tv Best Of Bloomberg Markets Middle East Bloomberg November 24, 2016 11:00pm-12:01am EST
>> it's noon here in hong kong. here's an update on the top stories. japan's consumer price is falling for an eighth month as a remains everflag out of reach. it's the longest streak of years.s in five fell 4/10 of 1% four years ago. well, early indicators say china's economy remains steady this month. manufacturing gauge based on satellite imagery jumped to a five-year high with large companies more company. medium-sizedl and firms are less optimistic.
finalizeit will restructuring by the end of the year, heading for its highest january 29. the shares have doubled from may low.ere they hit a day,l news, 24 hours a powered by more than 2600 journalists, analysts in more countries, this is bloomberg. we've got hong kong and china closed for lunch. here they were sitting higher for hong kong. a little bit lower, though, in the mainland markets. we do have a third session of a lower yuan there. really is japanese markets driving those gains in asia. this is bloomberg.
>> welcome to the best of "bloomberg markets: middle east." i'm manus cranny. driving the region this week. opec's major powers continue to to cutwards a deal crude. iran and iraq are the two major stumbling blocks. can they overcome their differences? we take a look ahead at the all-important meeting on thursday. donald trump made a lot of promises on the campaign trail. what he actually plans to do have been few and between. what does his presidency mean for the middle east? a matter ofnly been weeks since egypt signed off on with the i.m.f. five years in the making. on fuel,ved subsidies raised interest rates by a whopping 300 basis points. of those measures, egypt is also set to top the bond market. to cairo to sit down with the finance minister and i that mighthen
happen. >> progress is going very, very well. our even beyond expectations, especially when it comes through the floatation of the currency. feedback and the results that we have seen so far are ofy encouraging, in terms really returning back the markets, the foreign currency market, into the official market, rather than having it in was very market, which harming to the economy. the results so far are very positive. the central bank and the banking sector, they are doing a great job so far in addressing that. >> so by the momentum of conversion, i understand billion hasy $3 been converted. is that momentum gathering? is that growing? and it isathering basically -- the central bank and the banking system are including all stakeholders into the system. and we knew all the way that this was going to take time but
the performance so far is great. >> minister, i know that you -- i don't talk about currency. market is testing the pound. and it is casting the levels. there a level, minister, at which you are comfortable with? actually, we will tolerate it at this, but i can't tolerate it above 20? what is your bandwidth for tolerance? >> it's jurisdiction of the bank of egypt to speak about that. be we knew things will volatile somehow, given market conditions. but, again, the results that we achieved so far and the performance so far is really great and we expect that this gather momentum. remember, one thing that people did not believe that we will do process, as we did it so far. people just said that we would one price to another price and stick there. we knew all the way, and the the way,ank knew all
that this is not to be done. the's why, if you see performance and the system, it's really very good. minister ofs the state, you have to have a bandwidth of where you see the pie.ian what have you worked into your models in terms of economics next year? we're not calling a result right now, because things will take time until they settle. but what is happening so far is very encouraging, not only from transferring foreign currency into the banking system but also fromeedback coming investors. let's talk about the bond market. everybody is talking about it. come withou going to a euro bond issuance? will it be before christmas? we were planning to do it by end of november. but there has been volatility since the election, because maybe of the change in the how the economy
would run and basically the plan president-elect. so there has some volatility in the market. we're really waiting until the markets -- we're trying to do it maybe next week. but the window is closing, because by the second week of ratherr, markets will be very quiet. so it's either this or maybe by mid-january. >> someone said to me, how do i inticipate in the future, the upside of egypt? market.the bond 2.5 billion is the number in the market. issuance goes well, how much more could we see come for next year? >> it depends on our financing needs and depends on the of how much investment will come into the country, either foreign or... but we will come to the market --
billion, $10 billion? what's the ambition? $6 billion overall. we can envision a number like that, between now and the next year, 2017. >> getting my money into egypt paradigm and getting my money out are the two big issues. international investors into this country is your mission. understand that since you floated, that foreigners have thought about $700 to $900 million of your debt. what i want to know, minister, is how much of that is fresh rollover versus fresh money? >> look, in terms of investments mean? >> yes. i mean has come so far, the amount of money in t bonds becausey fresh money, buz we have come to basically a very slow pace on that. coming the money that's is really fresh. weer this, the entries that
