tv Bloomberg Markets Middle East Bloomberg November 29, 2016 11:00pm-12:01am EST
impressed. the index at a three-year high. kong, 4:00 a.m. in london. by where it is 8:00 a.m., welcome to "bloomberg markets: middle east." what are you looking at today? asia, globale in investors taking a closer look at i -- it is weakening and there is a lot of volatility when it comes to the yuan. jump into my bloomberg and see what i mean. exchange, it stock has surged to a record in november. as you can recall, it has been a wild month for global markets, ofecially after the surprise some of president-elect donald
are lookingvestors for production. check out what has been happening this month. here asreally surging investors scurry for protection. we are just under two marketsay from emirates in dubai. let's take a quick check of how they closed across the region yesterday. a mixed bag. dubai, one of the biggest gainers, .7. >> we are doing a quick check of markets open in asia. mumbai trading for almost 20 minutes now. you can see, it is a mixed picture across the board. we are seeing gains in the hang seng index. a 12 day streak
yesterday, we did not make it to lucky number 13. it does not look like it will snap back in terms of recovery. lower. let's check in with first word headlines. here is haidi. haidi: samsung electronics has extended record highs after signaling a potential split as soon as next year. the plans to create a whole new structure was created to improve shareholder value and reduce criticism. the founding family would also see improvements. up more than 30% this year. more evidence that a rate rises coming next month. the governor saying the case has strengthened. speaking in indianapolis, he said unemployment and inflation were topics. moving too slow, could trigger an abrupt decision. policymakers meet on december
13. janet yellen says she sees arise coming. we will find it on friday if she will be forced to resign when lawmakers debate her impeachment, making her a third public policy. down ifd she will step they can agree to a civil transition of power. samsung was also drive into the scandal. the european commission's chief negotiator says there will be a small window to seal a break the deal. talks may begin in as little as 15 month. because the european parliament deals, that the will happen in the second half of 2018. the british government says it won't talk about brexit negotiations at the end of march. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am haidi lun, this is bloomberg.
oil is trading near a two-week low. opec failed to agree wednesday to cut output to stabilize prices. at the vienna talks, saying it will refuse to lower production despite pressure from saudi arabia. >> all the options are on the table and they will be discussed. we need the rationale in any decision we make to be conclusive. let's get the latest, we are on the phone now with a reporter from a vienna. talks aboutil opec the deal. the details are shaky. what happened, if there is no deal? >> good morning. it is up in the air, there is no deal. but anything could happen.
they could agree not to meet for six months. it took months for them to meet again. if the price of oil drops, and many analysts are saying they could see oil in the 20's. be sooner rather than later, if they are under pressure because of oil prices. here?anyone exempt >> there has been much internal strife and pressure, they cannot economically afford more cuts. -- thisis and iranians is what the deal comes down to. the saudi arabia and say they will not accept the deal. if the iranians and iraqis
agreed to cuts. part ofw russia is not the talk here. are you seeing any delegates from russia there in vienna? i am sure one of the delegates of russia has come. it is not an official meeting, but they should be attending before they go to the opec secretary. we are still trying to find out if any russian delegates are here. they are trying to figure out what is going on internally, before they confirm any news on production cuts. >> we are watching the latest on opec in vienna there.
the clock is ticking in washington. gore are just 50 days to until donald trump moves into the white house. today we are hearing about three major cabinet picks, including a former foe. ramy inocencio made his ok. let's talk about the new team members. and very interesting names here, indeed. >> definitely loyalty across the board, except when it comes to romney -- mitt romney. the commerceto secretary, the most recent name to have dropped in the past few hours. that would be wilbur ross . win since donald trump did the election, but more about mr. ross. he is a 78-year-old billionaire and a former banker. he made his billions by restructuring a lot of industries in the u.s.,
specifically, the u.s. steel industry. it turns out he is also a former democrat, but in 2012 he decided ck that party and had to the gop. he backed romney. he stuck with the republicans and is now headed to the white house cabinet, as long as he gets approved by congress. if he does, he will be helping mr. trump the phil campaign promises that include scrapping the transpacific partnership, which was mr. obama's foreign-policy cornerstone. he will also try to ring ago -- renegotiate nafta and call china a currency manipulator. let's head over to the treasury secretary position. mr. trump wants steve mnuchin to take on that role. insider and street
has been criticized for that just a bit. he spent 17 years of goldman sachs. and donald trump on the campaign trail was lambasting wall street, that had a key role in the 2008 financial crisis. we still do not know his views on interest rates, fiscal policy, and dollar strategy. i also mentioned mitt romney quickly. mitt romney and donald trump did have a dinner earlier today a couple hours ago in new york. not sure what they talked about. but it probably ended up something about the secretary of state position because his name has been bandied about. heard who he wants to have four health and transportation. >> with transportation, that is elaine chao. she is no stranger to the white
house or the white house cabinet. that is because she was a former secretary of labor for the george w. bush white house between 2001, as well as 2009. she is the first chinese-american woman to ever serve in a u.s. white house cabinet. she is 53 years old and married to senate majority leader mitch mcconnell. if you take the position and she is widely expected to, she will be tasked with executing mr. trillionrategy for $1 in terms of infrastructure to repair america's roads, rails, and bridges. we also talked about health and human services. obamacareis having well within his a sites. tom price is the man he is tapping for that. inocencio there for us in new york. thank you. let's get the latest for the markets now.
