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tv   Bloomberg Markets Middle East  Bloomberg  November 26, 2017 11:00pm-12:00am EST

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♪ saudi arabia's biggest companies signs a deal to process oil and chemicals, ultimate could be worth $20 billion. >> the rally loses steam as investors turned their attention as the dollars rising against his peers. near two-year highs as opec and independent producers meet, production curbs on the agenda. another child trial bitcoin
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eight years into its life, surging towards $10,000. it is 8:00 a.m. across the emirates. this is "bloomberg markets: middle east." i am yousef gamal el-din in dubai. angie: i am angie lau in hong kong. it coin, butabout let's take a look at the sentiment across the asia-pacific market right now. towards let's see -- $10,000n price was the predictor last week. incredible prize for bitcoin, but the regional benchmark off fresh highs, losing steam, losing momentum. one of the biggest sellers is into negativeuing selloff territory, down 4.3
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percent after morgan stanley cut equal weight from overweight. some is that stock price target well over 3.4 million. thestock has flatlined in past few weeks, so morgan stanley among the first to pare back expectations, it's analyst downgrading back down to 2.8 million. yousef: some other asset classes in focus. crude complex still holding close to the highest level in two years for brent. this is slightly below the flat line. 2.34, theper, treasury curve flatter, and the two-year and five-year underperforming at an auction earlier in the day. that's your cable trade at 1.33. we are focused on the discussions between british and european union officials.
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we don't have much economic data going into this week, and dollar-rand study. strongly after s&p global ratings stripped the nation of its rating. let's get a check on first word news. bitcoin has surged past $9,000 mark, taking its year to date gains above 800%. world's most popular crypto currency climbs despite warnings of a bubble. cme group will offer futures contracts from next month. the total market cap of digital currencies is now more than $290 billion. china's industrial profits increased 25% in october
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compared with 27 .7% month earlier. robust factory inflation has kept plants profitable, and moves to tackle pollution have benefited larger firms. the mood will be tested by a cooling property market and action to reduce leverage. say thefrom pakistan standoff that has cut off islamabad is coming to an end. a conservative religious group have been demanding the law minister quit over changing the wording of oath taken by parliament. that minister has resigned. two police officers and six people died in clashes. it may unnerve investors has pakistan prepares a $2 billion bond sale. stocks rose despite the deadly terror attack. rose .8% in cairo, taking its advance to 15% this
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year. more than 300 people were killed in friday's attack on a mosque in northern sinai. egypt has raised it security alert to the highest level after claims that so-called islamic state is responsible. germany, angela merkel has stuck back from the possibility of a new election following the possible revival of a grand coalition between her christian democrats and opposition social democrats. she told her party that the two had worked well over the past four years. she said any potential coalition partner would have to support a balanced budget and broadly pro-business policies. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. yousef: the dollar is advanced
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thing as investors turned to tax reform. senate leaders are planning and make or break vote this thursday. democrats are expected to derail or delay the bill. some republicans are concerned about the end of federal to directions or state and local taxes. the president is scheduled to addressed senate republicans this tuesday. senate also on tuesday, confirmation hearings for jerome powell to head the fed. investors hope to hear his ideas on monetary policy, especially rate hikes in regulation. some are expected to raise their projection to four hikes if trump's proposed tax cuts kick in. >> we expect the fed to hike three times next year. december is almost in the price now.
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in threere not pricing rate hikes for 2018, but we expect those three rate hikes to ex isn because we think cap picking up in the fed will get the confidence to hike three times. now is aining us right former economist for odyssey asset management, now independent wealth management. years plus of experience in global markets come global investments. what has happened and will it happen again if the future just repeats itself when it comes to tax reforms and what the market is seeing? >> the market may be mistaken because the things are not always in a cyclical repeat
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pattern, but sometimes you can get at just of what is going on. i think trump has managed to antagonize so many people that i would be surprised if he gets his tax reform bill through the way he wants it. be a big says it will week. he said so on twitter. >> when did he not say that. angie: what are the hangups? they have 52 majority and all they need is 50. can they hang on? >> i don't think so. john mccain, he will have antagonized him so much that they have been pulling their swords out quietly to attack him. the signs which nobody knows that the were taxes will boost. it is not a given. yousef: where does that leave us in terms of rate hikes?
