tv Bloomberg Markets Middle East Bloomberg November 28, 2016 11:00pm-12:01am EST
>> oil gives a big as opec members had for vienna. signs of cartels being divided, not striking a deal. criticsresponse to through a u.s. listing, and raising the dividend by 36%. japanese stocks snap their run, with the topix falling for the first time in 18 days. and the yen has a tendency to slump, but this november is to be its worst since 1978.
it's 8:00 a.m. across the emirates, i'm jc humphrey into by. angie: i'm angie lau into by. welcome to bloomberg markets: middle east. there used to be a show in the u.s., let's make a deal, deal or no deal. what is behind door number one when it comes to opec? jc: great question. all will be revealed tomorrow but it is all about oil this the major opec and non-opec players set to meet tomorrow. i want to revisit the current state of play for the oil markets. purple and blue is where the current price of oil is at, and take a look at that white line are allalks in vienna
.round lowering that output we will talk more opec in just a moment. angie: for now, let's do a quick check of the state of play in the markets right now. mumbai has been trading for almost 20 minutes, and we are seeing gains, although we are seeing a pullback when it comes to risk. we see it reflected in the hong thatand topix, thinking maybe today will not be lucky 13. in the middle east it is two hours away from the opening of the markets in emirates. qatar closedabi, lower yesterday. saudi was the only bright spot, gaining nearly .9%. checking in now and the first alert headlines from around the world, here's sophie. sophie: spending in japan fell
for an eighth straight month underscoring weak consumption and the continuing struggle to revive the economy. the client in spending and retail sales have narrowed since august 24 whether her demand. unemployment remains at its lowest in two decades, but there were no significant wage gains. the prime minister hopes it will drive a and spending higher. the oecd listed global growth forecasts for the next two years, predicting a boost from donald trump in china. its gdp forecast is now 3.3% in 2017, up from september predictions. they say growth will expand to 3.6% as it sees trump's infrastructure plans raising output. a source has told bloomberg that india is set to clear the right healing services of uber and lyft. they will need to get software validated.
a court affidavit will be filed in delhi. they're pouring hundreds of millions into india. the head of the middle east's largest listed property company with milan-based online retailer. e-commerce in the region is still just a baby, making up 1.5% of global retail. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. delsey: thanks. opec ministers are gathering in vienna for wednesday's output despite signs that the cartel remains a split.
let's get the latest from singapore. re any indication they can reach a deal? >> well, it's tough to say. we are getting down to the wire here. bloomberg has a team of -- on monday, there was a 10 hour-long meeting with representatives from opec countries to hammer out their differences, and the main sticking point seems to be revolving around iran. iran is producing 3.7 million barrels per day, and saudi arabia wanted to stay there. iran wants to be able to grow its production toward 4 million barrels per day, where it was before sanctions came down. algeria, which has been the big peacemaker through this process, has put forward a compromise solution halfway in between, but
it is unclear which if any of those proposals will get full opec support come wednesday. as you also know, algeria and venezuela's oil ministers will be heading to russia today to talk with non-opec's producers about how they might fit into anything. so a lot of balls in the air. we will spend a lot of time seeing how they land. angie: ok. and they may land with a crash. what is going to happen to the oil market if they do walk away from this meeting and to handed? -- meeting empty-handed? >> if they do, all of a sudden the markets will shift back from opec and onto the joyand they m. giant overhang of crude oil in storage tanks over the world. there are more than 3 billion oil products in the developed world, even more in the underdeveloped world. all of a sudden, you look at the
record opec production and it doesn't make any sense to pay a lot of money for oil. analysts say it could fall back into the 30's or even the 20's if the ministers don't reach a deal. angie: dan murtaugh in singapore. thanks. i want to bring attention to breaking news out of south korea, just crossing the terminal. the south korean president will address the nation at 2:30, in about an hour and a half. this, of course, follows the influence peddling scandal that has enraptured the nation and is also just negatively propelling this nation's first female leader into a possible impeachment as early as this week, approval ratings sinking to an all-time low. addressing, she's
the nation of south korea at 2:30 local korean time. we'll have the latest. samsungt samsung now, electronics announcing sweeping changes to its structure as it adopts the changes proposed by activist investors italian's management. let's go to stephen chin. this is another big story ahead of south korea, as well. what did samsung announce? >> indeed, it is another big story. a little overshadowed by the political developments, but it's a big deal, because samsung is south korea's biggest company. it essentially announced a plan to step up its share, its cast returns to shareholders. pressure fromder activist investors to do a few things. the problem is that they didn't
give everything they wanted. step up its, a, cash buybacks and dividends to about 50% of free cash flow. 10t will amount to about trillion won. one going to look at adding outside director, and do a six month review of its corporate structure. that's essentially the news that came out today. reed, how does this compare with what the management asked for? >> yes, well, you can't always get what you want. they wanted three directors on the board; samsung said it would appoint at least one outside, independent director. he had called for about 30 trillion won worth of cash
returns -- instead samsung has committed to about a third of that. and of coarse they wanted two other key things. one was a separation, a split to a holding company and operating company, and it wanted the enterprise to list its shares on the u.s. exchange. samsung's response to that was that, give us six months, we will look at it, and it is also going to consider listing under international exchanges. so to some extent,, yes it took an outside director to add pressure, to get samsung to move along, but it is obviously not as much as some investors we spoke to had actually called for. delsey: reed stevenson from tokyo, thanks. let's get the latest from the market. here's david ingles.