are seeing from wherever we go, there has been a conference, in dubai, and there has among 50 investors where seven eight countries of emerging pollrontier, they did a and they choose egypt as the second most interesting market year, so this is one time of how people are looking at the egyptian market next year and procedure that we have taken in terms of economic options. is, yes, ihe aspects put my money in, but i want to be able to be, i suppose, solid that i can gete my money. and to that end, that's about confidence, isn't it? we with the backlog in dollars?demand or how long will it take you to clear that backlog? give us an update. theook, i think that banking system is working on this in a good way. is, again, jurisdiction of the central bank of egypt. doing itr, they are
fine in terms of really the needs and the backlog as well. so the process is taking place in a very positive way. be clear, then, before the end of the year? >> i cannot give you a time. >> confidence. it's an interesting word, isn't it? you had that confidence last week. about the biggest question that investors have had for you, the conversations foreignaving with investors. >> look, it's all about confidence. the entire thing is about confidence. and confidence in the policies that you put in, okay? when you decide to do something that has not been done or 40pt for the last 30 years in terms of, i mean, in such the currency way, that gives a lot of confidence. when people see that the system and transparent, that gives confidence cht. do the consolidation, that gives confidence, by putting together the right policies.
>> let's talk about the i.m.f. many have been waiting for this since 2011, so well-done. but the chinese, we understand, billion. have you received the equivalent from the chinese? >> it's been approved. the money, received sir? >> ha ha! it has been approved. and i think it is either on its way to come. >> will it be safely in the bank by christmas? >> again, money is reviewed i -- received by the central bank. the exact transaction is something for the central bank. involved witht the i.m.f., there are many issues, discussions. rises areional tax going to be necessary, what additional subsidy cuts are egypt in 2017 after the new relationship with the i.m.f.? not a matter of when and how. it's a matter of the plan that's country.ted by the back in 2014, a plan was put for
it, and this was a plan that, every year happen, for five years or six years or what have you. and it is taking place here, year after year, and it has and '15.in 2014 because of the sharp reduction in oil prices, the action was not taken. but this year, it has been taken. addressing this issue, because we know that this helped egypt for a very long time. so we are very serious about theing with readdressing subsidy in its entirety and really giving the subsidy to the it the mosteserve and not to give an absolute subsidy to everyone. >> up next on the best of east,erg markets, middle and in on the market debate the probability that opec will enact its first cut in eight years. this is bloomberg. ♪
>> welcome back to the best of bloomberg markets, middle east. opecweek on signs that members have made progress towards finalizing a deal. spoke to energy founder and theo. robin mills about likelihood of a deal. >> we've had more positive news the minister. i mean, iran has been kind of coming and going in its butusiasm for this deal there does seem to be more indication that iran is prepared of deal.nto some kind 3.9 millionund barrels a day. >> yes. numbers, there are numbers that iran is reporting for itself and the numbers that are a bitiving them
different. could that be an obstacle to a iran insists on its own numbers being used for any freeze? countries several have been playing this game. we know that iraq has also been reporting figures well above third-party estimates of what iraq is producing. onhink it ultimately depends really whether there's a chance of significant further output since iran's and production came back from sanctions, the past few months, it's been pretty much leveling out. only increasing slightly month from month. iran's feels that production is not going to increase much from 3.65 or 3.7, give them any target they like, if the iranians want 3.9, ithey're producing don't think it really matters too much, if they're not actually going to get there. that iranian production point in particular, they have increased. countries liker libya increasing significantly. planis sticking with its
to reduce production. is that going to be enough to 60ng prices up to 50 or dollars a barrel, like iran mentioned? just this week, given the increase in production? >> well, this is the challenge, i think. a target for opec somewhere between 32.5 to 33. million barrels, i think, is quite achievable over the winter. production goes down as they don't need so much oil. so if saudi production is going other -- is add going down and you add other countries,from other they would reach 33. to get to 32.5 requires larger cuts. decemberome back after and, in angela, for example, then of course opec will be again having immediately exceeded its cap. nigeria, libya, productions come it's very volatile. the fields might be offline or in any given month.
