terms, it was 1.5% against a fall of 5.4%. in dollar terms, imports have risen for the first time since 2014. exports picking up in august. exports rose 5.9% year on year. in dollar terms, it fell 2.8%, but that is against estimates of 4.4% year on year. in dollars, the trade surplus is at $52.75 billion.
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the human is trading near a six-year low -- the yuan is trading near a six-year low. the thing is, global demand is still pretty weak, so without people wanting to buy the products, it looks like trade may not see a big revival. it is said that superficially, the numbers look better, but trade is still sputtering. we have also heard from jpmorgan, their economist saying that the downside will prevail in the next few months. debtgan saying the average of july and august shows economic growth still on path to moderation for china. from the numbers, yes, better than expected, but perhaps nine yet. -- perhaps not yet. angie: no celebrating yet. thank you so much for that question. let's get the latest from the markets, because asia has experienced somewhat of a pause over the past couple of days.
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david is here with an update. david: right. what really set us up today was what we saw in washington, closing barely higher or. lower -- or barely lower. point 73%tle lower, if i'm not mistaken. here is the story across the asian-pacific markets. despite what you see, this is a two-month chart of the cnh hibo r, a gauge of funding conditions, or demand for the renminbi in the spot market. about 388 basis points, the highest level in a while. let's have a look at the year today look, because we are nowhere near levels. that was back in january. back then, we had a lot of turmoil, the renminbi was getting pounded low oil -- how did lower. that being said, this spike really makes you think, who needs this much renminbi to
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really move the market? that is something to keep in mind. let's have a look at equity markets across the region. as angie pointed out, it is not exactly fun and glee. their ago, one third of 1% lower. nikkei 225 is about 40 minutes in the afternoon session. we are still watching nintendo applea behind what announced. super mario is coming to your iphone. by the way, nintendo announcing that pokemon go plus will be available in most countries coming next friday. hong kong, one of the few bright spots. angie, yousef? area andhanks, dave later on, the historic rivalry between saudi arabia and -- thanks, dave. later on, the historic rivalry between saudi arabia and iran's over into a pilgrimage. and we will get the latest gauge of the dubai economy and see how it is doing.
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this is bloomberg. ♪
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yousef: welcome back. i'm angie lau in hong kong. yousef: the latest report was released on dubai. it's economy tracker index fell last month to 55 point seven. it hit a 16 month high in july, reaching 55.9. it shows the private sector is maintaining a strong growth trajectory. let's bring in 10 fox. -- tim fox. the most part, despite global and regional headwinds? thet: a solid report from month of august, illustrating the dubai economy is quite resilient in the face of issues like oil prices, weaker oil prices, and also some of the global headwinds. but i think the headline to some
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extent belies what is going on under the surface. you still have a challenging environment for corporations in dubai in relation to jobs, in relation to prices, and costs are rising, margins under pressure. i think the challenges remain. theef: looking through report, retail remains the best-performing, followed by travel, tourism, and construction. where is the key vulnerability you are finding? guest: unemployment is the challenge, and the sluggishness in the employment picture overall. -- companies are adapting to a tougher climate more effectively than they have in the past, so discounting seems to be the way forward. regional tourism, these kind of sectors are starting to react and show they are more
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maneuverable in a challenging environment. that is reaping rewards. yousef: where do we go from here? how do you expect this to develop going forward? what is the outlook? guest: i think it is a slowly improving one. i think we will obviously see a fair wind coming from the background factors of oil prices. we think they will gradually appreciate. in theprivate sector dubai economy going forward, i think it to 2017, i think more orders will be received in relation to the expo event in 2020. i think that will take up some of the lifting in terms of the causes of growth and pillars of growth into the next few years. thoughtset me get your on saudi arabia. with the biggest market in the region, $20 billion worth of projects under construction for cancellation as the country tries to rein in the budget stockt, and also, the
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market opening. we had a discussion earlier in the week. what do you make of this shift in the kingdom? the equity markets seem to be unimpressed. guest: i think reform on lots of agendas. reform in terms of costs, as you highlighted in your report this week. big projects potentially being slammed down. privatizations of . we have expectation around big rival positions next year. and in terms of bond issuance, which are looming more closely. i think on all fronts, the signals from saudi arabia are quite impressive. theimplementation is where gap between the markets and saudi authorities lies, but i think they will -- if they push forward with the reforms, confidence will grow. yousef: that brings us to oil prices as well, and the talks in algiers. freeze or no freeze? guest: i think probably not.