david: if you look at what's happening right now, to make a long story short, it is almost a reset we are seeing as people are squaring their positions as the focus shifts away from donald trump, pushing into things like opec. asian stocks, china on the way up. look at the other side of the spectrum in the asia-pacific and you still have a number of indices, especially japan. we will dig deeper into japan and china later on. it started out with a very weak dollar story. that has obviously not flipped on its head across some currencies. the renminbi still on the rise against the dollar. others, the rupiah, hong kong dollar, gaining. everything else is falling against the greenback's. commodities, we are still seeing it fall. a rally across sovereign bonds
continues. let me zero in on the topix index. we were supposed to be going for 13 straight days and we could still get that. two hours left in trade. any gainscapping out of japan. hopefully if you are along in japan you could get that longest gain since 2009. seem like that will be the case because this market has been brought up quite substantially since thie election. delsey: david ingles, thanks very much. later in the show, consolidation in asia is highly competitive wealth industry. we're back to our pop-up studio in singapore, and we are talking with dbs. angie: opec's meeting tomorrow. we will ask ubs asset management's jeffrey one how he sees oil playing out in 2017. this is bloomberg. ♪
delsey: welcome back. we're live on bloomberg tv and streaming on the radio. angie: delsey: emerging-market currencies posted their biggest advance in more than nine weeks on monday as investors pop the trunk trade was overdone. shery ahn is live with a man who can tell us more. shery, a mixed picture for equities, but positive signs for emerging markets? shery: yeah. we are hearing that this growth prospect is boosting discretionary spending and emerging-market, combined with solid demographics, a long-term positive for emerging markets, according to jeffrey wong, the
head of emerging markets and asia-pacific equities at ubs asset management. thank you so much for joining us . let's look at the positives for emerging markets, but viewers will be scratching their heads going, we will still get rising rates, headwinds from a strong dollar. can those positives offset the risks and emerging markets? >> you are absolutely right. investors have been focusing almost exclusively on the negative, in addition to the things he mentioned, with the possibility of trade wars. but the positives are there as well. there's been reflation, where interest rates have risen, but at the same time economic growth has accelerated. equities in emerging markets have done fairly well. we arer, a lot of what seeing is really talking about infrastructure, and infrastructure means commodities. so i think there are enough positives of their, and at some point in time --
shery: we have seen commodities stabilize. when investors are looking at the emerging markets, should they be focused solely on growth? what else should they be looking at? they should really look at what's happening within industries and how economies are transitioning. you look at china, economic growth is decelerating, but within the economy itself, there's a huge transition from manufacturing over to consumption and services. that's a very powerful driver. particular companies will benefit tremendously. the old economy is growing at 0%, roughly speaking. but things like retail sales are growing at high single digits to low double digits. shery: not surprising, given that we have people with more money, discretionary money they can go out and spend. which sectors are going to see the most benefit? >> within emerging markets, we
still think consumption is a good deal. when incomes are below $5,000 per household, people tend to spend everything on food and clothing and health. but once you get a $10,000, it increases. it depends on the state of the country. in lower income countries, india and so forth, it is basic goods. but once you get a $10,000 you start looking at automobiles, perhaps even luxury automobiles. shery: all the focus this week, opec. we have the ministerial coming up. do you expect a spike in oil prices anytime soon, if we got a deal for the supply curve? >> short-term oil prices are always extremely difficult to predict. we don't have a particular cause . we think oil prices are roughly where they are, upward slowly over time. but we don't have a specific forecast.
