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tv   Bloomberg Markets Middle East  Bloomberg  November 19, 2017 11:00pm-12:00am EST

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♪ tracy: risk off, asian stocks resume the slide, and the euro falls. is a correction coming? grow for an exports fourth straight month by double digits. we are live in tokyo with the latest. resign,efusing to robert yougov a shocks zimbabwe and does not step down in a tv address. his impeachment the next step.
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investors waiting to look at the notes from the recent fed and ecb meetings. janet yellen and mario draghi meet this week. is 8:00 a.m. across the emirates. i am tracy alloway in dubai. david: we are just entering the lunch break from markets here. a sense ofe you where asia started out this week. it has not been the most stellar .ession' a lot of this comes to the pullback. the big story out of europe, germany. -dollar.ion low on euro were coming off a little bit those lows. still under pressure. gdp, cementing
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southeast asia as the rising star of growth among growth for thailand going back to 2013. you have some good, but mostly risk off. definitely risk off in the markets. some assets that mean a lot for this part of the world. brent falling, down $.13 this morning. meanwhile, the bloomberg dollar regaining some of its safe haven status. u.s. 10 year yields continue to grind lower come and now 2.32%. a lot of that risk off feelings showing up in dubai stocks, some of the biggest callers in the region. in particular dragging the whole index down. somell talk about that and of their nervousness in middle
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eastern markets later in the show. first, let's get over to first word headlines from around the world. hasresident robert mugabe shocked zimbabwe with a televised address that failed to announce his highly anticipated resignation. may means the 93-year-old face immediate impeachment hearings. sources have said he would go after his ruling party dismissed him as leader. he and his wife were both fired from the party yesterday, four days after the military put them under house arrest. in germany have collapse, forcing the currency down and throwing into doubt the future of angela merkel. this could herald new elections. a 12 hour negotiating session ended shortly before midnight, but the pro-market free democrats walked away, saying differences with the greens are
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two great to bridge. is a day of deep reflection on how to move forward in germany. i will do everything is possible to ensure this country will be led well to these difficult weeks. u.k. could improve its financial offer to the european union. that is the head of a crucial leaders meeting next month. they will consider how much they are willing to offer in britain's to force from the eu. philip hammond yesterday suggested a settlement proposal would come soon. >> we will make our proposal to the european union in time for the council. i am sure about that. >> saudi arabia on course to meet in the year budget targets after an 80% jump in non-oil revenue in the third quarter. the kingdoms watch a deficit ,arrowed to 48.7 billion riyals 9% lower than a year earlier.
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the nation is trying to rein in spending and reduce its reliance lower oil prices train finances. $8,000 aspped investors shrugged off a 29% tumble last week, taking gains to more than 700% despite a recent move to alternative currencies like bitcoin cash injecting volatility. futures trading on bitcoin will be on offered next month. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. sophie: let's talk about this recovery in japan. growing by double digits for a fourth straight month. in points rising 19%. -- imports rising 19%.
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james, this was the best or strongest performance since 2008. what are the supporting factors here? >> that's right. we saw the data today. japan exports year to date of the best since 2008, so it indicates a strong recovery in japan and the strong recovery in the domestic economy driving for demand. arebig increases in exports in cars, chemical products and machinery to make semiconductors and other goods, driven by the iphone and samsung smartphones, shows theformance strength in the industrial economy and how much demand there is for manufactured goods in china.
