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tv   Bloomberg Markets Middle East  Bloomberg  May 2, 2016 12:00am-1:01am EDT

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♪ how much oil will be too much? $47 as production nears a record high. finance japan's minister is concerned about the yen's rapid rally, but it keeps on climbing. manus: a jump in profit for the builder of dubai's tallest tower.
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severe cost cuts. rishaad: growing political anger in baghdad. protesters want more efforts in the fight against corruption. 8:00 a.m. across the emirates, 5:00 in london. i am manus grinning. -- cranny. rishaad: i am rishaad salamat. it has been a relentless climb taking place. people are asking if there is a line in the sand. 110ere talking about this level being the spot where the bank of japan is coming in, buying dollars to weaken the yen. 105 is perhaps the in the sand. manus: we are going to spend some time on this.
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is it a haven trade? there were comments over the weekend from the central bank. officials saying, we do not take much heed about what the americans say. for us in the region, it is about oil. take a look at this. you have the oil bulls back. net longs at the highest level since last year. we are retracing our position on bloomberg. highest since 2015. short positions at a 10 month low. think about iraq pumping the most since 2011, opec members pumping like it is 1989. the oil market is on a little bit. rishaad: let's look at the markets and see what is going on. hong kong, china, taking a break for may day. let's look at other markets in
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this part of the world. 0.5a came online, down percent. topix, absolute pounding taking place because of the strength of the yen hitting exporters, as they make less money in terms of what they are doing a broad. let's take you to the middle east. rs away fromwo hou the emirates opening. down adx, about a 10th of a percent. saudi arabia, this is the situation. the last close, again, another day of declines. that is seven sessions. a quick look at cairo and tel
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aviv. this is the last close. 1.1% down for cairo. israeli, weakening to the tune of 1.75%. another day, another decline, it would seem. oil on the are weak, move, a lot of facets at play. let's get you up to speed with headlines around the world. today. yvonne: halliburton and baker hughes have called off their billion-dollar merger, citing industry conditions. the union had met antitrust resistance in the u.s. and europe. baker hughes says they can ease concerns. halliburton must pay a termination fee of $3.5 billion by wednesday.
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protesters have withdrawn from baghdad's green zone a day after tearing down walls around the government district and storming parliament. supporters of a shiite cleric led the breach, demanding more efforts to fight corruption and what they regard as sectarianism in government. the unrest has raised pressure on the prime minister to break a political stalemate preventing him from appointing government. puerto rico will default on a bond payment later today, a clear signal it cannot pay debt. the governor warned the government bank would miss its obligation and called on washington. nonpayment,at any even if agreed to, constitute a default.
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withholding interests, even temporarily, is synonymous with default. takata plunging again. its stock fell 16% in tokyo after news of u.s. regulators planning to expand recalls. to all vehicles fitted with airbags lacking a moisture absorbing dessicate. that would affect 100 million vehicles worldwide. news 24 hours a day on bloomberg powered by 2400 journalists in 150 bureaus around the world. yen, gold, and oil are top of traders minds today. david, give us the flavor of what is going on. david: those three are related. what underpins everything is a n,akness in the dollar-ye pushing towards the lowest level since 2014. this move started in the summer of last year. if you retrace it, it is about 19% move down in the
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dollar. the dollar index today, below or at 93, longest streak of daily losses going back to this time last year. quite something. that obviously comes down to the policy not really panning out. level.yen at that where does japan step in? we could see it at 100. below 100, they may step in. that does not mean it will be enough to support the u.s. dollar. that is the story right now for dollar-yen. let's have a look at new york crude. this was pushed higher because of the weakness in japanese yen. an outputhope of freeze. 4545 is the level right now.