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i don't think there is a requirement necessarily to freeze output of this point. you have seen slower output from some parts of the world. i would imagine that in some cases, other countries might be seeing this as an opportunity to protect their market share even further, by keeping output relatively firm. output share is probably one of the rumors coming to fruition. .ousef: you're sticking around still plenty to get through. nbd is tim fox from everest . make sure you stay tuned. this is bloomberg. ♪
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yousef: welcome back. i'm yousef debiting in dubai. angie: and i'd angie lau in hong kong. quick check of the lie lines -- of the headlines.
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a financial company's jockeying and aramco's ipo. izuho says it wants to take on a role in the privatization plan. and two other japanese leaders signed a nonbinding agreement with aramco to cooperate with its share sale, which could come as early as next year. a dubai website is said to be selling a stake worth $1.2 billion. the online retailer known as the amazon of the middle east has hired goldman sachs to find buyers. associates told bloomberg that us-based tiger global massive -- management and a south african company are open to selling part of their holdings. financial is working with citigroup to find a buyer for its stake in bank muscat. an sale was triggered by agreement with creditors, and
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the 12% stake is worth $300 million. investors say oil pension funds have expects -- expressed interest in the sale. we want to wrap things up with breaking news crossing the bloomberg right now from china, reporting august retail auto sales rose 24.5% year on year. data according to pca. retailuary to august sales of 14.2 million units sold, that according to pca. this is a very interesting figure share, because a lot of expectations that the consumers should pick up the slack to make sure that the economy's health is still moving forward. let's head back to tim fox, the chief economist of emirates nbd, still with us. let's talk on a more macro view tim, because macro
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is regional when it comes to the federal reserve. that is true for us here in asia. that is true for us in the middle east. significantly, a lot of these fed governors have been job boning still being alive. what is your take on it? guest: i think a september move would be justified, and i think it would be a good idea if the fed her to -- were to in september. but the messages are relatively mixed, and some of the recent data has been disappointing. with the fed it who is also talking about being data independent, the markets have become very abscessed with each data point that is released. from our perspective, some of the aspect tensions around the september -- some of the expectations around the september move have dissipated. the quicker the fed gets it over with, the better, as far as the
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global economy. yousef: when do you think they will move? guest: i think the likelihood from what the fed is communicating looks more likely to be december, but from our perspective, they should move in september, because the economy is on an improving track. i think normalizing monetary policy would actually help the economy rather than harm it, because it would in view -- in being confidence among consumers, and probably among investors and businesses as well. u.s. economy is normalizing sufficiently to justify higher rates. yousef: the rest of us around the globe are watching what the ecb is going to be doing. what is your expectation? can they continue on the current program? guest: i think the pressure is building for more easing from the ecb over the coming months. the data from there has not been --y impressive area i think very impressive.
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i think there are limits to growth, particularly be offense in the coming months and next -- in relation to political changes. i think they will inhibit growth potential, and i suspect that you could be looking again at low inflation remaining for longer. i would imagine that president ghi will beiva talking about the prospects of easing down the road, but whether he does it today, i suspect he will be waiting for the fed in september to see what they do. yousef: it seems that everybody is waiting to see what the other bank is going to do. when does this come to an end? guest: this is why it would be helpful if the fed were able to move now, because it would unlock a lot of that uncertainty, and it would allow other central banks the room to think about their own prospects and what they have to do in the context of knowing what the fed is already doing. yousef: always great to have you on the program. fox, the chief
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economist at emirates nbd. still ahead on the program, capping oil output. how well iran's production plans affect opec talks. that's next. this is bloomberg. ♪
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is 1:30 in tokyo, where we are seeing a selloff in japan, after revised data is showing the economy grew more than estimated. revised second-quarter growing at 0.7% gdp. we are entering the last 90 minutes of trading their. this is having a lot of peoplee feeling that the chances of government stimulus is not likely going to happen. ♪ angie: top stories on bloomberg