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the recovery is building and so they are coming back as a big export destination for japan, and exports to the u.s. are still very large. there is a slight nuance between the value and volume of exports. what is that? the yen has weakened since 2013 with monetary easing and the boj. it has made japanese exports cheaper. the cost of a car in u.s. dollars could be cheaper. what japanese companies have done is instead of making their products cheaper to export more, they have kept the price the same and taking the difference in profit. the volume of japanese exports has not changed that much, but the value of those exports is up a lot. 2012, japan exported 11% more cars, but the value of
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those cars is 53% more, meaning those companies are making a lot more money for the same amount of cars they produce, so very good for japanese companies come and we are seeing that in record corporate profits. thanks for joining us. staying with japan and the country's economy minister, who has spoken the bloomberg about the chances of the u.s. returning to the tpp. frankly the possibility of having the u.s. back on tpp soon is quite slim, but japan would like to make a persistent effort to persuade the u.s. to return. the fact that 20 items that are still on hold will encourage the u.s. to come back to the table. japan's economy minister
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also spoke about the tpp timeline and said his country would take a leading role to finalize the agreement as soon as possible. the managingn director and head of wealth management at citibank singapore. thank you for joining us this morning. >> thank you. tracy: let's start with that japan data we just saw, this export boom. what does that tell us about the economic growth of the asia region in particular? first and foremost, japan has been on an upswing. it has been one of the best run in a long while driven by productivity and labor participation. the demand coming to asia in particular in this market that we have been seeing. david: it is there anything not
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to like about japan at the moment? we just had a stellar earnings season, and you look at the multiples for that market, they word cheaper now than 18 months ago. talk to us about the outlook. >> we are feeling good about japan. gains on been making the political front. coming sos are not much from growth, because that is in decline, but from the road activity the labor market participation. lastly on the management of the economy, the liquidity has then managed and the boj has been purchasing bonds, but not setting a specific goal in terms
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of how much to buy and how much to keep. that is helping the markets because they are doing it on a need-based. the last few months, it has been slower, but the markets have been strong. clearly all is well for japan. japan released sweeping regulatory changes to the asset management industry. china is trying to make the products that wealth managers offered safer and less risky. does that affect your credit line in china and how d.c. this moving forward. standpoint,ort-term there will be some liquidity from ain the market, but longer-term point of view, it is a positive. clearicing is becoming and for customers providing
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greater protection. we have been dealing with mainstream wealth management products. it is a positive and the fact that shadow banking will come more into the mainstream bodes well for traditional products it has not where been growing for the last few years. we will probably see more participation from the retail front. tracy: we have seen some analyst commentary saying smaller asset managers might move, and youlose out from the see that happening in for citibank to benefit? >> from an asset management point of view, the banks and companies that have been operating in the mainstream will benefit. the ones operating on the sidelines, taking advantage of these loopholes, these are the ones which would be impacted.
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that a lot ofe banks such as ours with obvious he benefit from having more customers coming back to the mainstream versus trying to look at what used to be guaranteed production and so on, which is something that was not with an investment product. david: we will continue the conversation. there is a lot more to talk about. before that, refusing to resign. us and bobbe shocks way as he does not offer to step down. now, the next step. next, central banks in the spotlight with minutes from the fed and ecb this week. will they give guidance into their strategy. we will discuss that next. this is bloomberg. ♪
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♪ tracy: this is "bloomberg
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markets: middle east." bloomberg tv and radio. i am tracy alloway in dubai. david: let's get you caught up on the business flash headlines. oildhabi state owned company will sell 2.5 billion shares in its ipo according to an advert. the ad also said the firm will reveal the price range on november 26. it is the first of several ipos expected in the region. that includes saudi state owned oil giant aramco. toshiba falling, down 4.8% in 5.5o, plans to raise billion dollars and explore the sale of nuclear assets to avoid being delisted. its claims says against westinghouse will allow toshiba to significantly reduce
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resources that can be used by the business. kong, son art reversing gains after alibaba said it is investing $3 billion in the company. taobao will own 36% after sealing the deal. themlliance will help explore new retail opportunities, and sun art will continue to be traded in hong kong. that is your bloomberg business flash. thanks. let's turn to central banks. we are waiting minutes from the fed and the ecb. the fomc held the line on interest rates earlier this month, but hinted they would raise costs in december. the ecb said it would be buying bonds at a lower rate, but a longer time. goldman sachs says it sees for rate hikes in 2018 with strong
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momentum likely to boost wages and inflation. later today, mario draghi addresses brussels. the head ofs, wealth management at citibank singapore. the u.s. start with yield curve. that is the big story and markets right now. it shows the 210 year yield spread versus the put. people have been saying wouldn't 2.4%ather by treasuries at over bunds. that is changing relative to the two-year and tenure spreads. what is this telling us about the yield curve, perhaps a fed policy mistake? isfirstly what we are seeing
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something gradually reducing the liquidity. up, short-term rates going it has an effect, but that does not point to any policy mistake. also a question of the curve so there is too much to to define the state of .conomies on a plane basis tracy: do you encourage clients to buy duration or them away from it. the base cases are yields headed higher, so customers are
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not looking at a long duration play. it makes sense to cut down the duration. witha credit standpoint interest rates rising, we anticipate at the lower end of the credit risk that there would be some level of volatility. hence, we are advising customers to look at better quality credit has the rates are headed north. david: just to recap the calls on g10 central banks into next year. we have a graph that shows this. three hikes from the fed, two from the bank of canada, two from the boe, one from the rba and one from the rbnz. help me understand appeared that is a bit counterintuitive. >> what we also see is that emerging markets right now have been looking well, both from a
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macro economic standpoint. at the ground level, there are .eforms and changes being made that is likely to continue. that's why we believe emerging markets provide an attractive currency play and from an absolute fundamental point of view. they are providing a lot of value. i feel bad for asking this and david will not be a fan of this question, but bitcoin cracking the $8,000 mark. what do you tell clients about bitcoin? chainstly from a block standpoint and i would rather not comment specifically on bitcoin. block chain technology is increasingly being accepted.
