tv Bloomberg Markets Middle East Bloomberg December 27, 2016 11:00pm-12:01am EST
could be a top pick. in london. angie: i am angie lau in hong kong. optimism shine bright after the holidays in the u.s.. it helped push u.s. markets. ef: absolutely. some markets close to record levels. let me show you how some of the americans are feeling about equity markets. that is the conference board data. this chart tells the story of the optimism americans are feeling about stocks. we have not seen such a dramatic the.com --urge since
dotcom boom. the biggest monthly advance since november of 1998. how optimistic are things looking on your end of the game? seeing gains for the first time in seven days across the region. if you take a look at the broader index, we are seeing gains. as youto the tailwind, said, from u.s. markets. the dow jones a few points away from the 20,000 mark. mumbai has been trading for a most 20 minutes. asiantake a look at how stocks are doing. japan, very interesting as well. we are seeing it flip into the green. gaining some traction, you could
say, today. show you what has been happening in this part of the world. i'm going to show you some of these indices. gains in saudi arabia, up 1.27%. keep an eye on what is happening in egypt. foreign investor appetite, still driving the resilience. the first wordon headlines. : qualcomm says it will appeal against the south korean antitrust ruling. trade commission says company co-worst companies into signing contracts.
they are also under investigation in the u.s. and europe. airbus deliveries to its top customer delayed. they will be shifted to a year later as demand for four engine airliners fall. iran canceled an order, but they say they plan to deliver -- -- australianmped retailer wolworths jumped. the funds will shore up wo olworth's balance sheet. teaming up with
panasonic to make solar cells in new york state. production is set to begin in the summer and may bring 1400 jobs to the buffalo area. haslett is expanding its manufacturing business in the u.s.. elon musk is on donald trump's business advisory team. the suit alleges petitions anduded confidential data financial information related to india's biggest conglomerate. global news, 24 hours a day, powered by more than 2600 journalists and analysts. angie: to she but enduring another tough day.
after admitting losses to its u.s. unit could be in the billions of dollars. the company has lost a third of its value. let's bring in our bloomberg reporter. to explain this unit, we have to go back to 2006 went to sheba bought westinghouse. westinghouse is a maker of nuclear units. they were betting the nuclear market would be booming. fast-forward to today and you have the fukushima disaster and other problems that have stopped nuclear from progressing. on thea put their bets reactor being built in the united states. they are over cost and a delayed. in order to get them back on track and reduced to some of the cost, toshiba decided to
purchase the unit constructing those reactors in the u.s. last year. because the units have been fought over so much, toshiba might actually have to bear the cost. a right translating to down. write down. does this mean exactly for the balance sheet? >> this charge is bad. is going to happen now, we are not sure how much it is going to be. a $1 billion charge which might be the lowest would wipe out their entire profit for the current fiscal year. billion, would mean they
are going to have to go back to the banks and potentially give some preferred stock options. that is basically putting pressure on the stock market prices. we are not sure how much of a charge they are going to take. out are still figuring it internally. it is going to be billions of dollars which will just add two more that happened. yousef: thank you, stephen, giving us some context on the toshiba story. a broader view now on how markets are developing. we are seeing regional stocks climb for the first time as we return from the holidays. we are seeing shares rally in
the philippines and indonesia. adding on most 1%, trading at the highest in 16 months. leading the charge. wayne on that index -- weighing on that index. shares in hong kong trading at a five-month low as developers and banks way concerns over rising costs. toshiba down in the red, as well as the likes of others. demonstrating some of the weaknesses in the domestic picture. our quick look at what is going on with toshiba, our big story for the day.