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appears to be largely unconvinced about the longer-term ability of this institution to stoke inflation. where do you stand and what will it mean for those hikes? >> inflation is yesterday's story. tomorrow story is deflation in coping with the marker fee. it is all about production that has pushed the production curve to the rather infinite. you simply produce more at the same low-cost because of technology and because the powers of the unions have been broken. rates will rise, but for different reasons, which is fiscal policy, especially if there is an increased infrastructure spend. we have put the current
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outlook for rates here on the chart. this is 1575 on the bloomberg. odds of a rate increase next month pretty much certain. 95% as it stands. possible sources of instability, they will not come from the fed, dollar trump. you think it will come from digital currency. yes, what we are dealing with is a known known, which is unfortunately mr. trump. he will cause plenty of rockets -- ruckus by appointing jerome powell and getting the things he wants done, donald trump, not jerome powell. on top of that, you will find unknown unknowns. the bitcoin thing may come into that when some smart person decides if he wants to r.o.i.
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against his collateral with bitcoins and then go into bitcoin futures. that is a potential threat. yousef: you are sticking around. we still have plenty to get through. come, iw of what is to our interview with the iragi central-bank governor as the country grapples with the widening deficit. next, bitcoins unstoppable rally as it closes in on the $10,000 mark. this is bloomberg. ♪ ♪
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yousef: this is "bloomberg markets: middle east." i am yousef gamal el-din. angie: her quick check of the business flash headlines. meredith corp. to acquire time worth $2.8 cash deal
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billion. the boards unanimously approved the deal with $600 million in backing from the koch brothers. the meredith ceo says it creates a premier media company is serving 200 million consumers in the united states. saudi arabia's two biggest companies have agreed to build the plant to process crude into plastics. ic say theand sab project will be guided $20 billion in process 400,000 barrels a day. saudi arabia is moving to a more diverse economy to reduce dependence on oil. south africa in talks to sell majority stakes in its arms manufactured to qatar. president zuma is also seeking
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to sell other enterprises including a power utility and south african airways. they were among state entities bailed out this year. that is your bloomberg business flash. yousef: thanks, back to our top slowing down, not going past $9,000 a week after topping $8,000. could we and with five figures? we have more on this. is there anything tangible driving this surge, something we can hold up and say this is something we can explain, something visible? >> and the reason why it shot up over the weekend, there is no single catalyst. we saw if. him hit a record, then bitcoin followed.
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there is no reason to sell and new money keeps coming into bitcoin. capitalists is the cmd will list the futures and people are expecting institutional money to come in. i think that is true. i think retail money will benefit as a result. once these futures are listed, etf products and anyone with an account can buy them. they can get exposure to bitcoin. overall there is a lack of selling reasons. we are done with the bitcoin split and money keeps coming in and pushing higher. will institutional investors put money into bitcoin? arthur governance and regulatory issues there? big expectation is that
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fund managers are dying to buy bitcoin. i don't know how true that is. i have heard from various sources that institutional money , the smart money, is just as interested shorting bitcoin as going long bitcoin, so i lot of the fast money, the guys not looking out for your pension, just as easily take a short position. as far as the pension money, the long-term guys, you are right, governance issues still exist. it's not so much that it is used for money laundering and child issue ishy, the bigger the lack of protections around bitcoin. of regulatoryk rules, and that makes people uncomfortable. who knows it if you're bitcoin exchange is hacked or if you
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have a wallet stored somewhere, hackers could still get in, internal theft, there are unclear issues and a lack of regulatory issues. will institutional money by bitcoin or not, i am not sure, but it is driving the price for now. you also don't want to lose your flash drive with your crypto key. what about other cryptocurrencies. it's not just bitcoin. hit fortioned etherium now going higher. i'm guessing 500 is within range has these psychological figures are enticing to people. i think bitcoin cash is doing well. that is the split off of regular bitcoin, which offers bigger
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block sizes. pretty much money is pouring into every single currency. one thatitcoin is the tries it. in july when bitcoin had a big selloff, other cryptocurrencies fell off as well. it is a leading indicator still. angie: right now at least. thank you so much for that. let's talk about this bitcoin frenzy. it does really feel like it irrational exuberance, but there is no denying that people are pouring liquidity into the bitcoin. is it sustainable? tulipmania of the 16th century and is not sustainable. when people take up loans against positions, something
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nasty is going to happen. the first bitcoin fund was launched recently in paris. so you are now getting nibbles on the institutional side, but one has to be quick because it is derivatives and futures, and that is not good. you look at what is happening in asian economies, what key risks standout. there are obviously ongoing risks coming out of europe. what are the concerns you have? , then the danger china decides it wants to really centralize party control. throughdigm is to look decentralization spectacles, it could be xi jinping wants to centralize too much, and that