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we believe from a long-term standpoint that it has benefits largeruld play in to the economy. as regards to cryptocurrency, i think it will be a while before it comes into the mainstream. there is obviously a lot of does mainbut how street make applications of it, it is still not clear at this stage. it is still early days. let's put it that way. if city does incorporate cryptocurrencies, we would be glad to have you back on the program. up next, holding on, president robert mugabe refuses to resign, so is impeachment inevitable? this is bloomberg. ♪
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♪ tracy: welcome back.
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president robert mugabe has shocked zimbabwe that failed to announce his highly anticipated resignation in a televised address. the command element has underscored the need for us to processesly start that return our nation to normalcy. germanic twist means than 93-year-old may face immediate impeachment hearings. reporter paul our wallace. robert mugabe staying true to form and holding onto power for as long as he can. what comes next in this dramatic saga? on tendereveryone hopes waiting for his resignation which never came. theyuling party has said
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will continue with impeachment proceedings, which are meant to begin today at midday zimbabwe time. beyond that, it is anybody's guess. maybe he is trying to cling onto power. he said in a speech yesterday that he would preside over the ruling parties congress next month, which surprised everyone given that he was fired by the ruling party as its head only a few hours before that speech. he was replaced by the former vice president, so now we will have to see how much more pressure is put on him to quit quickly. tracy: let's talk about the markets angles. this chart shows these and bubbly benchmark stock index. and rising. now falling a little bit, but rising stocks are not exactly a good thing in zimbabwe.
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know, the stock market is up, last week, up 320% in the past 12 months in dollars, so it was the world's best-performing it was a casebut where the deeper the economy sunk, the more stocks rose. that is because they sold buying stocks is one of the few ways to preserve the value of their money, so they were just piling into the stock market. by you wish and's have become have becomeations very unrealistic, which interestingly has started to reverse. tracy: which would be a good sign. >> yeah. the stock market would have to come down if confidence return. index has dropped
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33% since the military takeover. tracy: we have to leave it there. up next, we are talking about the saudi arabian budget deficit. ♪
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tracy: we are 90 minutes away from the market open in the .mirates let's check in on first word headlines. president robert mugabe has shocked the zimbabwe with a televised address that failed to announce his highly anticipated resignation. that means the 93 year old old may face immediate impeachment hearings. he said he would go after his ruling party dismissed him as leader. and his wife were fired from the party yesterday
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after the military put them under house arrest. coalition talks in germany have collapsed, forcing the euro down. chancellor angela merkel is europe's longest-serving leader and this could herald new elections. the pro-market free democrats walked away, saying differences with the greens were two great to bridge. it is that they have deep reflection on how to move forward in germany. asould do everything possible to ensure this country will be well led through these difficult weeks. tothe u.k. could be about improve its financial offer to the european union. members of theresa may's divided cabinet will today consider how much money they are willing to offer in the divorced from the eu. yesterday, philip hammond suggested a settlement proposal could come soon.
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we will make our proposal to the european union in time for the council. japan's economic recovery remains on track with exports growing by double digits for a fourth straight month in october. that is the best performance since 2008. exports rose 14%, and imports k leaving a year earlier, a trade surplus of $2.6 billion. global demand has fueled growth, with new electronic devices creating orders for parts and machinery. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: the week are standing by. not a lot of i am out there.
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-- not a lot of volume out there. desley humphrey a few bright spots out there. sophie: thailand stocks are rising after third quarter gdp beat. currency halting and advance as the dollar picks up strike on concerns over political uncertainty in europe which saw the euro fall the most in three weeks, while the yen is hovering around that level, adding pressure to japanese stocks. topixkkei and the resuming losses, but goldman sachs raises its 12 month target. take a look at shanghai. shares are falling for a fifth day, slipping further amid this new clamp down on shadow banking.
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the biggest drag on the shanghai composite set for its biggest two-day drop in two years. ubs is maintaining its optimism for chinese stocks amid this recent tumble, saying positive earnings growth and stable valuations will spur further gains. ubs sees the index of 4450 points by the end of 2018. ses in the chinese markets. some: let's turn to regional news. saudi arabia on course to meet attended your budget after reporting and 80% jump in on revenue in the third quarter. the kingdom's budget deficit ,arrowed to 48.7 billion riyals 9% lower than a year earlier. the nation is trying to rein in spending and reduce reliance on crude as lower oil prices strain government finances. let's look closer at this with bloomberg economics. thank you for coming on.