shery: given that assumption, where are you investing? >> we tend to be investing in southeast asia. demographice we see and consumption growth to be strong. in china itself, although the lines are always about tolerating growth, and we talked about the transition -- shery: what about industry? >> within china, i think the new economy, e-commerce, mobile -- shery: when it comes to regions growing out of asia, how about emerging middle east? >> i think the middle east definitely faces some challenge, not the least of which is the lower oil price. but if we look at other oil exporting countries the flexible this allows them to make adjustments in the economy. a lot of the middle eastern
countries trade with the dollar but they don't have that flexibility. i think it is going to be challenging for investment for quite a while. shery: thank you so much for joining us. of globalng, head emerging markets. back to you. delsey: thank you. coming up, opec members failed to work out a compromise on a deal to cut production. we will discuss the implications to the markets, next. this is bloomberg. ♪
producers don't necessarily need to curb output. let's bring in abu dhabi commercial bank's chief economist, who joins us in abu dhabi. a warm welcome to you, monica. how certain are you of an agreement from tomorrow's meeting? >> it's not certain that all. we have seen the recent comments coming out of the delegates, implying a deal hasn't been reached, and we are close to the final day of the meeting. there seems to be a couple sticking points. -- wee already stressed have highlighted in our research --t iran and iraq [no audio] angie: i think we have lost our connection with monica. we'll try to get back to her, and as we fix this technical
glitch, we will try to get you back to monica, to talk about the latest on opec and whether or not they will get a deal. for now, let's get a quick check of the latest business flash headlines. barranco and abu dhabi planted more than double petrochemical productions to cash in on growing demand. they are diverse sing to wean themselves off crude, particularly in asia. oil says national demand for petrochemicals is expected to double by 2030, presenting an unprecedented market opportunity. abu dhabi investment company -- has reportedly signed an agreement with china's agent a group. the company is looking for investment in aerospace, manufacturing,, real estate hospitality, kent financial services. no details were given about the potential size. growthl grew out of the
of their aviation services company to h&a earlier this year. and china railway construction and qatar has been slated to build a stadium for the 2022 world cup. was80,000 capacity venue designed by a british architect and will host both the opening matches in the final. financial details were not disclosed, and qatar has faced consistent criticism for labor standards in construction projects. delsey: let's get back to monica malik from abu dhabi, the chief economist. monica, where we left you, we were talking about how certain you are, or uncertain you are, of an agreement for tomorrow's discussions. andica, where we leftyou are ta iraq critically, and russia.