these are all quite difficult moving parts. >> i want to bring your to stuff going on in the u.s. let's take a look at the baker hughes rig count. that the total number of oil and gas rigs 588 accordingto to figures released just on friday. that's one of the biggest jumps since april, i think. you look at just crude, it's the biggest jump in like 14 months. shale really coming back. doesuch more difficult that make it for oil prices and theopec in terms of efficacy of its production deal? >> a lot tougher. back seeing prices bounce from their lows, but still, well below $50 per barrel. drillers are very keen in west texas particularly, which is proving to be the real bright for u.s. production. and we've seen u.s. production bottom out and even rebounding a bit over the past couple of months, in line higher rig count.
that makes it very tough for opec to keep depending its market share. >> how much stronger could fuentes production of oil -- production of oil get? i'm reminded of a new discovery permian basement. it seems like there could be even more coming online, particularly if capital markets feel comfortable with financing this? >> that is an announcement by u.s. geological survey. not discovered yet but potentially available. we've seen other reports of other various companies announcing bigger discoveries in the basin and indeed in other places in, say, oklahoma and elsewhere. that, you know, whereas a few years ago, shale drillers would say they needed $80 a barrel to be profitable, there's now some who they can make it at $50 a barrel or even less. for u.s.her wild card
oil production has got to be trump, in particular his america potentiallyes, revving up u.s. domestic production of not just oil, but gas, coal, that sort of thing. what does that do for global oil markets? donald trump isn't president yet. he's inaugurated, it will take time. i see those in terms of the u.s. secondary thing. i don't think the u.s. oil production and gas production today is particularly by, say, regulation. some extra pipelines, of course, would help and those pipelines likely get built now. but i think it's kind of a secondary thing. i really think u.s. oil production today and over the past couple of years, the issue has been about price. increases andion keeps prices down, it's kind of self-limiting. >> what about trump's approach to iran? because he has, of course, been very critical of the deal with with iran..s. deal could donald trump going after iran prove to be a boon for oil
prices by taking a chunk of production out of the market? >> yes. bigink this is the real wild card as far as donald trump and oil is concerned. he's obviously talked about iran deal.ng the some of his associates talk about tearing it up. does and let's say we've been back to the situation a a year or two ago where million barrels of iranian production was taken off the by sanctions, it will make opec's job easier and help u.s. drillers as well. there's quite a lot of hurdles in the way of that, not the least i think that the other deal, then the iran europeans, russia and china, would say that iran so far seems with the dealg and therefore, why would they rip it up? existential e question for you. happening in shale, given the rise of people like donald trump, geopolitical populism, nationalistic parties, how does opec maintain its relevancy in terms of the bair o behavior of
oil-producing nations? as an organization will continue to exist. anle is not exactly existential crisis for opec but any it hasis unlike ever faced before. opec.lly puts a cap on on the other hand, i think if moree got a world of, say, geopolitics and trade barriers opec andnationalism, its mission fits very well into such a world. ofup next on the best bloomberg markets, middle east, more on opec's crucial meeting week and whether members can overcome their competing interests. this is bloomberg. ♪
bloomberg markets, middle east. this week failed to resolve how iraq and iran would plan.pec's that, of course, has been playing on the energy markets. to us about spoke what still lies ahead in terms accord.ay to an >> everyone has said they're optimistic. ministers that you spoke to. that's about all they said. meeting, theyrmal said, not all the members were there. as we're aware, wasn't represented there. there.minister wasn't that's the country's perhaps deal.ng point to this so we've some way to go, but the talks do seem to have been positive. >> and you cover oil markets day in and day out. bring your attack attention correlationt, the between the price of crude and
the u.s. dollar. it's been breaking down, which for those asset classes. is this all about people eyeing the opec deal? dictating prices at this moment in time? >> yes. i think oil tends to move with not to thebut exclusion of all else. when there's a bigger event like to opec meeting, that tends outweigh the effect of the dollar on the oil price. also, the dollar has been recentlyvolatile because of all the political developments in the u.s. theyes, opec will be headlines that drive oil more than anything else at the moment moment. >> what are you seeing in terms of positioning? the announcement that they were a production, deal, really caught the market on the back foot. and we saw a big reversal from long for speculators. are we going to see the same thing again if there's a deal in ?ovember >> a deal in november would be quite positive. certainly. the market has been sort of -- the optimism has slipped since the algiers
meet. there was a big spike in optimism. we're seeing it start to we'reo come on again. but we have to look slightly longer term here. the deal on the table is apparently six months. we have to look beyond that and say, what is going to happen is expired?al does that lay the ground for a longer deal, or is that actually just delaying a sort of inevitable increase in production? going to beare you watching? we have -- i think, what is it, more days until we get to november 30? maybe a bit longer. dates anymore.r but what are you watching in the interim, until that bigging vienna?in >> i think the most important thing to watch is the position of iraq and iran going into this. as we know, the opec secretary general, was in iran this weekend. in iraq last month. all this diplomacy is going on. these are the two countries positions might not be in line with the rest of opec. particularly with iraq.