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how much comfort should we take from these latest figures, in particular the fact that they are apparently boosting nonoil revenue? >> saudi is on track to meet its target, which is 200 billion saudi riyals. the first three quarters, the suggest one lower than the one budgeted. in terms of government spending, there is a temptation to boost government spending, particularly towards the end of the year. is that a danger here. they are understanding the budget as opposed to raising more revenue, so we are seeing understanding on the capital spending side below what had been budgeted for 2017. on the revenue side, and they
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are not meeting targets, but that is all set on the spending side. outlook, willar we see a full year recession for 2017? mainly is likely, but driven by the cuts in oil production as a result of the opec agreement. nonoil growth is positive, but around 1% year on year. thank you so much. joining us now is the md of a brokerage. with the opec up cuts coming up. the burden of those falling on saudi. do you think the political will will be there to continue to maintain the austerity we were talking about? >> they have no other option. i slightly disagree on the fact that they could decrease spending. usually towards the last
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quarter, you have payments to close the books in any budget, so the combination we have seen is good, but there are no details on it. it was a quiet budget announcement, no press conference late in the day. let's talk about the corruption crackdown. the chart behind me, i put up some bond prices that were affected. they are rebounding now. this might be a better measures of how investors feel about saudi assets. how are you feeling about investing right now. saudi is apened in
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one-off thing regarding the arrests we have been seeing. saudi is trying to change. they are trying to fight .orruption the budget deficit this year is $55 billion. think investors are waiting to see what are the outcomes. if the offer settlements to the arrested people and they get their money back and everybody goes home, i think saudi will come back to be an interesting opportunity for many investors. tracy: there seems to be consensus that it is uncertain in the short-term, but longer-term plays into reform efforts. how are you playing it? are you telling people to stay away from it? >> you have to stay on the sidelines for the moment.
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, the drop was massive. the game is to wait and see what is the outcome of these arrests and what will happen. what the government offer settlements? i think that is the direction. i think the government initiative or what they want is the money, not just to accumulate. tracy: the ritz-carlton is a pretty plush prison. impact?ut the regional we have seen the emaar ipo was hit by regional tensions. >> we are one region in the end. you eight and saudi are very close to each other. there is a high level of integration on an economic
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level. the ipo was not really hit. the retail tranche was covered 15 times. that is not great, but that is not bad. getting that ipo covered is a great thing. tracy: who is supporting these regional assets? domestic bars or foreign participation? distressed.n is this will not continue forever. we know this. some investors do see this as an opportunity. allocating at the moment has
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been a strategy for many investors. in terms of the end of the year, what catalyst are you looking for, saudi news, opec? >> i'm not optimistic on any positive catalyst this year. i just hope that the saudi situation clears up and they come out with a clear statement and say this is what we want. this is what we are doing. tracy: you are staying with us. we will discuss the finer points of the ritz-carlton riyadh and just a bit. david, back to you. david: i heard it does not come spa spot vouchers --
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vouchers. in hong kong, the biggest hypermarket chain in china had an up-and-down session. this is after alibaba's online shopping unit is acquiring a controlling stake. obao taking a 36% stake. clarify that there was some ambiguity in the earlier bloomberg story about buying a 77% stake. they are increasing their stake with partners to 77%. partnering with existing stakeholders in sun art, which owns those hypermarkets . a french group will up their stake to 36%, so all told 77%. this is jack mas new retail strategy, transforming old
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shopping in china. you still have to take that flimsy piece of paper from the shopkeeper and still go to some cashier somewhere else and take the extra copy all the way back, oh, my goodness, so this tries to eliminate a lot of this and make it more efficient and have it tied to your smart phone, cashier-less, and cashless shopping, and alibaba has all those people using alipay. they want to get the fulfillment, procurement, and everything, one-stop shopping in every corner of every neighborhood in china, so you can ask he or do your things online much like amazon in the united states, but it sure food or your purchases within half an hour. david: so basically pick up. >> you can go in to have it delivered, procurement, fulfillment, all kinds of things. david: to understand the strategic implication for ta
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obao, what does this company do. they have more than 400 hypermarkets around china to read sun art has those partners -- china. sun art has those partners, but it is old retail and they have been searching ways to leverage to be online. that is a trend that alibaba is pushing, of course amazon and their whole foods purchase, and amazon go, there have been trials for their cashier-less and cashless stores. alibaba has a running start on this one. what they will do right now is those hypermarkets they have, they control 15% of that segment of the retail space in china. that is huge. alibaba sees the last mile opportunities with these physical work and mortar