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markets: middle east. china's imports rose last month for the first time since 2014, and the company's exporters enjoyed the weaker yuan. point 8% when two measured in u.s. dollars, but grew almost 6% in yuan terms. yousef: turkish prosecutors say the country's central bank is dominated by people loyal to the cleric accused of orchestrating july's field coup. bloomberg has seen an indictment against fetullah gullen's organization. ullen's followers believe the messiah will emanate from a comet. 10 coke released the new iphone calling it apple's best
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ever. seven is water resistant, but loses a physical headphone jack. release willng the revive slowing iphone sales, especially in china, with pressure from cheaper rivals. 12:30 in hong kong. i'm angie lau. yousef: it's a: 38 dubai. -- 8:30 in dubai. manus: and i've manus cranny in london. we are counting down to the beginning of our trading day in europe. there is only one event, and that is mariota rocky and the ecb. you have the rate decision and what they are going to do, and in the news conference. i think what is interesting is -- marioota rocky's lookingill probably be at yesterday. will the ecb be acting head of the political rose -- of the
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federal reserve? last week, an executive members said they are encouraging signs of resilience. we get growth and inflation targets today, and we get them again in december, but this set of numbers produced today are done so by the ecb staff members, not the external board. where will the euro go? have will be bond market react? will they lower the rates at which the european central allowed to buy assets? a lookl of that and have at this, because this is the euro against the dollar. morgan stanley saying never mind the stimulus that could come from mario draghi. nothing could stop this bull run. from the ecb will be ineffective against the inflows. thanuro will end 5% higher where we are now. it has rallied 3.5% so far in 2016. the euro will continue to rally against worries. the ecb has a huge amount to
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contend with, because inflation is nearly a figment of the imagination, 0.2%, when the target is a lofty 2%. yousef: you mentioned mark .arney's testimony i got a glimpse of some of the action. nothing really rattles him, right? manus: it's a word i'm well known for, serenity. of course, that is subtle irony. was in -- was robust yesterday, and things might be just as bad. perhaps the risk of recession is not just as bad, but there is perception that they are doing the right thing.
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there is dissent in terms of the kiwi and corporate bond buying program. i think as far as the u.k. is concerned, they are facing the same global challenge as the japanese and the central bank, which is the guilt that they are -- they are running against buffers of the legal amount that the bank of england is allowed to hold. it is beginning to look like a challenge. a lot at play for us. let's see what mario draghi. never mind mario. yousef, angie. .ousef: thanks, manus plenty of creativity coming from central banks, that's for sure. oil production in iran continues to inch towards pre-sanction levels, and the state oil company says that the 4 billion reachedarget could be in two or three months. joining us is sam welcome. sam, could this mean that a deal to freeze output is on to -- is
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on the cards, maybe not? yes? reporter: we have to because just when talking about this oil freeze deal. it has been talked up and talked up. we are perhaps getting closer iran iss news that getting closer to pre-sections output. that said, we actually interviewed the same official this morning in singapore, and he said we are not ready to discuss it yet, we have to get that production level before we start discussing it, and they are not going to have that done in time for out years. he said the target is just over 4 million barrels a day. it is at about 3.8 million at the moment. he also said today that prices $40 and $50 a barrel is reasonable. it is in the high $40's now. angie: and politics could be played -- could be in play at
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well. could this be real the talks? reporter: yes, it could potentially. oil has always been quite separate from politics. ministers and ministries in both countries and oil-producing countries have often been quite technocratic and separatist of politics. as the official from iran said yesterday, it is now a litical decision for the ministers to take. a lot of goodwill was going to be needed to take such an extraordinary measure. if relations take a turn for the worse, as they have done between iran and saudi arabia, then that could be an obstacle. yousef: some know that iran is at a pre-sections level of output, is there anything else standing in the way of a freeze? pretty much everyone is pumping at record levels. reporter: everyone is pretty much pumping at record levels. they willan saying
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increase production through 2017. there are a few countries that are not pumping out record levels, countries such as algeria, and a couple of other countries such as libya. there is a question of whether they will also want to recover their lost production before committing to a freeze, or to have that bandwidth given to them. and in the question you have to ask is, if iran's at record levels, saudi arabia is at record levels, there are space for other countries to come up, what level are we going to be freezing at? are we going to be freezing at a record high? in that case, how much will we achieve? >> we will see how it goes. let's check in on the first word headlines from around the world. here's elliott gotkine. hasrter: mark carney defended the actions of the bank of england and is first testimony to lawmakers since britain voted to leave the eu. the central bank governor has been criticized for exaggerating the warnings before the