how critical are the non-opec countries when it comes to opec deciding on a cut? very important. for a number of key opec countries, including saudi arabia, russia would need to also cut back production. russia has so far said they are willing to freeze production, but they haven't gone as far as to say that they will cut production. know, the meeting that would later be with russia and other non-opec countries was canceled at the last minute. i think the key stands for saudi arabia is that they don't want to cut and see other countries not cutting or having the ability to increase production. that is what we are seeing in the comments. they are implying that they are willing to negotiate hard, and if need be, walk away from a deal if it doesn't suit their purposes. is said to offer
iran 3.7 million barrels per day. tehran asking for 3.97 million. re talking a difference of 200,000 to 300,000 barrels. how successful do you think of jerry it will be in bridging the divide? >> well, it's difficult to tell. at the moment, iran is still holding out. current production levels are at about 3.7 million per day, and has been holding steady at this level. but even if we cut back to the top end, that's about 600,000 barrels they will have to take out of the market. 200,000 barrels of that is significant. forill also be critical next year with the global demand scenario. aret of non-opec producers expected to see rises next year, and demand is expected to be
angie: 12:30 in hong kong. these are the first word headlines from around the world. oil has given up gains as opec ministers had for vienna, showing signs of the cartel remains a split on output price after a 10 hour meeting. sources tell us that iraq and iran angie: continue to express objections by lowering output. iran wants to raise up to pre-sanctions levels, while nonmember russia says it is prepared to stop about cut. samsung will allocate 50% of free cash flow to shareholder returns and conduct a major buyback for the end of january. also looking at creating a
holding company structure and listing on international exchanges. investor had been urging sansom to restructure and return more cash to shareholders. lufthansa has lost its latest bid and was denied an injunction. they will stop work in the coming hours and all pilots will block out on wednesday. it is heading for its longest ever industrial action, with costs approaching $50 million. lufthansa shares extended their decline for the year to 15%. the former cia director david the traders is the latest person up for secretary of state under donald trump. a top transition officials said the president-elect is "inclined to pick him, but is weighing the pros and cons of having the retired senior officers at both the state and the pentagon." general james mattis is under consideration to leave the defense department. global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120
countries. this is bloomberg. 's strong chinese demand for australian properties has helped tries prices skyhigh in recent years, but the enthusiasm for real estate has been somewhat dampened by new restrictions, making it tougher to get money out of china. let's go to our economy under, michael heath, right there in sydney. michael, we are talking about australia's beloved cate blanchett. she is trying to sell her house, but obviously that fell through because -- why? tell us. >> well, she isn't having much luck. she was quite unique case. in an instance where her property was up for millions of dollars, normally a chinese buyer has the means to get the money out of the country, as the
wealthy tend to do. but it did happen to hit cate and her, sale fell through. more broadly, this is tending to happen in the apartments sector in australia, where there is a lot of new supply coming in and a lot of chinese buyers. now when they have to settle the rest of the payment, they find they can't get their money out of the country. through,es are falling and there are a lot of them on the horizon as well. angie: where does that leave australia's developers? what is the logic from china's side when it comes to capital leaving the country? >> look, it's sort of unknown with the developers. obviously it is quite a risk for them. the three main cities on the east coast, brisbane, to melbourne, and sydney, i think the central bank has expressed
the most concerned about that. in sydney there is such demand for property, and they think it can be soaked up. from china's side they tend to wax and wane, but as best i understand it, they tend to tighten as their currency is falling, prone to stop the process. this is another example of that. they will face real trouble if the u.s. titans rates again, though, because that will be a big draw for capital to the u.s. notey: michael, while i'm exactly in the cate blanchett think itroperty -- i was $20 million she was trying to sell it for -- could this be a spark for a wider property downturn in australia? >> good question. some people have looked at it like that, and melbourne and brisbane have a sense that we could be facing significant oversupply. the question is doesn't spill
from the apartment market into standalone dwellings, into houses? the thinking at the moment is that you could see significant drops in apartment prices, but that it is unlikely to spill over into stand-alone houses. there may be some declines, but not in the main area of dwellings. it is probably going to be confined to apartments, or that is the sense. delsey: michael heath in beloved said the, thank you. after acquiring wealth management and retail banking business, is dbs still looking spend? let's ask our next guest in singapore with haslinda armen. it's all about consolidation and we have seen a lot of it happening in the asian market. good to have you with us.
dbs has been aggressive. is consolidation the way spend? forward? >> well, i think big isn't always beautiful. you don't need to be the bigger to be the best. i think when the opportunity arises and it is something that fits in with our overall a deal that we can execute well and we can deliver, and it is part of the overall direction we want to go. then yes, it is something we will look at. haslinda: it is always about price in the end. carried a story this week saying that dbs is bidding for ab&m. can we get any insight? >> [laughter] we look at deals and they fit in with our overall strategy. if we have the bandwidth and the operational expertise. wealth management is a key
pillar for dbm. of theent acquisition wealth and retail business speaks very much to the overarching strategy of growing our footprint in wealth, particularly the retail markets of indonesia, china, india, where we see massive opportunity with additional disruption. asia, with then digital initiative, dbs is ahead of the curve. you were talking about going digital years before everybody else. where are you in this journey, and how are you helping your consumers benefit? because dbsjoke, stands for development bank of singapore. but now it's the digital bank of singapore. that is the direction we want to go. we believe that banks should ultimately disappear and be seamlessly embedded in the
customer's life journey. their shopping journey, investment journey, retirement journey, education journey, etc. banking is a service. realize your customer's life goal. it shouldn't be clunky. it should be quick, easy, dependable, and safe, and relevant. that is technology. we spent a lot of time to create something that creates open api. we can embed it in a customer's life journey. working with partners on open platforms for investment. working with partners on their life journeys. it could be a retirement journey, an education fund for my children. but being able to give the customer the tools -- haslinda: and you also have
this strategy -- getting rid of the cash, of atms. what does that entail? i'll give you an interesting factoid. singapore uses more cash than most countries in the world. we i'll give you an interesting factoid. have 388 atms per hundred square kilometers. some countries have three or five or seven. cash costs this country about .5% of gdp. it's expensive, it's clunky. dbs, are atms are in full-time use more than the global average. are able to use digital technology to shortcut cash profits. i could pay you, you could pay me without cash, just using an the e-wallet.