has said it's not going to cut production. it may freeze production but levels that are its own reports of levels which are which opec those knowledges. so iraq is really a country to watch at the moment. positions ofe other opec countries, particularly saudi arabia, which the group and which is the one which torpedoes the last when iran had an exemption. >> stay with us. explain hiswill first move strategy and why he the firm'shabi as new middle east headquarters, next on bloomberg. ♪ >> it is 12:30 here in hong
kong. south korea's president has fallen to 4%. polls --owing mps met impeachment polls, consumer confidence is at its lowest in several years. airlines is preparing to sell its first bonds in more than a decade to prepare for planes from airbus. it is worth $135 million next month. it would be the first bonds
2011 left bankruptcy in and relisted a year later. theasian groups ceo says company has plenty of potential in india and japan. he is still aiming to raise a billion dollars by spending off its lucrative leasing business. china has canceled talks with mongolia in protest of a visit by the dalai lama. beijing called the visit unacceptable. the mongolian prime minister strip is now also in doubt. he says the visit was purely religious. day.l news 20 for hours a we are rounding out this trading week here in asia.
sherry: another day of gains for china. losses, a clear leader this week has been the nikkei. japan is now rising for several consecutive sessions. it's the highest level since january. we also have the new zealand trade deficit showing it narrows, up one quarter of 8%. lost anghai composite 10th of a percent. housing gained for tens of 1%. emerging markets reversing some earlier losses we saw in the session. it has been unchanged in the past few sessions but it is trading near a 13 year high. yen,a look at the japanese which has been weakening for four consecutive sessions. at 113 spots.ing
let's check on oil because it is headed for a weekly gain despite the fact that it is losing ground at the moment. there counting down to reopening and china. welcome back to the best of bloomberg markets middle east. after initial shock donald trump's election victory has sparked the trump jump. all four major benchmarks have rallied to records. asked the ceo what donald trump presidency could mean for global markets. the spoke to him briefly on friday after he had been elected. i still think he was elated to have been elected. i spoke to him for 10-15
minutes. he said with two weeks to go he thought he could win, which probably was at on its 1 -- was at odds when i met him earlier in scotland. i suspect he did not expect to win. obviously elated. at howed i think as well many world leaders had phoned him up. he mentioned the king of saudi arabia had phoned. he is very accessible as you know. and a good businessman. >> you are scheduled to have a meeting with him. we will know the treasury secretary is. what are you going to chat about? there are a number of things. dodd-frank.
what do you think that conversation is about? >> just general. i have known him for many years through golf. that is where most people really know him. greg norman introduced a world leader to him. he said he was -- he counted him as a friend. i think just to see how the commerce asian goes. i said what he mind if i dropped in to see him when i was in new york. he said no. he would be delighted to see me. so i think i will just see where it goes. no specific subject really. >> you said before you think that he will make a good president. you think you will be good for business. is he going to expand on why you have these views? the market seems to think that donald trump the candidate will be different from donald trump the president.