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locations. $2.9 billion. david: a little bit of a discount. >> 24% to the market price. david: tracy? ♪ of those people that remember shopping in chinese department stores. turning to there oil market with the opec meeting a little over a week away. markets are certain supply cuts will be extended, but some producers remain unconvinced. we will discuss that next. this is bloomberg. ♪
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♪ david: a quick check of the business flash headlines. abu dhabi state owned oil shares in itsell itsming ipo of
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distribution unit. the price range will be announced next sunday. it will be the first of several ipos expected in the region, including saudi aramco. plans tois falling on raise $5.5 billion and explore the sale of nuclear related assets to avoid being delisted in tokyo. itscompany said selling claims and holdings of westinghouse were allowed toshiba to reduce resources. earlier, sonabout art reversing gains after alibaba's online shopping unit is investing $3 billion in the company. 36%.o will own groupswith two other will form an alliance that will allow new opportunities in the retail space. sun art will continue to be
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traded in hong kong. it is your bloomberg business flash. tracy: thanks. the global energy markets are in focus this week as we count down to the opec meeting. traders will be watching for any hands from the cartel and russia whether supply curbs will be maintained in the spring. theguest is still with spirit i want to start with the chart because i think markets tend to have short memories. gots look last year when we the first announcement of the production cut agreement. you can see that oil prices were actually falling after that. it felt like the market priced it in. will we see the same dynamic this time? >> the oil dynamic has been changing. what ever is doing looks to be discounted up front, and people don't expect the rises to be really significant after any output cut for several reasons.
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don't see it jumping on tensions anymore like in the past. the non-opec is countries, the shale guys, produce more, and they simply need to produce more to make cutting is so affecting a lot of countries and also affecting saudi arabia. tracy: the oil market may be putting the oil cartel before the horse. maybe the cycle is ending and you can see opec is struggling at the end of its life like any corporate, trying to do different things, and those are usually signs that the product life of this product is coming to an end. it could be a decade or two bank, not sooner than that. meid: that suddenly brings to the question, do they need to cut? i don't think they have other
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options. played all their cards. as i said, with all the tension, oil is not moving. a little bit,es then it goes down even lower, so i'm not sure what they can do more than that at the moment. outside themuch oil organization equivalent to what opec has to control. tracy: how does opec play into the regional market story? it may seem simplistic, but we have seen the correlation between the tadawul and the stock in oil breakdown. it is at the most negative correlation since 2014. i wonder if it is changing a little. barrel,l was at $80 a
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you would not feel the heat of all the problems. when you are rich, you can afford spending on problems and afford sorting them out and wheng everybody happy, but it is a collective exercise, everything going wrong becomes real difficult. the thing about oil and the it is actually happening and the reason is people are realizing that the new oil prices $50 to $60. tracy: how worried does that make you about the exits strategy. it will depend on what kind of investor you are. if you are a value investor and looking for assets that are distressed because of the situation around it, then you won't have a problem with that. is a fairly liquid market. we have never heard anybody having a problem exiting from saudi.
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it does not happen a lot. to leave itve there. thank you for coming. coming up on the program, abu its ipovancing ambitions, announcing distribution plans for its state owned oil company will but at what price? details of the offer next. this is bloomberg. ♪
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♪ we are counting down to the market open in the emirates one hour for now. i'm joined by our middle east markets reporter. you have brought us a chart behind me. what does it tell us? >> this is showing as that abu dhabi stocks are underperforming emerging markets by a lot. the betweenuge gap emerging-market shares this year and what stocks in abu dhabi are doing. this? i telling you
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we have news of a big ipo in abu dhabi, selling up to 20% from one of their units in the uae. this is a very important ipo for the stock exchange itself, for for theet in abu dhabi, uae, and it happens at a delicate moment in the region. development, a branch of emaar properties, one of the biggest companies in the country, and we do know that even though the whole deal happened and they priced in the lower range of their reviewed guideline, but still we know that some investors pulled out ir initial demand for the stock. tracy: geopolitical tensions playing a role. what other companies are you watching?
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have arimax, a company with very good liquidity, especially for foreign investors in the uae market. this is something that should move stocks in riyadh. we also have a branch of the kuwaiti group, a name that is very popular among regional investors. tracy: thank you. that is it for this edition of bloomberg markets: middle east. sorry, david. david: i was about to say it's
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been a pleasure. we have the best of bloomberg technology next. i will be on as well with all the top stories. stay with us. this is bloomberg. ♪
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