>> it is midweek, and midday here in hong kong. on theirasian-pacific last leg this wednesday. it is very much the same picture we saw in new york, directionless trade, very mixed. it is very hard to make any clear direction. more importantly, when you look at the market, the volumes are quite light. that may have been the case for the most part. we did hit extreme levels because we entered december. one thing i want to point out, this third column we see on the right side of the screen. very much red. unwind we are seeing in china. a lot of contracts on the commodities exchange are down 5% just over the course of two days. that potentially can become messy. we will continue to follow that. as the moment -- at the moment,
leading those declines. steel not far behind, as is aluminum. table, they of the are gaining at the moment. let me shift to this quickly. at 2.3%.ear the dollar continues to weaken against most asian currencies, with the yuan leading those gains. desley: david, thank you very much. later in the show, samsung .hares hit a record high a sign company is heading for a split. angie: opec's deadlock over output. independent oil market expert joins us. this is bloomberg. ♪
>> welcome back to "bloomberg markets: middle east," live on bloomberg tv and streaming on the radio. let's get you a quick check of the headlines. chancellor angela merkel has expressed opposition to further talks on turkeys suppression to the eu. she told her party the negotiations are effectively over. last week, the european parliament talked about secession talks. they accused erdogan's government of a disproportionate crackdown following july's failed coup. france and international institutions have stepped in with billions of dollars of aid for tunisia as the government tries to revive an economy from terrorist attacks. $1.25 billion, while france said it would provide a quarter of a
billion dollars annually for five years. they have barely rallied in the six years since the start of the arab spring. appointed to a new term as head of his ruling party. offer clues toy his successor. select theto governing bodies. the central committee and the revolutionary council. sinceved as president january 2005. oil remains near two-week lows on concerns opec leaders will fail to agree to production cuts in vienna later today. let's bring in our expert who joins us from dallas via skype. you're talking about opec and an
agreement today, what is driving that pendulum? >> the challenges are too many. the unitedt money in states and are looking for market share is in the euro. we have the iran-iraq issues, secondary data versus government data. we have a major increase in russian oil production. we have an increase in the value of the dollar. we have a new president-elect, trump, with new energy policies. some of them will affect opec members. we have all those issues that are very hard to deal with. they affect all parties. desley: do the opec nations have a choice of not presenting a deal? the legitimacy and importance of opec is constantly under criticism. what is your take about the fact that the group possibly may not
have a deal at the end of the day? >> most likely, just like everyone else, you have to have a deal. but my view is that opec was there a long time ago. there are an organization, people are beating the dead horse again and again, but the horse is dead. the horse is dead, you cannot beat a dead horse. but it boils down to this. let's jump into my bloomberg now. divide seems a small here. iran proposing a cap of $3.975 million a day. todi saying, no, you have cap edit $3.7 million a day. algeria trying to play the middleman here. but it really is about the global economy and what that means for these two nations. only the saudi's are the -- saudi arabia is the only country in the world right now where they can compensate for lower prices by higher
production. cannot do that. they are the only ones that can survive a lower price by increasing production. others will suffer. they are suffering right now, trying to diversify their economy. but i guess they are the richest player in the room. >> correct. but if you tried to rank all opec members plus russia on who is likely to benefit from the deal the most and who the least, you will see russia, iran, and iraq will benefit the most. saudi's will benefit the least. so why go for the deal? anas, how much downside you think the markets will be able to accept if there is no deal? in the market already priced no deal? anas: not all of it.