you did that is the case as well? politicians you have got to see what they do, not what they say. especially in a campaign, we saw that in brexit as well. he is a good businessman. he is pragmatic. i think he will deal with the issues that confront him. and to a certain degree i agree with what president obama was saying them of the reality of office will make him adapt. i think he will adapt. he has done to the markets is move inflation expectations to the highest rate since 2015. when you look at inflation expectations, i have got to hand it to donald trump. he is not even in the hot seat. all ofmanaged to do what
the qe has not done. have we moved far too fast and far too aggressively without a dollar spent? >> yeah. i think so. but markets go on expectations. i think what he has achieved is good, even though it achieved what no other central bank or has managed. i think it is more perception of what he is going to do. i think that is good. he is going to borrow more and invest more. i think that is what the world needs. qe hasn't worked the way the central bankers thought it would. so with that being the level that it is i would be borrowing money and investing it. >> this is what the markets needed. we have you back. we have volatility back. he has done nothing. he has actually said little
sense his election. our markets overdoing themselves? an uglythe risk for correction if the reality doesn't match the wild expectations? >> i think we needed a bit more yield in the yield curve. it was killing savers at the moment. this is good. but your point is he has said very little, it is very pertinent. i think it does show the rhetoric in the election is not the real donald trump. he is thoughtful and i think he will change his rhetoric and change what he is going to do now he has won the election. >> one thing that struck me, ireland has issued 100 year bonds. you said they are expected to
borrow more. you think that is legitimate? 50 year bonds in the united states of america? >> i do think central bank should be issuing long-term debt . these 250 year low interest rates. there are people who want to buy them. if i was the central bank asernor i would be issuing long dated debt as i possibly could. >> you have said you thought e.m.'s are doing just fine. we have seen them come under pressure. this relentless dollar we have seen. thatof that protection, is more inward looking? are you still constructive on emerging markets? if so, which one? more of a component of internal demand, india for example than
those that are more vulnerable to the global economy? >> your last question first. we still like india because of the internal story. but also because of good companies we have invested in. these sort of companies. i think the protectionism in the u.s. is going to be more difficult to achieve then perhaps people think. if you does go for a tax cut, they are going to spend. that is going to go into the u.s. which should theoretically be good for emerging markets. i'm not as negative as a lot of people. but i have to be posited on emerging markets. , i think they are fine. the growth is still there. >> coming up on the best of bloomberg markets, donald trump takes two youtube to offer his
manus: welcome back to the best of bloomberg markets middle east. donald trump released a short video this week outlining his policy priorities, explaining his intention to withdraw from tt -- tpp trade talks. >> it is a precedent for how we are going to see announcement made. are they going to come on youtube videos? this is a guy who likes to tweet staff. he tweeted many people think it
is a great idea nigel farage become the next u.k. ambassador. i wonder what mrs. may thinks about that. that is pretty outrageous as well. everything is going to change under donald trump. likes it is a brave new world we are living in. the ramifications, we were not surprised. >> the interesting thing is there have been these asian leaders, hoping against hope that it would not happen. from japan.ric fo >> and australia saying the same thing. hoping that donald trump can come through. of the to the head school of public policy. inid they believe reincarnation.
is, the u.s. is not going to be under its present guys. the implications are more geopolitical than economic at this stage. what it is doing, it is signaling to all of the leaders u.s. is everybody, the ceding power and influence. who is going to take over that position? there is a big country just over there, that is china. you, thereing to ask are two ways china could view this. on the one hand the reduction in trade is a potential headwind. it does give china the chance to increase influence in the region. how are the authorities on the ground going to react? not need to do anything in order to increase
its integration into the region. the u.s. has signaled it is going to exit. , they have if free trade agreement with them. another they are building on top that which includes countries like that which includes countrs like india and other non-asian countries. if they can bring that off, that is a huge political job for china. it will influence and integrate china into those asian economies. let's face it. opened platter here anyways. trade and economic influence you get political influence. it is a win-win for china even if it cannot pull off these trade agreements it is working on. >> benjamin netanyahu will be hoping for a shift in foreign
policy in the u.s. when it comes to iran. aviv.has more from tel what does netanyahu want from donald trump when it comes to a policy on iran? >> first of all netanyahu once donald trump to -- wants donald trump to see iran as part of the problem in the middle east rather than the solution. that is the first thing netanyahu wants donald trump to do, to do a shift of approach. obama saw iran as part of the solution. incentives give iran to behave and to act in accordance to u.s. expectation. that is what we saw that nuclear deal. israel wants a 180 shift on how the u.s. approaches iran. >> what about the palestinians?