you should be able to pay your bills without using cash. is a huge agenda for us. we've been very efficient in the monitoring of our atms, with smart analytics to predict when atms run out of money. but our ultimate aim is to take cash out of it. haslinda: where are you in this transition? >> working with merchants and retailers, so if our customers go to the atms, give them an incentive to not withdraw cash, but just use their debit card or e-wallet,d or our failed the spot without cash. what happens is we have to put security to take the cash out, the merchant has to take the cash out. right? so it's not the most efficient use of human capital. haslinda: thank you for your insight. from coming to you live
our pop-up studio. back to you. angie: it is the most popular place in town. thank you so much for that. live in singapore. coming up, emerging-market currencies post their biggest gains in more than nine weeks as investors that the trump trade was overdone. the prognosis for e.m., next. this is bloomberg. ♪
the hong kong-based imperial pacific's best sunshine casino on the u.s. territory has posted her with the ip revenues far in excess of the grandest resorts. that has alerted american authorities responsible for highlighting suspicious financial disclosures. onie: from resorts fell speculation of the casino company has put a proposed restructuring on hold. bankers andiew as lawyers stop working on the multibillion-dollar spinoff of its international asset. they said today it is partially because china retained 18 crown staff last month in a crackdown on overseas operators. china's biggest sports media companies says the company's lavish spending spree may not be enough for it to realize its goal of world cup glory. the vice-chairman of the sport
told bloomberg there needs to be more investment in the grassroots games. >> i think the right way for chinese is not only the buy and sell. how it'so consider developing, how we can connect and thethe users platform together. finally, some relief for emerging market currencies. the donald trump field rally took a breather and investors say the reaction had been excessive. we return now to our senior correspondent, has haslinda amin. the question is really whether that rally in emerging-market currencies can
be sustainable going forward. mark mobius thinks he has the answer. good to have you. >> know it has the answer. [laughter] haslinda: do you see it being sustained? >> i see it being sustained. and i thinkctive -- he will probably be successful -- is to resuscitate the american economy, get it moving at a higher rate. that's good for everyone, including emerging markets. my next point -- i think it will try to weaken the dollar. his program, in my view, will be heavy infrastructure spending, buildup huge deficit, which will be concerning to the rating agencies, which will push the dollar down, which will be good for him, because it means that americans can export more. that's a combination of things which i think overall will be good for emerging markets. haslinda: which emerging market currencies are you liking at
this point? it's been down so much -- has been incredible. trump is going to sit down with the mexicans, make an agreement, reached some kind of understanding, and that will be powerful for the currencies. haslinda: i know you are not the bondman, but i do want to take a look at the emerging market bonds. they have been slumping. left, right, and center. had we seen the worst of it, or are we expecting a further decline? >> i think the fed raises rates to more negative news, over the longer term i think we will see recovery. the currency will be a big factor in that. haslinda: that's what's happening in the bond market, impacting japan in a huge way. it will be difficult for japan to keep yields low. what happened to japan?