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may cause social unrest in china which would not be funny. you always have the possibility of some crash in world trade that >> southeast asia because most of the trade goes through the straits. there is the issue of taiwan, is too small to figure on the global stage, but it is north korea that will play a major role in investor thinking going forward. angie: we will leave it to their. experience.s of , investorsp undeterred after the terror attack in egypt. we will take a closer look at this next. this is bloomberg. ♪ ♪
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yousef: not even though weekends deadly terror attacks could deter the stock benchmark as it rose 1% on the first trading day since the assault, so does this mean investors have grown a thick skin when it comes to egypt? welcome back to the program. rather remarkable reaction. attack, major terror the market sold off by 15%. it is probably too early to tell just yet, but how much of an inflection point is this? markets were driven by local investors, not international investors. noal investors have accepted than sinai will remain unstable. has been it sounds, it
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going on for almost five years. thick skin might be one way of putting it, but investors have accepted this is an isolated territory that will sort this out and should not affect the fundamentals of the market. yousef: well investors pull out money? this is the most violent incident in egyptian history. i think international investors are looking at it now, some of them will be scared of it so they will not the putting more money to work in egypt. i don't think you will see money coming out significantly. yousef: a chart to put this in perspective, 1557 on the terminal. exchangeian stock story is one of the few remaining positive patches in the region filled with some of the worst-performing performing exchanges in the world. this is year to date, stocks on
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most up 30%. the other is kuwait with 13%. we've added saudi performance, barely flatlined there. how much more meat is there in the story. the strongest reform story in the region. the lastok at earnings quarter, it has been very strong, even the consumer sector, which is supposed to be the most hit, but is showing signs of recovery. it is purely fundamental. you have the recovery story translating into results. yousef: has anything changed on other markets, like qatar? an interesting effort by the bloomberg team. switchingmade 7% by onshore and offshore on the riyal. the rsi looks attractive, down 30%. >> it could be even more
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attractive. investable given what is happening so far. as long as the political situation remains the same, it would be difficult to put money to work in qatar at the moment. yousef: the rest of the gulf. >> saudi is showing positive signs. come the uncertainty is now switching. yousef: we still have plenty to get through. we will get into your calls and the crude oil story. a look at how some of the middle east markets fared. the market up .8%. eastern tobacco among the key gainers. quite a bit of downside in dubai and abu dhabi stocks. coming up, the temperature of
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oil markets as opec an independent producers prepare to meet. this is bloomberg. ♪ . this is bloomberg. ♪ is this a phone?
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see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to a.m. in dubai. the bloomberg dollar index giving away some gains, barely above the flat line. market moves,key but now first word headlines. in washington, the republican party's tax plan enters a crucial week with senate leaders planning a make or break vote as soon as this thursday. democrats are expected to delay or derail the bill. some republicans are concerned about the potential end of the deductions for state and local taxes.
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will address senate republicans this tuesday about taxes and his legislative agenda for the rest of the year. says the u.k. has seven days to produce a new offer on the brexit divorce bill if it wants to break the deadlock before the end of the year. he gave theresa may until next monday to bridge the cap between the two sides. on that day, may is expected to meet the european commission president, a critical moment for the u.k.. reports from pakistan say the standoff that has effectively cut off islamabad is coming to an end. members of the conservative religious group have been demand in the ball minister met over changing the wording of a note taken by members of parliament, and that minister has resigned. two police officers and six people have died in clashes. may unnerve investors as pakistan prepares a $2
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billion bond sale. it is not clear what caused an explosion that killed at least two people on sunday just south of shanghai. more than 30 were injured in the blast that flat and vacant buildings to for demolition. gasesses blamed a damaged pipe, but i local power company says there are no gas lines in the area. and airport has been closed the island faulk a at its highest level as a volcano a >> again. stranded and people within 10 kilometers have been told to leave. authorities insist bali is safe and singapore's advisory to afford parts of the island is excessive. the volcano's last major abruption in 1963 killed 1000 people. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. angie: the first trading day of
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the week in asia. are losingke we steam when it comes to momentum. let's get the latest on the markets right now. we are a losing steam. the day started strong with the regional index holding onto regional highs. in the red as we see a decline in u.s. futures. you can see south korea is leading the declines, down 1.3 percent has samsung has one of its biggest falls in the year thanks to a downgrade from morgan stanley, so weighing on the regional index. china csi 300 down 1.3%. signs of a cooling and the chinese economy in november ahead of key data from that economy later in the week. industrial production today was quite strong in october.