what is their position? netanyahu is going to get all of his ducks in a row and meet with donald trump. what is the palestinian side of this? what are they saying? >> the palestinians are quite , of course. donald trump has said various things in terms of foreign policy. one of the things he said is that israel, he is not going to pressure israel. settlement should come between two states, which of course the palestinians believe it should be international pressure on israel. that is why they have been promoting the french peace initiative. so the palestinians are concerned and they are concerned that donald trump is going to move the israeli embassy to jerusalem from tel aviv, which is something that has not been done even though others have
promised that in campaigns before. they are concerned that donald trump is going to take a harder line and ignore their interests. they will take stronger action in the united nations to do things that will make their life -- in israel harder. we have to see who this plays names asdonald trump ambassador and who his key nominations in this regard will be. >> what do we know at this point in time about donald's iran policy? >> what we know about his policy is we are trying to have a reading based on what he said during the campaign. he was a very fierce critic of the deal. he said he would share the deal. he said he was a disgrace. it had 2 advantages for iran. he has also said the deal was not good because it was
preventing u.s. companies from ,oing business with iran opening the door to european companies. it is to opposing views. when i speak with iran and people entire on that is what they -- in tehran, that is what they raise. he is going to be rolling back the benefits. others say hang on, he is going to be ruled by a business mind and that is going to be good for iran. >> what is at stake for iran in the worst case scenario? access new hoping to technology, hoping to see some $50 billion of foreign investment come after the nuclear deal. really high hopes from the iran side. there has been a number of big deals that have been signed, that have been at the preliminary stage.
iran is looking to complete those. we are talking about the supply of some 200 aircrafts from boeing and airbus. of, quite aa lot lot of business deals hanging in the balance. manus: coming up on the best of bloomberg markets, middle east and turkey take control of inflation. we will discuss the impact on the lagging lire, next on bloomberg. ♪
are doing to slow the run on the lire. it has been in a freefall since the u.s. election. with that depreciation was one of the agenda items turkish policymakers discussed on friday in a surprise meeting that lasted more than four hours. they said they were monitoring developments in the financial markets and they would shield the economy from adverse impacts. the turkish central bank would do whatever is necessary to keep inflation under control in these circumstances. whatever is necessary, would that include an interest rate hike? we have seen investors betting against that happening. >> there are different views on what exactly the signal was. quite a few analysts we spoke
time, thethe recent signal of this meeting would use all tools at its disposal --luding interest rates quite a few others i spoke with referenceink that the in the government statement to a general global environment being the main reason, after recent volatility as a possible hint that the turkish central bank may not use interest rate as a tool just yet. rate the central bank setting comedian meets -- committee meets next week. what do we expect to happen? >> according to bloomberg surveys of analysts and investors, the central bank is expected to maintain all three
of its main interest rates. that said, there is an unusual high number -- unusually high number of analysts who seem to think that there is a possibility that the central bank might increase, one of its interest rates to suspend the run on its currency area there is an expectation central banks might continue to use its other tools to basically boost dollar liquidity, which is something that has done a few times since july. >> that is it for the best of bloomberg markets. it is a busy week ahead. we are going to be covering the meeting on thursday. can they ever come their differences and get a deal done? we will be right here for the start of the trading week in the
haidi: the dollar is set to cap its biggest three-week gain against the yen since 1995. the dollar has surged 10% since november 4. gold is extending losses, falling for a fourth day. japan's consumer pricing fell for an eight-month in october as the 2% inflation target remains out of reach. it is the longest losing streak of declines in five years. 0.1% from aces fell year earlier.