>> exactly. i think japan has real problems, because they are going against the grain. the u.s. will be raising rates. they have currency problems. we need -- it remains to be seen , but at this part of the game, the focus on the american economy is where we should look. what will happen to the american economy? japan would be in good shape. haslinda: we know that u.s. rates are heading higher. japan's not happy moving. what impact do you see that having on the markets? >> that's true, you have a great, disciplined market in japan. he's right -- japan can go against the grain, but only to a certain extent. after a point, you are going to have to follow. haslinda: let's take a look at the stock market.
this euphoria, the expectation that trump will spend on infrastructure, but no one sees any disappointment. is that your assessment? >> i think the market is manic-depressive. they have gone from extreme pessimism to optimism. i think there are a lot of people who are very concerned. they're not very optimistic. it's out there to holdback. haslinda: so what are you anticipating? >> i don't see a selloff for emerging markets. i think we hardly seen that. now we will see a gradual recovery. markets are still outperforming this year, and the key will be this flow of money coming from the u.s. after holdings remittances from corporations, and with a lower tax and spending in the u.s., which will
have an impact globally. haslinda: how should investors position themselves now? how are you being positioned? >> as far as emerging markets, you have to be in china, and india, in brazil. and going forward, probably russia. in terms of the global situation, people should have at least 30% of their portfolio in emerging market. haslinda: what risks do you foresee for emerging markets? traditionally, whenever there is a rate hike, investors pull their money out of emerging markets, but you don't see that happening. >> i think the risk for emerging markets is not government debt. governments are in pretty good shape. it's the risk of consumer debt. consumer debt has been growing rapidly. that is something worth keeping an eye on.
it's not excessive. it's something we have to be concerned about. many of these people have and have the experience of consumer debt. haslinda: any bright spots in southeast asia? >> in southeast asia, there are a lot of bright spots. indonesia, thailand, vietnam. haslinda: but what are doing right for you to be upbeat? >> the main thing they are doing right is moving more toward a market economy, allowing the market to determine how resources are allocated. in indonesia for the infrastructure, they bring private investment. it's a means that he will get faster development. they're looking to have rule of law, and people will be confident about that. in vietnam, they are moving more toward a market economy. haslinda: all right. mark mobius, we thank you for your insights.
that wraps up our coverage from the pop-up studio, but we will be back over the next few days. delsey: good stuff. mark mobius, templeton emerging markets. east --p, the middle the head of the middle east's largest property company is continuing his push an into tech, targeting luxury consumers. that's next. this is bloomberg. ♪
they are looking to profit from increased luxury spending in the middle east. matthew martin has more. matthew, what are they hoping to get out of this deal? >> well, for what he was saying yesterday at the press conference announcing the deal, luxury spending in the middle east is roun around 20 million euros and one of the fastest growing in the world. at the moment, a lot of that gets lost to the offshore companies and the international brands. by creating this joint venture, he is trying to capture a bit more of that profit locally, and as we are seeing more shopping in the middle east as bonds go , he is also recognizing that shift and trying to get in as early as possible to profit as more and more of customers move out.
d delsey: if black friday is any example, we are seeing that already. had of this investment sit with broader technology strategy? bbar, he hasll oa become the cheerleader for technology investment in the region. he has recognized that silicon valley has all the great startups, all the great the companies, all the unicorns. billion dollar companies created out of the u.s., that is where all the money ultimately winds up going back to. the middle east has been losing out on this so far. if you are trying to create some homegrown companies to keep a bit more of the money in the middle east, a bit more of the money in his own pockets, he is keen to profit on this. shift,eally leading this and he has a group of investors behind him. he isn't saying much about who they are at this stage, but
saudi arabia's public investment sovereign wealth fund is a key partner for him. this now trying to drive and has created a $1 billion technology investment fund as well, which will also be made into more investments in the space. angie: quickly, what do we expect to see him do next? >> well, he is keeping his cards right close to his chest at the moment. he told us yesterday there will be another deal announced in the next 60 days, probably by the end of the year or early 2017. we should see something else as part of this $1 billion technology investment fund. he is giving cards close to his chest, not even telling us the name of the fund. but we are definitely going to be seeing a lot more as they tried to put this capital to work. angie: all rightangie:. keep an eye on it for us. thank you so much.
>> it is 1:00 p.m. in hong kong. opec ministers going to vienna and it is slim. iraq and iran continued to the cut production by more than one billion barrels a day in russia is prepared to be reluctant to cause it. 50% of free cash flow to shareholders and conducting a major buyback by the end of january. elliott management has been calling for the ration of a holding company as the shares administer abroad. the south korean president