if we end up with a deal where a stock opening 3000 barrels today, it will be mostly carried by saudi arabia. then prices will fluctuate or go to 56.he level of 53 if we have no deal, prices will collapse to about $35, $36. is, will theave saudi's increase production than? if they do increase production, prices could go lower. desley: who is to blame if there is no deal? after all, it is the share they split opec into two halves and those two have cannot -- halves cannot agree at all. angie: thank you so much for
thisg a look closer into with our editor, malcom scott. >> he did not name this, this was back when he was a provincial official. he was asked what he looks for in the economy. he said, some of the gdp numbers may be there. economye some of the was very different back then when he said this. it was very much an industrial economy. but people still question this index. it is roaring back to life. in september of last or it was down to 1% year on year growth. now it is raising back in double figures. that is according to this aggregated proxy measure we put together here at bloomberg. indicate goodt
news or bad news for the economy? malcolm: it depends on your perspective. for the overall economic picture it is good news. manyeconomy has defied since the start of the year. this is a stimulus on the monetary fund, the fiscal front, and that has fired up the market. it has the coal trucks flowing on the trains again, steel generators back at work pumping steel. that is good news for economic growth but bad news for the rebalancing story, which so many officials have put so much weight on. tos shift to transition and green energy, to consumer services. that is taking a backseat right now. angie: why do you suppose? do you have to go with the playbook? malcolm: it does work. angie: but at a cost of sometime
in the future. malcolm: you just have to look to the skies to see what that cost is. the economy is growing again. but what about those reforms that have long been promised? we shift to those greener, leaner forms of economic growth. that seems to be on a backseat. gaugeenergy or economy has stuff like come medical conception, clean energy production. it is falling back to its lowest growth. still pretty robust. but at its lowest clip since it was put together in 10 years of history. angie: absolutely. and what will the next 10 years bring? that is the question there. malcom scott, we look forward to telling us about this. coming up, the most
>> it is 12:30 in hong kong, a: 30 in dubai, and you're the headlines from around the world. failed opec members have to get their distance from production levels. hinting saudi arabia should shoulder most of the reductions it is asking for. is said to abandon the deal unless opec members agree unanimously to reduce production. more details of donald trump's cabinet. mnuchin is is said to be the new u.s. secretary. bloomberg, the second
bannon'sowing steve choice as chief strategist. name another wall street figure, wilbur ross, as his commerce secretary. growing financial distress in china. of -- they climbed a record 35 basis points this month. has made china's financial system more vulnerable to systemic shock. one girl lender has one third of its loans overdue. north korea faces a sharp cut in cold reductions aimed at the regime for september's nuclear test. bloomberg has a copy of the resolution which officials say would deny on gang $1 million a
year in hard currency. gyang $1 million a year in hard currency. i am haidi lun, this is bloomberg. middle east company that runs says it may file for an ipo. they are in talks with banks to sell shares in the next 18 months. we are fortunate enough to have the founder and managing .irector of the group thank you very much for your time this morning. you have got lofty ambitions. you had a wonderful start raising $50 million when you first kicked off. you're at the position now where you are looking at an ipo. is through the ipo plan and what your strategy is. back in 2013.mena
we wanted to capture the growing demand for consumer online regions. as ated to structure imena business that is large enough to have flexibilities napoli to build our own businesses but also to buy into existing high-growth, online businesses. we had a very specific strategy to focus on online marketplaces that have already been proven winners in emerging markets around the world. we have been lucky enough to start at a time that enabled us to own some of the largest and best positioned business models in that region, such as horizontal classifieds, automotive marketplace, online restaurant reservations. a feel that evolving into public company brings value not only to our investors, but to
the community at large because we can have a platform that allows for liquidity. int we have noted is that other emerging markets, similar business models, have been successful in creating proxies from other regional and international indexes to participate in their investing. desley: so you're not in the private equity model, you're looking at ipo's. tell us about the size of the ipo, the portion of the business you want to ipo, firstly. we are looking today in an international market and doing a dual listing market.mena institutional investors in international markets value online businesses and are to participating in those online businesses for the longer-term. taking that into consideration, the ipo will have to be significant to be able to