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referendum, then justifying them with his decisions after the vote. carney says he is absolutely serene about the bank's strategy and says the u.k. may avoid recession. not going to represent all of it by any stretch of the imagination, but part of it is a bounce back, because the bank took timely, comprehensive, and concrete action. and that action has had an impact. it has had an impact on financial conditions. they have improved considerably since we acted. manus: the u.s. federal -- reporter: the federal reserve's laces bank book says that investors are increasingly anxious about the november presidential election. it was cited seven times in the august appraisal of the august economy, up from two mentions in the july survey. pre-election productions are the strongest this time around as they were in 2012 one president
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obama took on mitt romney. some of the other stories making headlines, hsbc may face criminal charges in the u.s. sources say prosecutors may charge one of the bank's units for improper transactions on its foreign exchange dax -- foreign exchange desk. if the justice department turn determines -- determines hsbc broke its agreement in 2012, banks could be held responsible for helping drug cartels laundering money, and for doing business with iran and other sanctioned nations. global news powered by more than 2600 journalists in more than 120 countries. i'm elliott gotkine. bloomberg. emerging markets are declining for the first time this week after a four-day rally driven by signs that the fed will not raise rates this month. emerging markets index is near its highest since july
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of last year. investors have been forwarding -- been pouring money into em currencies and bonds as well. let's get more from abu dhabi. tracy, give us a sense of the moves here. sure.er: as you pointed out, we have seen strong bids for emerging market assets earlier in the week. general with the recovery in e.m. over the past couple of months, it means we have seen quite a strong rally. if you look at the msci emerging market index, that is up 17% year to date. rallye that with the 8% in the developed market nation index. quite a strong discrepancy there . but it is actually in bonds that we see the most enthusiasm from investors. if you look at emerging market bonds, take a look at turkey's most increasing debt. we have seen $600 million worth of dollars flowing
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into that asset class since june. and's despite the coup debt ongoing drama. if you look at russian credit default swaps, those are at a two-year low. the riskif you look at premiums that investors ask for to hold emerging market debt compared to something like u.s. treasuries, they are currently at 175 aces points, compared to 462 basis points earlier in the year one we had that big selloff. it is a stark turnaround. rally: you mentioned the in emerging markets. where is the unease going to come from, in terms of all this unwinding, any time soon? reporter: sure. the unease comes from the idea that emerging markets have become a yield play. they are really one of these few significant sources of yield especiallyinvestors,
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compared to developed market assets like u.s. treasuries, like european government bonds. yields on those have all compressed recently. the concern is that investors have been pouring money indiscriminately into the asset class, potentially ignoring these sometimes idiosyncratic risks that we get. on that note, we have seen warnings starting to trickle through into the markets. havenstance, we blackrock's head of emerging-market corporate jets on tv this week. period ofthat this indiscriminate buying might be coming to an end. he might be worth listening to, because he was one of those who urged investors to join the migration into emerging market debt at the beginning of the rally in june of this year. the tension is that if you think emerging-market assets are rallying because the fed is not going to hike rates in september, then that is potentially a sign that the fed does not feel comfortable with the current prospects of the u.s. economy. we have seen mixed data.
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when you have a slowing or weaker u.s. economy, that might the bad, but it seems like we are drifting into the paradigm where economic bad news turns into good news for investors. it -- angie: it's what we have seen. thank you so much for that. tensions rise as millions head for this year's pilgrimage. iranll take a look at why and saudi arabia are hitting out at each other, next. this is bloomberg. ♪
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yousef: welcome back. angie: the fourth biggest lender to saudi arabia is planning to expand in the kingdom as other banks jockey in aramco's ipo. ms. is a financials as it will boost advisory services.
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let's hear more from our banking reporter in tokyo. what is happening with japanese banks in the middle east? the banks face an incredibly difficult environment at home. they have corporations to flush for cash and don't want to borrow any money. competition is intense. to counter this, banks look overseas, but there have been places like china and the states, but with china's slowdown, the banks need to expand their horizons. japanese banks have plenty of capacity to land, and the you it -- and the middle east is an ideal market for them. -- a delegation oft week spoke to the heads the big banks and signed agreements with them to cooperate.