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that move is a 28% move in the price of new york crude. this is the june contract. you will look at the july contract. the june contract close on friday. is the level, substantially lower than three years ago. one other thing to watch, gold. a lot of this comes down to what energy prices do next. this is related to risk appetite in the markets. manus: thank you very much. to black gold and oil. may and other producers still consider a deal to freeze output. i spoke with mark mobius, and he
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told us there is no need. mobius is betting prices will rise. >> i do not think you need a freeze. the market will handle it. you must remember that demand for oil continues to rise. it is not going down. the account globally has gone down precipitously. suppliersmeans that have to diminish, despite what is happening in the middle east. and demand will continue to rise, maybe 1% or 2% a year. means wenation of this will see a higher price going forward. manus: we could trade through the $45? you see us having the potential to break significantly above $45? >> i am looking at $60. i cannot speak for everybody else in my company. i would say $60 is the target. i am not saying when. manus: i was just about to say.
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$60 by the end of the year? something there will be a rebalancing. >> it is possible. these prices are driven by derivatives, not by actual supply and demand. some event could trigger a big jump in price. gray swan, the iranians are not for stopping at the moment. i know you said a freeze is not what we need, but you need a discussion between the saudis and iranians, no? >> the big issue is who is controlling the market, who is supplying the markets. russians are not part of opec. they may not cooperate. manus: they did not cooperate during the last freeze. is that the biggest risk in the whole monopoly board? >> the biggest risk is some event which triggers derivative activity to either go low or
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short, which drives prices to unusual and irresponsible levels, i would say. manus: we will hear more from executive chair of franklin templeton, later on in the show. on set by ad commodities analyst. edward, thank you for coming in. , $60ning to mobius potentially on the table. that is his personal opinion. you take a different position? >> in the short-term, $60 does not look like it could be supported by current fundamentals. decade,the end of the yeah, prices are going to be grinding higher. the cuts in investment across the industry will mean there is probably some sort of supply squeeze. that is a 2020 time horizon. in the short-term, look at the production volumes coming from
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opec countries, russia, they are just untenable to support a price above $60, i would think. rishaad: edward, even if we $60 a barrel,or we are looking at a situation where the national budgets are constrained with prices of those levels. how long can they really sustain this? how long can they fight for market share as opposed to bringing down these quotas? we are seeing a lot of squeezes in the fiscal positions of government, particularly here in this region. you are seeing the government getting the handle this and getting some large reforms in trying to raise revenues and rationalize spending. what is important to remember is even though we had success in diversification in terms of moving the economy away from oil and gas, these are huge parts of the economy.
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over the 30 year horizon, oil and gas will be an important part of the economy. they will need to make sure they mix in the market share for a long-term. that means paying in the near term. manus: there is a lot more to get through. nbd.d of coming up on the show? rishaad: you can go to the web and get more on the rest of the day's news, particularly in the middle east with market data from the region. you can watch our special content in the available online. manus: coming up, protesters withdraw from baghdad's green zone, putting pressure on the prime minister. we take a look at what he can do to break the political stalemate. after this short break, find out why mark mobius says saudi
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arabia may be pushing too fast on reform. ♪
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you are watching "bloomberg markets middle east." 8:10 in dubai, and we continue our discussion of oil with edward bell. it is exactly a month until opec meets in vienna. what is going to be achieved there, if anything? >> i do not expect to see a lot from the next opec meeting. is how far at doha apart the producers are with respect to the markets. is insisting iran is party to a production freeze.