attract such ipo investors from international markets. so we are thinking a little more than $100 million. however, before the ipo in the next few months, we are going to do a pre--ipo which will enable us to complete our plans and be ipo-ready. desley: what percent is that of the business? khaldoon: it is tough to say. we are growing very quickly. in the last 12 months, all of our businesses grew at least two to three times. the markets are changing quickly. we hope that it will be a very good market. it is very tough now, maybe in six to eight months. six to eight months ahead of a 18 month ipo. are they concerned about the
slowing down of the middle eastern region? especially when it comes to the latest opec deal or no deal? secondly, what is the differentiator that you are offering in that region versus somebody else with bigger ammunition coming in and bigfooting you and your own market. khaldoon: those are good questions. in the last 12 months there has been a bifurcation in the economies in the middle east. some traditional sectors have been slowing down, but online businesses have been they are finding efficiency and online businesses and investors have to allocate more time and funds for online businesses. are not concerned about the slowdown in the traditional economies. as for your second question, we have been very, very careful in our choice of the business
models. we target existing off-line industries based on the online to off-line business model. those businesses create or possess a very powerful network a highthat creates variable. if you look all over the world, online classifieds aren't businesses. automotive marketplaces, online reservations, these are all local businesses that have been able to protect their position. models wheren there is no value, it is very tough. desley: what is the upside for any investor interested in your ipo? if you are going to stick with your own market there, what is the potential for growth? khaldoon: there is tremendous potential for growth in the imena region. as a proxy ford
the growth of online businesses in the imena region is very big. thatesearch as shown markets of similar gdp to the imena region has generated $35 billion to $40 billion in online businesses. we see that in the next five thes as saudi arabia and uae will have $50 million worth of online listed businesses. and it was virtually zero, nothing. when you start there, there is a tremendous upside for growth. again,you could say that especially when you start from zero. thank you so much for joining us. south korea's most valuable company may split as soon as next year. looking to turn itself into a holding company and will have more to say at a
later date. but for now, let's go to our columnist to joins us now. samsung said yesterday they will give back cash. but you are not satisfied with this offer. why not? it wase reality is, it not an offer but a rebuttal to what elliott had wanted. they are sitting on a lot of trillion,t $18 translating to 17 billion u.s. dollars. cash in theve yuan shorter term. and there will be a shorter term cash flow in the future. -- still still sits on sit on buckets of cash. they think they need to sit on roughly 60 billion u.s. dollars in the futuree when they need it. they do not need that much cash.
if they did, they could tap equity markets. doesn't samsung need cash for a rainy day? aren't they just being prudent? tim: they say they are being prudent and responded to me and said, oh we do need a cyclical business. you have to be careful, save it for a rainy day and so forth. really, i do not buy that. the reason is, they are cash flow positive. even in a downturn, if they were cash flow negative, they would still have a lot available and naked adjust spending accordingly. and a downturn you cannot adjust your spending. the other thing, and the last five years the cash doubled. that is an incredible amount of money that they added to the pile. if they did see a downturn in the future there and be more remaining even with half of the
cash they have now on hand. desley: what should samsung do with that big pile of money? is, theyway i see it should basically set out a it it, say weicize have this much cash, we will give a certain amount today, a certain amount of year from now and in the future. if they lay out very clearly a plan and stick to it, investors would be able to basically decide whether or not they want to hold the stock or get rid of it. they can price accordingly. and it would basically build in a certain dividend yield. if you know that three years down the track you will have a certain amount of cash minimum from the start, that is a valuable commodity. a lot of our clients and shareholders want cash. desley: tim, thank you. live for us from taipei. investors that have been abandoning the yen.
angie: welcome back, i am angie lau in hong kong. desley: and i am desley humphrey in to buy. i check of the business flash headlines. china unicom has jumped to the most in six weeks after local language website said alibaba and others will participate in the mixed ownership reform. citing unidentified sources, that three internet giants would hold differing sides today. at least two analysts raised the china unicom ratings from hold to buy on tuesday.
angie: the hong kong stock 14.1% inhas raised to the past few days. evergrande have enough influence for a shareholders meeting and take a seat on the board. attemptsnd financial for china's biggest claimant platform have backfired. with picturesded of scantily clad women posing in exchange for money. in an internal memo, the executive chairwoman apologized to users. she also promised to remove inappropriate pictures of block related accounts. let's take a look at the global stage for you right now.