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quite a lot of these commodity players are looking good as well. steel and shanghai up 2%. you can see the taiwanese index off. the philippines off by 1.1%. new zealand closing higher by .6%. fro advancedovers, the semiconductors leading the region. samsung electronics down 4.8%. a couple of other subsidiaries also weighing heavily on the regional index. the other big story is the surge in bitcoin, showing no signs of slowing down. it looked like we could see bitcoin test to $10,000. it is holding strongly above
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$9,500. bitcoin according to bloomberg strategists, saying there are anecdotal warning signs, but despite being cynical about bitcoin. mark cudmore says there have been a few downturns in terms of sentiment come a but at this stage we are seeing the huge rally continue after its past $8,000. having a look at the regional index, we were seeing brent holding at a two-year high ahead of the opec meeting. is being ledsector by these i.t. players, samsung, and those apple suppliers and taiwan. yousef: thanks. let's get back to crude oil. opec and non-opec set to meet indiana.
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delegates are expected to extend production limits. in march.ill expire with crude at two-year highs, has the group done enough to ease the global crisis? it marks the ongoing transition in terms of power and influence within opec and non-opec. , when the oil minister of saudi arabia would say something, it could move the market, but now russia is playing a more dominant role. for 534, russian crude oil output. it is the price of brent crude. as russia cuts back on production, the oil price begins to get supported. some analysts are skeptical. sees growing risks of opec delaying decisions on
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cuts. there are higher risks of a correction. anotherant to point out column to give more perspective on a very important story for global markets. opec has no i hear what shale is up to, but never mind. lead times are measured in weeks rather than years for new shale projects and a large number of companies have made forecasting oil out put growth almost impossible. it thirdtainty makes difficult for opec and its friends to assess how they should respond. we have to look out for what is going on with u.s. shale. the ceo at renaissance capital is still with us. you hear a lot of these ideas and expectations. where do you stand? it is almost impossible to
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predict where oil prices are interests are aligned to keep the cuts as it stands today. would think that all parties will try to keep oil prices where they are now and there might be more upside rather than downside in the short-term. more likely upside than downside? >> yes. yousef: that is a bold call. how much more upside can there be in the price? >> not huge, but in terms of risk i would not see oil going down 10% or 15% come a but going up another 2% to 5%. angie: u.s. drillers are adding oil rigs, nine alone last week. to accelerate,d especially if we go to north of 60. where do you think it will stop?
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at what point do these opec moves get nullified by u.s. drillers? >> it is almost impossible to predict, but i think opec will in terms of it can keeping oil prices where they are today. would it be keeping the same cuts are adding cuts, i don't know. i think it is in their favor to try and keep oil prices where they are today. angie: opec one thing. global demand another. we are seeing global synchronized recovery. do you think that will help? >> absolutely come yes. yousef: to pick up on some points and tied back to the region, higher prices is not good news for the region beginning to embark on a series of reforms. $75, they're saying
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, and is no need for that that is what some people we are speaking to point to. lower oil prices long-term could be in the interest in this part of the world, but short-term, you are still making the shift. saudi arabia will not make the shift overnight. it will take time. it will be helpful for the budget to have oil prices where they are today. yousef: what level would not be a good price? $50?morgan points to >> if the question is what level the region will be comfortable with, i would argue it is the current levels. yousef: always a pleasure having you on the program. the ceo for renaissance capital meana.
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iraq returning to the global bond markets. the b it be enough to plug deficit? don't go away. this is bloomberg. ♪ ♪
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♪ yousef: this is "bloomberg markets: middle east." inm yousef gamal el-din dubai. angie: i am angie lau in hong kong. meredith corp. to acquire time and all deal worth $2.8 billion. the boards unanimously approved the deal said to have $600 million in backing from the koch brothers. it createsh ceo says a premier media company serving 200 million consumers in the nine it states.
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-- in the united states. saudi arabia's two biggest companies have agreed to plan to a plan to process crude. the plant sabic say will process 400,000 barrels of oil a day. saudi arabia is moving to a diverse economy to reduce dependence on oil. south africa and talks to sell a stake in its arms manufacturer to qatar. president summa is also speaking -- seeking to sell portions of other struggling state-owned enterprises. dnel and south africa and entities bailed out this year. let's get into the story around iraq planning to return
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nexte global bond markets year to raise $2 billion to finance its budget deficit. the central bank governors spoke to tracy alloway in abu dhabi. how does iraq plan to make this happen? tracy: it might not the is difficult as you think. this would be the second time iraq is selling international abt come up bonds without government guarantee in one form or another. they sold one billion worth of debt in august and were met with incredibly strong demand. they had $7 billion worth of orders for $1 billion worth of lawns, and that meant they were -- of bonds and that meant they were able to tighten the price guidance. there are a few potential challenges. iraq is still talking to the imf about the next tranche of its loan.