chart, at the two day adding to its tuesday drop of 12%. let's cross to one of our top stories. u.s. secretary of state john kerry sent to offer his vision on middle east peace wednesday. this comes as israel steps up its response to a center from the united nations over settlements in the west bank. great to have you back on the program. this has been status quo for decades. now this major shift read what are the applications? give us a sense. isright now the implications israel has been censured. there is a change in the u.s. position. them not vetoing, not doing anything, is a change. language in the resolution was pretty strong. means, itf what it doesn't mean any major change at
the moment. the concerns for israel ease is what it means going forward. it might encourage the boycott movement. it verylution makes clearlyifferentiates between the west bank, east jerusalem, and israel proper. also sets this line, 1967 basis ofas the negotiations going forward. that is the great concern. angie: it not mandatory, this resolution. what is really going to change in practice, in reality? >> it is not mandatory in the sense the united nations is not necessarily going to send troops to implement it. with the palestinians are hoping his they can take it to the international criminal court, it ry's speech, ker
there might be a concern among israelis, the israeli government, there is momentum to keep pushing this forward. , theinforce the principal the basis forre solution. a functionbrought up that shows us trade volumes for israel. u.s., not surprisingly, the biggest trade partner. showing the relationship. for many years, this is a relationship that has been considered sacred. two bloomberg view editorials on the story. talk about how much of a shift that is on a bilateral level. >> in spite of the tension between the obama administration and the netanyahu administration, as you point
out, strayed -- trade is extremely strong. they still share intelligence. huge militaryr a support program. there is no sense the u.s. is moving away. one has to at also, we will soon have a president trump. president-elect trump has made it clear his perspective on israel is very different than obama's. thanks a lot. still to come on the program, let's get you a preview. more on the economic outlook for the region. we are joined by a chief economist. angie: emerging markets in 2017. we are going to discuss why investors love russia and want to get as far away from turkey as possible. ♪
angie: welcome back. live on bloomberg television and radio. let's talk shortselling. .irst, turkey seeing as the market to avoid. down.get the break what is making russia so attractive to investors? it wouldn't be the oil price, would it? >> of course it is related to oil prices permit investors can see the political climate is improving. you also have high interest trade which make strategies very interesting with the local currency. stocks trading at a very
attractive level. you have, for example a 26%.ction of returns of that is a pretty good number. abu dhabi is set to introduce shortselling next year. we know exactly when that is expected? >> what we know from the stock exchange is they are talking to investors here in dubai to come up with exactly how everything is going to work. know this is going to be the first time a major stock allow such going to an instrument. it is something the market has been waiting for for a while. investors skeptical
about how this is going to work. a little context for our viewers. changes. of you can see, for the most part, a lot of them remain unchanged. what does this mean for volumes? what does this mean for activity and momentum? it has really been struggling to find that. we had like more than half of the members unchanged. that is what our chart is making clear. this is an attempt to boost liquidity. to make investors trade more. to become more sophisticated. it is something we have been talking about on a daily basis.
when you see volumes, they are related to small caps that do not make a big difference when it comes to the market size itself. it is a clear demonstration, that is something the officerity -- abu dhabi said, they are looking to improve liquidity. yousef: thanks for that perspective. our middle east equities reporter. let's bring in hans. investments for middle east and asia. great to have you back. onnow you have been bullish middle east stocks. what is this latest move do? does that change anything? the way you put money to work? : it will take time for investors to familiarize themselves with short selling.
unless you are an institutional investor, it is a step in the right direction. liquidity.s increases prices. angie: doesn't help beyond abu dhabi -- does it help beyond i dhabi?eabu dhabi is the first market to adopt this. overall, the region will gain in importance with international investors. beenaudi market has partially opened. we are also talking about the bond market developing here. great names in bonds as well. rates.reat --
specific details of the cancellation have not been released. gained aftert most downloaded free app in the apple store. suggesting the wearable health tracker was a popular gift. angie: amazon enjoy the holiday period. the company says it shipped more than one billion items. sales of echo speakers were nine times more than the 2015 holiday season. yousef: we are now joined by hans, still with us on the set. to 2017, we have
italian banks and european financial stability or fragility on our minds. i brought up this great chart. deutsche bank in blue. , and the paschi stocks therefore additional perspective. is this a buying opportunity? hans: things have been suffering from this negative interest rate policy by the ecb. when yields become positive, the better it will be for banks. i think the ecb has recognized negative interest rates are probably a policy mistake. you rank the european markets when it comes to the economic time horizon?
is it still looking good or not? hans: first of all, europe is more reasonably valued than the u.s. is on thecus united states, the trump rally. the rally has been likened to the reagan rally in the early 1980's. in at somel set point in 2017. maybe it is going to be sooner rather than later. what central banks are doing, not only the fed but ecb. that should be supportive of european equities but also puts pressure downward on the euro against the dollar. yousef: this is a spread of versus u.s. 10 year.
how is this going to develop in 2017? hans: the fed is the tightest of all, but at some point, the economy will feel the headwinds. not only long-term interest rates but also the u.s. dollar. it is essentially the equivalent of 25-50 basis points tightening. that is where all these projections about fed rate hikes will be put into question. the dollar is overbought. we would expect the dollar at some point in 2017 to correct. >> folks would tend to agree with you. the dollarying against the yen before the election and now selling the greenback. hold that thought. staying with us. globalcoming up, fragile
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♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. these are the first word headlines from around the world. toshiba is forecasting a loss. this follows the acquisition of a power systems operator by its westing house unit. there have been arguments over new their projects in the u.s. toshiba has lost a third of its value. >> we are yet to determine the down amount but it could be as much as billions of dollars. i would like to ask your continued support.