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iran says it would only agree at pre-sanction levels, 4 million barrels a day. they have added quite a bit of oil, but are still half a million away from the target. i am not sure how we square that with regard to the oil policy. i would not expect a lot from the opec meeting in june. rishaad: is the decline in shale production being met by a rise in iranian production? if so, does the glut continue? >> it does. give you look at the volume of production from opec from russia , from the national control producers, you had over a million barrels a day year on year. in the united states, the decline is 450,000. there is a big gap in terms of how much has been added from opec versus the united states. decline from u.s. production is turning around sentiment and
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giving the impression we are having a rebalancing. the volumes we are seeing from these big producing countries shows we will be contributing to a glut and major inventory overhang. rishaad: great talking to you, edward bell. plan for ai arabia's otetwar future has won the v of mark mobius. a small stake in aramco by 2030. sources tell me the plan is ambitious, but achievable. >> the fact that he wants change country too open the capital investment is the most impressive thing. we have been waiting for this for a long time. it is one of the major markets in the world. we want to make it bigger by having a more open market. manus: saudi arabia opened its
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markets this time last year and foreigners did not flock. what does it take to change the narrative? >> the issue is the freedom to go in and invest as much as you want and get out. problem, whichi china has as well. china is beginning to open up more and more. open necessary to completely and allow investors to come in and out at their will. will you go for qualified for an investor status this year? >> it is possible, depending on funds. we are running open-ended funds. we have to be able to get in and out. funds, it isd-ends possible, but it would be limited. manus: going back to some of the
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lines, when i walk into a military zone, it is a five star hotel. this is going to be a social evolution. is he being expedient? >> he is being very expedient. maybe a little too fast for his own population. there is going to have to be a pa of education, patients -- tience. the to aramco, do you believe it? trillion valuation to aramco, do you believe it? >> is possible. london would make more sense. people are understandable in being keen on emerging markets. i think that would make sense.
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of course, new york would be the obvious destination. manus: sort of cart before the horse. i know you like to differentiate. qatar are back in bold territory. on the other side, you have yemen and syria, virtually politically failed. glass half-full? glass half empty? talk me through. where is the biggest opportunity? >> the biggest opportunity is here in the uae, saudi arabia, and gulf countries. egypt is huge. they have to get their political situation in order before you can attract more investments. the other countries are on the borderline. we have the greatest hopes for them, but the reality is very different. to thethat takes me biggest underpricing's of risk.
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you can tighten it down as much as you want. what i want to understand is dubai, abu dhabi. but oil is going to under $30. >> if we look at the region and what it is going to impact, what is happening in saudi arabia is most important. sayingey are basically is, look, we are going to lessen our dependence on oil. we are going to diversify the economy. they have the capability to do that. manus: by2020? >> i believe you well. manus: coming up, we follow progress when "bloomberg markets middle east" returns. ♪
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tous: welcome back
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"bloomberg markets middle east." tanker has returned to port after failing to offload a shipment of crude in a europe. anthony has been following this. i am able to track any tanker in the world. tell us where we are. the oil left libya and travel. >> it was loaded in eastern libya, where the national oil company that represents that part of the country tried to export the oil. maltanker sales towards and was refused entry. the u.n. blacklisted the tanker. the ship has now gone back to the western libya. zaiuya,f of the port of
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where there is a refinery. the ship is to offload the cargo at the refinery, where it will be used. we are still waiting for the tanker to actually offload. it is just off the port. manus: to traveled up here. talk to me about political implications. >> the fact it has returned to libya has diffused the situation. the issue is about sovereignty. countries claiming legitimately to sell the oil. if you do not control the mineral wealth, you do not have government income. manus: a lot of people have been talking about the oil market and have talked about production being off-line in iran and iraq, near their maximum. here we are with the libyan story. how does that play in to the market story? >> libya is a vital missing point.
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they are down to a quarter of the production before the revolution. million barrels a day. they are down 400,000. manus: getting back is not just flicking a switch. there is a lot of infrastructure. stability is the key. >> of course. of western national oil company says they have a plan to get back to pre-revolution production. they can double production in a matter of months when the situation is resolved. that would bring production back online. that will be more oil than expected from iran this year. manus: something to consider. paolo, our energies market reporter. rishaad: coming up, we will look at dad and how protesters are
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raising questions about the viability of the current iraqi iaae-m"
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imperial palace in the heart of tokyo, 1:30 there. topix down 3.4%. asian equities on the way down. 18 month high against the dollar. ♪ manus: oil is on the slide for a second day, trading below $47 a barrel as iraqi production nears a record. n climbs to a year
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and a half high. the government will intervene if the rally continues. manus: jump in profit for the builder of dubai's highest tower. by severe cost cuts. , 12:30 in in dubai hong kong. i am manus cranny. -- 5:30,don, it is is and we are counting down the trade. decent datave some driving the story on friday. what is on the agenda? it is a holiday, and you are working? >> a number of us are working in london. u.k. markets are closed, as you say. , italy,open is germany
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spain, and france. we get those futures markets at 7:00 london time. the equity market at 8:00 london time. friday, inflation and growth data for the eurozone. growth was better than expected. ,nflation, not so good highlighting the challenge for mario draghi. eurozone inflation is far below his 2% target. today, we will get manufacturing pmi data. at 10:00, we get eurozone manufacturing data. we get some before that for spain, italy, france, and germany. onwill be keeping an eye those numbers and any reaction we see in euro-dollar. right now, pretty much unchanged. itwill be keeping an eye on after the data.