this is the last trading day of the month. joining us now is mark matthews, head of research at the bank. -- topics did not make it to topix did not make it to lucky number 13. it would have been lucky. we are seeing the weakness, but it is about to change, especially as we come up to italy's constitutional referendum. >> we will know on sunday, right? that is a pretty binary outcome. we thought of brexit what happened the market would collapse, or if trump was elected, the market will collapse. to predictped trying these things. but i do think that given the pace of dollar strength since the election, it makes sense for it to back down a little bit, which in turn means the yuan will strengthen and topix will
not get to 13. i do not think the dollar is going to more than 2%, maximum. dollar strength and interest in the united states remains the same. angie: putting a lot of pressure on the yuan. they are looking closely at capital controls. a whole host of capital controls are coming in. do you see that continuing into 2017? mark: yes, i guess so. i do not entirely understand chinese policy. i think they do like a weaker it makes people panic. maybe it is the sudden strength of the dollar, or the reverse has prompted something like that, which is why they are talking about capital controls. i just want to switch gears and talk about tom. a dealmakeras
rather than a deal breaker. isl he break anything that set in place? what is your take on what deals he is going to propose, and the outcome? atk: i think the man looks everything through a very narrow prism of business because he is a businessman. that is the only thing he has done his whole life, he likes doing it. people of different opinions. i think he is pretty good at it. i ran, he will look as a business proposition. in terms of headlines this announcedarrier has they will keep 1000 of the 2000 workers in indiana that they toe going to let go and move mexico. to me, that is an example of a deal. he is willing to
compromise, i think. that it is also good for the united states economy. on the united states economy and those deals he is proposing, you are producing three interest rate hikes, december, march, and august. will those deals be inflationary? mark: half of it is because of the steel. i imagine he told carrier exactly what he told tim cook. bring operations back to the u.s. and i will offer you very generous tax cuts to manufacture on shore. so half of it is this idea that you are going to get tax reform in united date. that is an extremely powerful thing. imagine if they cut the effective tax rate of s&p 500 companies from 26% to 20%? is, the u.s.ing economy is already doing very well. i just noticed this morning in terms of headlines, home prices
are up 5.5% in november, year on year. a cyclical high. corporate profits up for the first time since the beginning of last year. the other one was the third quarter gdp, up to 3.2%. desley: it sounds great until you look at u.s. dollar strength and what it means for corporate earnings, and what rising rates from the federal reserve me for home mortgages. mark: you are right. these are balancing things. the economy has a wonderful way of balancing itself. if the dollar goes up too much, that detracts from producing things in america. i think it will balance out. certainly come a dollar strength is a major theme for next year. 20%, that will impact manufacturing. cut taxes asf they much as they are saying -- all these things will balance out, somehow. angie: if you are looking for
capital gains, where do you look? mark: i agree with the consensus it is the cyclical stocks because they correlate with rising on deals, historically. but what is overlooked is the money managers. i am talking about mason franklin -- these companies times, they0 or 11 have no debt. there is a fiduciary rule imposed in april of next or that would make them liable for losses of their clients. team saying they would get rid of that rule, a little like getting rid of dodd-frank. the market rises, people will become interested in it again. angie: that is a great insight right there, mark matthews. head of asian research bank right here in hong kong. coming up, mission to mars. we take a look at how india's space program has proved much
angie: welcome back him you're watching bloomberg. i am angie lau in hong kong. desley: and i'm desley humphrey and divide. china's crackdown on high rollers and excess and the --eral slowdown in business the chairman is launching a new billion-dollar hotel. he said it is just the beginning of a global plan. melcro brown, we like to be the creator of entertainer -- excitement. the puzzle,ece of
our flagship resort, we want to be the best. it is built for the most sophisticated international travelers. it is really our gift to macau. but at the same time, we want this property to launch a global brand. we are looking for the next place to build something special. like many global operators, we are interested in japan or other parts of asia, where you could spend this time of money. gaming revenue has seen three months of growth. are we in the middle of a recovery? recovery, it that will not be the same as during the global financial crisis. back then, china had infused $4 trillion into the system, renminbi into the system.
this time around it is different. a more natural recovery. we are excited by the infrastructure improvement coming on board. 18china last month arrested employees at the crown resort. macau ofhe effect in the arrest, psychologically and operationally? >> psychologically, the customer base may be concerned. but the crown arrests are not different to that two previous years where china came down hard on korean casinos. i think the view in macau is that china is trying to crack down on the foreign casinos trying to poach their players to go overseas. whereas at the end of the day, macau is part of china. successon for macau's is china. our hope is that our homegrown operators will be safe.
it is even more important, melco crown has been very mindful of what you can or cannot do in china. the -- herily, father, is 95 this year. is there a succession plan? >> i do not know. i have never been involved in that aspect of operations, and never will. >> you'll never be involved? >> i am not interested in that. what i have build on my own is so much more exciting. speaking to our journalist. that is it for this edition of "bloomberg markets: middle east ." desley: we will have all the top stories from around the world coming up. "bloomberg tech," is next. ♪
we have an update of the top stories, oil is covering near an all-time low. oil production levels, iran and iraq, insisting it will not cut out. saudi arabia is said to be ready to abandon a proposed dealer unless opec members agree unanimously to reduce production. said to bechin donald's pick for u.s. secretary. he is the second goldman man following stephen bannon's selection as chief strategist.