>> the suit alleges the own petition against the group includes confidential data, business strategies, and confidential information. the former argentinian president has been charged with corruption over construction contracts. the judge has also frozen assets estimated at $640 million. she is also being prosecuted for allegedly manipulating currency futures markets. russian investigators are studying the flight data recorder from the military plane that crashed into the black sea earlier this week. were killede
including members of the world-famous red army choir. it had refueled on its flight from a military base in syria. qualcomm it says it is going to appeal against a south korean antitrust ruling. the fair trade commission says the chipmaker improperly licensed mobile phone patents. let's get the details. ind: they said they were worst customers into signing paperless contracts. they also did not fairly pay for the use of patents held by other phone makers. qualcomm gets the majority of profits from licensing.
, investorsoncerns are worried about what this means for the future of welcome's -- qualcomm's business. angie: we know they are appealing. what exactly is qualcomm saying? rosalind: they say they will seek a stay from the court of appeals. and, it is unprecedented unsupportable and it is going to appeal the decisions in the soeo ul high court. it's licensing business follows industry practices. the yuan is heading for
the steepest slump in decades. bloomberg intelligence has looked at the likely impact. china's shopping habits and the prospect for overseas deals. eak yen would deftly have an impact. the chinese are more conscious about how they allocate that shopping budget. they are starting to see global retailers and brands opening shop in marketplaces such as alibaba. chinese shoppers can assess and buy these products online. we see investments in hotels specifically. that is going to continue through 2018. there are two types of key investments.
one is the physical which generates that profits and a strong currency. , owning a rates flagship property. the second type of investment booking a global operator. they are capitalizing on the business have this that weathers through business cycles and that is what the chinese are looking for. bo -- thisg to hong kong is how the developers, going until next year, we may see office demand. in terms of those demand coming from china to hong kong, the interest is inside the office buildings.
>> -- into theet's jump conversation with hans. it is a grim time for anybody who tends to be bullish on china, specifically. in 2017,oing to happen these outflow concerns? it doesn't keep me up at night, but we have to also uana s it is not just you weakness, it is also dollar strength. we see a limit to dollar strength. up.e: i want to follow may of this year, we saw
it hit a low of 92. .ight now, 102.96 are we in overbought territory? : you have the fed on one , a tightening cycle, and everybody else still easing. or at least not tightening just yet. the dollar strength itself is the equipment of an interest rate hike. it will have an effect on the economy sometime in 2017. higher long-term interest rates do have the same negative affect on the economy. that will lead to maybe a .e-think at the fed at least a consensus. yousef: is this the fed that is
going to look at a re-think, the government under donald trump? they are not going to be in favor of a stronger dollar. it doesn't fit in with some of the economic indications. could there be a political intervention to put a backstop to the strength of the u.s. dollar? sane, we are overboard, we have to rain things in? : in 1985, the dollar went through the roof. we are not quite there yet. donald trump has been an advocate of higher interest rates. sometimes, because for what you wish for. i don't think he will be in favor of a much stronger dollar. on the other side of the trade, we are seeing bonds, precious metals, really selling
off. especially this fourth quarter. do you expect that to continue? hans: it all depends on the dollar. if you assume it is overbought, every asset class will reverse. the end of the day, the key driver for emerging markets relative to develop markets is the difference in growth rates, economic growth rates. that turns back in favor of emerging markets. once the dollar strength is over, emerging markets will be one of the most attractive asset classes. the same goes for gold and silver. what ng wasking of talking about, it has been a tough year.
higher oile to prices has pushed that down. the biggest withdraws of sense 2013. as we see opec beginning to 1.8 millione, barrels per day, is it going to be successful? are they going to push prices higher? seen, from what we have the $55? beyond 60 is tough. the new swing producer is now u.s. oil shale. saying we are going to have a production 360,000 a day. that is an important offset. we have to watch oil shale.