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are relativelys general, but it does put them on the front foot when it comes to doing these deals and a place like saudi arabia, where corporations are at the very bottom. absolutely right. i spoke overseas, and id that the bank has had 20 financing deals since april. they are trying to take business away from the long term project financing, which is an enormous amount of capital. so is this going to ofition well in the sense doing business in saudi arabia after having listed all those opportunities for themselves in the middle east? reporter: yeah. i think they are in a good
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position. mizuho is the only japanese bank that has a subsidiary and saudi arabia. they have had a long presence there and have quite strong relationships with the royal family and all the business leaders. when these deals come along, they are keen to get involved. i think we will see a lot more of this going forward. angie: gareth alan, thanks for that. tensions between iran and saudi arabia are rising again as millions of muslims prepare for the hodge pilgrimage that starts tomorrow. -- hajj pilgrimage that starts tomorrow. why is iran boycotting the hajj this year? guest: there was a deadly accident with hundreds of thousands of pilgrims being -- hundreds, in some cases thousands, of pilgrims being crushed to death. iran said it wanted to ensure the safety of its citizens, and there have been talks about the
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logistics of iranians' participation as part of the pilgrimage. those talks went down in the spring. iran's claim was that saudi arabia had made it unusually difficult for iranians to participate. saudi arabia said iran was making unreasonable demands. the talks did not go anywhere, and iran decided it would not send anyone this year. yousef: there is no real precedent for this, is there? what is the road look like on this particular front? reporter: we know that this is a very tense time, because on top of other conflicts that the two countries are engaged with, we are in a situation where over the past week, we saw a flurry of comments back and forth between iranian and saudi officials, and in his annual hajj message, he had very saudil comments for arabia, going as much as to question the management of the
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holy site, saying that muslims need to reconsider saudi arabia's control over those sites. yousef: we know they don't see i tie when it comes to the freeze, but what other sources of friction currently exist between the two countries? reporter: there is the historic rivalry that we know of between iran that is led by a shia establishment, and saudi arabia which is sunni muslim. there are some sectarian conflicts due to that, but there is more than that. i think the two countries are engaged in a battle to have more influence in the region, and that has been ongoing, especially with conflicts in the region, in yemen, where both sides sai on opposite sidest -- sit on opposite sides of the divide. yousef: still to come, mario draghi may have no choice but to
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extend his bond-buying plan. he will have to do so very soon. we will be live in frankfurt with the very latest so we can get you the full picture. this is bloomberg. ♪
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yousef: welcome back. i'm yousef gamal el-din and sunny dubai. -- i'mand i'm out t angie lau, in blooming hong kong right now. mario draghi will brief the media after euro area policymakers talk monetary policy. let's take a look at their decision in frankfurt right now. caroline, one action, if any, are the markets expecting? reporter: there is certainly action expected this year. the question is if today will be the day that mario draghi pulls the trigger, because let's face it, european growth not looking pretty, a 19 month low.
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you've got brexit issues, italian banking issues. all these worries are certainly making most economists expect a downgrading of the growth projection for 2017, but will be see also an expansion of quantitative easing and bond buying marching past 2017? with a majority expect that as soon as today. also, and expansion of what bonds that can buy. 80 billion euros a month is proving a struggle for the ucb, because they have self-imposed rules. they can't by the -- by below the rate. notably, they could make a few changes to the bond buying. could they perhaps by moore of each individual bond, more than the third they are allowed at the moment? there are many things that could potentially tinker with, but there are also some problems related to each of those changes, angie and yusuf. yousef: caroline, a lot of this is uncharted territory.
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but draghi is likely to have given the to do market distortions that are already happening. reporter: you are so right, yousef, because these are what the issues are with the monetary policy. are they blurring into fiscal policy? that is something that keeps being reported. a key criticism to expanding quantitative easing. notably we have seen key distortions. pimco, a chemical company corporate, for the first time actually sold that, and with a naked appeal. investors are having -- with a negative yield. investors are having to pay the company to buy their debt. and we have bonds going up because of a national because of their quality, but because they are eligible -- not because of
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their quality, but because they are eligible to be bought. overall, we are getting central banks in a race to the bottom. we already heard from the swedish central bank yesterday i does it,t if dragh it might come open again. angie: what are the concerns to changing the ecb bond buying rule, then? reporter: i think some of the key concerns are, for example, if we do go below the yield, that would drive further german foreign costs to negative rates we have not yet seen. it could be a race further to negative yield net territory. if you are indeed allowed to buy -- this is a key potential issue. this is where you are only allowed to buy a certain portion of each debt in expectation of the size of its overall euro zone economy, but if you buy will theyan debt,
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sell more debt as it becomes more debt-laden? i think that is a concern for many regarding the changes
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day, mario draghi's big what might the ecb resident announce. lucky number seven for apple, the iphone reviving slower sales, but where has the innovation gone? and china's cushioned by a weaken yen, surging to a seven-month high. >> welcome to countdown. manus: great to have you on the program. nejra:

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