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manus: no conversation with my european colleagues would be complete without brexit. what is the latest? >> a poll over the weekend show 46% back brexit. 43% favor the eu. the thing is, some of our editors at bloomberg are saying, do not make too much of a big deal about this. online polls show a major divide in phone polls. our own number cruncher has it still at 80% stake, 20% leave. manus: thank you very much, nira. protestersres of breaching the supposedly secure green zone raised eyebrows
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around the world and raised questions about the iraqi government. andrew joins me now. a warm welcome. ours to consider the implications. talk me through the economic consequences. a lack of stable government has major consequences for iraq. >> it is not great. this is the fortified administrative part of the country. you cannot secure it. raises big questions about iraq's ability to secure going forward. the headline is not that bad. growth is coming back this year. when you scratch the non-oil, it is terrible. you have three years of contraction, trade disruptive. investments are down. manus: we will bring this up, iraq's debt.
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uae, andre iraq, kuwait. will worryt the imf about, the nonoil risk. >> they have given greece a hard time. debtaq, you see the projected to reach 100%. the reason this is key is because we had the deputy finance minister tell us, we cannot go to market. they are offering 13%. with the imf agreement, we can borrow 4%. things might get back on track. manus: let's bring in our guest from cornerstone. great to have you with us. when we look at this situation, abadi'ss it mean for government? what does he had to do to bring stability about?
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>> what we have seen is that it has added political flavor to the technocratic government. it is going to be easy for him to translate this into impunity, purely because of political interference. manus: one of the parts of the story we wrote up yesterday, the u.s. reaction, the rumored suggestion the u.s. might be pulling back. we are in an election year. g and is in his swan son needs to make his last moment in terms of the iraq story. how does that fit together? >> it would be difficult for iraq to return to political stability without military intervention by others, the united states and other arab countries. it would not be a good idea if iraq pulls out now. manus: let me bring you back in
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on that point. iraq has global consequences in terms of the fight against i.s., this war on islam state. took the biggest northern city two years ago, and c statet state -- islami has been camped out since then. if you are the brigadier general and you are not sure who is in charge, it is not a good thing. the u.s. needs to see stability before they commit. that is unlikely with the election. anem, everyone is babbling around for solutions. is this an is,
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arab-iranian issue? inter-shia and sunni-shia one. the brings to the fore complexity of iraq. esh, and iranians, da of kurdish problem in one country. manus: sometimes, that detailed prism is sometimes lost in the last. -- west. the other dynamic is oil. notoil industry is affected. if anything, iraq is exploding in terms of production. the risk factor is not higher? >> oil is in the south of the country. back to my earlier point.