that leads to the conclusion it is going to be relatively difficult. angie: is that story, a lot of people thinking that is going to be the main driver of economic growth. that is exactly the thing. rally is based on hope. stronglity is, we have deflationary forces. deregulation, which is part of the trump agenda. capacity utilization at 75. the dollar,
deflationary. correlation between facebook policy and inflation is practically nonexistent. and inflection point where monetary policy is going to shift to fiscal policy. top trade for 2017? top trade, japanese equities. japan,e the bank of committed to a green the 10 year bond yield. that isest rates go up, positive for equities but negative for the end. joining us live on the
much as it takes. that is an important decision for the boj and you have seen the yen drop significantly and 's mojock market get back. >> we think the focus of policymaking will shift in 2017. away from long-term requirements . the authorities have been very good at engineering a recovery in 2016, alex we have seen. -- as we have seen. however, the policy levers they have been using to stimulate starting to extinguish. we feel and 2017, they will have a much harder time balancing between growth and stability. -- thesenses we see european economy, 1.6 down to
1.4. japan, the modest growth, and it is like the u.s. economy where we see a modest strength thing, continuing to carry global growth through 2017. yousef: let's get back to the saudi budget story which has been driving a lot of the market activity in the middle east. we did see some changes, a more ambitious saudi arabia coming to the forefront on the back of reforms as it tries to wean itself off the policy on oil. dhabi economist. great to have you back. your topline thoughts on this saudi budget, which has had its share of skeptics. >> good morning. indeed, it has. there are many different layers of the budget which highlight
the outlook for next year. i think the key issue, the key on, away that i am focusing it is moving away from a deeply austerity focused budget to one looking to support growth more. a big development in 2016 was vision 203 and the development plans0. there was a realization with the deepest 30 and fiscal retrenchment, you could not reach these goals. support andsome stimulus to the economy. you see parts of the budget looking to make sure fiscal well-being is there. you are going to see a pickup in government spending. incentive to try to encourage , which willsector
be critical driving growth. and ae seen more moderate reductions of subsidy reforms. we expect these could come in in the second part of the year when there is momentum in place. supportive see goal budget, although the stimulus to growth will be weak. much can this support confidence? it might have moved from a sturdy to fiscal stimulus, but isn't it going to return back to austerity in 2018? i think austerity is something we are going to see again and the next few years. the critical issue is, where are oil isis going to be? it will remain in the 50-60 dollars level.
the break even price for saudis than $80 a barrel. you are going to need further austerity measures. whichis a document highlights the medium-term reform plans. these include the liberalization of fuel prices. to markets at levels, and so on. austeritying to see levels going forward. the government also wants to cut back on recurrent expenditures and be more efficient on that side. there is the view, to meet the , this does need investment going forward.
the private sector will have to pick up a lot of the slack. the government is looking at measures to support these. that is exactly it. as much as they want to stimulate the private sector, -- what do they need to crackfinally be able to this problem effectively? been trying to stimulate the private sector for years. if you look at the oil price downturns in the 1980's and 1990's, the focus has been on some putting the private sector. the private sector, at this point of the historical economy, is much stronger than it was in the 80's and 90's. -- they areolved more efficient.
they were delayed payments, the government progressed with pain these. nonetheless, a lot of the reform measures will impact the private sector. everything has to be access to funding. private ownership programs. course, these are going to really take time to develop, have the framework in place and contribute to the economy. it is more the relief from 2016. a bit more confidence. increased government spending. we believe this will take time to build up and gain traction.
problems. 2017 hasn't even started. why such a dire picture? looking at the way singapore has kind of hand out. we had five companies default. million worth of bonds. that is mostly due to the commodity downturn which impacted the ability of the companies to repay debt. this is seen as a bellwether of sorts. withe going to be dealing rising interest rates for the u.s.. potentially more protectionist trade policy from trump. dollar bonds are set to mature, more than this year. expect more restructuring out of indonesia. think about the coal miners down there. they could allow certain companies to fail as they seek
to control risk. 2017 hardly sounds positive. can you put some numbers, give us additional context on this? facing itsr is weakest growth since 2009. weakness inhe exports and the faltering commodities sector. example, it has galvanized to fiercely protect the financial services industry. the industry makes up 13% of the economy. other than a year of debt defaults, it is also marked as the busiest year for enforcement actions. we have the monetary authority clamping down on banks. is it for this edition.
>> it is 1:00 p.m. in hong kong. qualcomm is to appeal a record fine of several million dollars in korea where it is accused of illegally mobilizing phone licenses and not paying other phone makers for using their patents. launched -- lost a third of its value after forecasting a loss in the billions of dollars. problems that it's new nuclear programs in the united states are above budget