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there are questions about the kurdistan referendum. i asked the central bank governor about that. havest of the targets we have been met. discussion was more on the 2018 budget. agreed on the re, and we have the there is some questions being raised by them about kurdistan and about some other details. i think we are very close to agree on that. baghdadht that back to for the government and parliament to review based on
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what we had agreed on. that is in line with the imf program. part theymportant usually focus on is to reduce our deficit, especially the non-oil balance. we have worked a lot on that because that can give an impression of how much we have reduced our expenditures and how much we have raised in domestic revenue. that they are happy with that, but we and for them, we expect to do it much on that. if you are narrowing the deficit and have the right
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signals from the imf, when would you expect to receive the next installment of the imf loan? >> the imf board meeting will be in january, so we expect that in january. it was planned to be in december, but they have postponed their meetings until january. that would be a payment for 2017. we will get more from the world bank and others. they are waiting for that to come, positive reports from the imf is a green light for everybody. what are your financing requirements like for 2018 and had expect to meet those requirements? , the focus is keeping in line with the imf .rogram for our expenditures
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also, domestic revenue. that is what we need to work very hard this year to increase revenues fromour inside the country instead of relying on the oil. plans for that, customs, taxes, other services, the power, the electricity, which is a. serious one. i think they have to work hard on that. the government has to work very hard to make that happen in 2018. more bondt about
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sales? you had your first independent sale a few months ago, loads of demand for that debt. would you do it again next year? >> yes, if it is in the 2018 budget, it would be 2 billion. tracy: 2 billion. have you hard banks for the issue. >> it is in the process. banks becauseme we did it last year. i think it will be easy to do with issue. the reaction was very good last year. to goould encourage us for that. tracy: what does the reserve position look like now. >> in our local currency, we
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would like to cover all the come so still with the international standards. we now see some increase in our increase ofto the the price of oil so hopefully in the next years we will start to rebuild again. that was the iragi central bank governors speaking to us in abu dhabi. iraq is struggling with the deficit and that declining reserve question that we have they have twout major tailwinds, one is the , potentiallyprices stable oil prices if we give that opec extension next week.
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the other is demand for emerging-market asked that's, which has enabled them to tap international investors for the first time in a long time. great interview. thank you so much for that. you can catch all our interviews with our interactive function tv . you can dive into any of the securities are functions we talk about here and become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . ♪ it out at tv . ♪
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angie: this is "bloomberg markets: middle east." i am angie lau in hong kong. yousef: i am yousef gamal el-din in dubai. let's get you up to speed. not even the terror attacks deter traders.
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for an investors were largely absent. we will get more perspective later in the day. how is this story at likely to evolve as the market comes online with more global input later on? >> today we will be able to measure what exactly international foreign investors will see within this event. what we can tell is we don't expect a lot of outflow from the egyptian market right now. we have a very good story to tell. it has been a story of reforms investors have liked. and foreign money is betting a lot in egypt right now. 18%.rn tobacco is up it was one of the main names trading yesterday in cairo.
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there is expectation they've might be included in msci, which could lead to $90 million into that name in egypt. angie: let's talk about qatar. likelylooking at a positive reaction or decision by msci on the official fx rate. exchangethe stock response to msci's concern regarding the qatari riyal? >> that is also an important story in the region. we had the stock exchange saying they expect msci will continue to consider the official rate for the qatari riyal, which is important for the way international investors trade. the centralfter bank said late last week after markets were closed in delhi on thursday that they believe that
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they will actually commit to provide all of the dollars necessary for those that are actually trading in or have -- trading in qatar or have qatari stocks in their portfolio. a final decision by msci early next month in the first week of december. yousef: excellent reporting. here are some other key themes to look out for starting with what is going on in the uae, but first and israeli rates decision to look out for. the last quarter we saw economic as economic performance blew past expectations with the median forecast of 2.7% growth. the absence of inflation amid strong consumption has allowed the central bank to keep the benchmark rate at 4.1%.
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light to start operations. a busy day ahead. plenty more ahead. this is for bloomberg subscribers only. check it out at tv . ♪ eck it out at tv . ♪ retail.
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