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the oil industry is doing well. that is what is lifting iraq. down, you willck reveal the weakness of the non-oil industry, which has had three years of contraction. this underscores the urgency of imf talks. manus: a final note from you, ghanem, which is production. is continuity key? >> absolutely. not easy to maintain, though. you, bothdrew, thank of you. cornerstone global associates. rish? rishaad: let's check on the stories making headlines around the world. china sees signs of improvement in its relations with japan, but there is still a lack of mutual trust. after themmented
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premier met fujio kushida. ties have been strained by territorial disputes and japan's decision to beef up its military. malaysia has received a protest from taiwan after deporting 32 of the island's nationals to china to face wire fraud charges. taiwan claims victims of scams may have been worth a billion dollars a year. state media said the others are chinese nationals. bj mallya is expected to be deported from the country for not paying his debt to kingfisher airlines. he denies he is a defaulter. tohas offered various sums
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prove he will pay up. delhi has asked for him to be sent back to india. largepansion on bands of diesel vehicles will be reviewed again on may 9. toyota says sales of more powerful diesels in india fell 41% in march. delhi rivals beijing for levels of air pollution. powered by 2400 journalists in 150 bureaus around the world, this is bloomberg news. rishaad: higher hopes at home. we have details for you next. ♪
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withad: you are back "bloomberg markets middle east." the builder of the world's tallest tower has reported a jump in profits. properties sales rose 17%. what do these numbers really tell us about emaar? >> the most important thing for is that it is able to sell and deliver properties. a lot of the sales were done in previous years. rules, of accounting they are now able to recognize those sales. that is helping them. chairmaneting with the of couple weeks ago, he told us he was worried about what will happen in terms of property sales in the beginning of 201 but was leslie surprise.
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-- pleasantly surprised. rishaad: does this mean things are getting better? there was a predicted fall in prices. >> home sales tend to be lagging indicators with developers. they are accounting for sales in the past. as construction progresses. we cannot rely too much on it. the chairman said a couple weeks ago he was surprised by the fact that sales held up. one cannot deny the fact the market is weaker. a lot of people are now talking about expected decline in prices around 10%. rishaad: would that come about as a result of a supply glut or other factors at work? >> there are other factors. most have to do with oil price. the stronger dollar, which makes markets like russia become
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more expensive for countries to come to dubai. also, weakening job markets in dubai hurts the growth of demand for properties. rishaad: thank you very much, indeed. dubai.fattah in uae is the fourth biggest producer with much of it coming from abu dhabi . , witht's focus is tourism seven-story hotels and theme
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parks set to open. how do you build on that and market dubai to the world? know better man to have that conversation with than jared lawless, head of strategy for dubai holdings. you are a great part of the bloomberg story when we talk about dubai. your role is about private development. is, with 2020 you coming, where is the city? any three-star hotels? >> we have many three-star and four-star hotels. there is great demand in that area and huge expansion of supply as far as three-star hotels. within jim eurogroup group, the contemporary lifestyle hotels. the government has incentives to broaden the market. we are beginning to have dubai
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established itself as a high-quality destination. manus: i get that. every time i come here, it is a new experience. we have the ruble under pressure. with theerious issues people who traditionally bolstered the market here. is that evident? >> it is evident, of course. the tourism industry is always in danger of currency fluctuations. to the dollar65 and four years ago was .32 to the dollar but has improved from .72 to the dollar. it is not only because of one currency going down or another market going up. we have a target of 20 million visitors by 2020. we are at 14 million now. you have to have a great depth in the actual product. but it involves things like theme parks, which are under
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construction. that construction is on the experience side of the agenda. how do you link back in from emirates? you have a variety of carriers coming in to dubai. how do you get people to link up and spend more time before singapore or hong kong? >> all our developments have been close to the airlines. manus: are they helping get tourists? >> absolutely. if you look at the various packages available online, you can get special offers to stay in hotels in dubai. if you have, as we have at the moment, almost 80,000 passengers coming through dubai airports, and people in the industry will go to see what we can get people to look at our
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product here. manus: there is overcapacity in the private sector. we had and send p warning about p when about house prices. hotel rooms in dubai -- are there too many? talk to me about the supply-side. >> we are looking at being able to achieve approximately 80% occupancy. we want to increase our number of guests coming in by 43%. of course, we need more hotel rooms. it is good for the customer, the destination, ultimately. eliers will have more competition, which is good for the consumers. they will benefit from the fact that we have more hotel rooms. ultimately, supply and demand begin to balance. manus: you have a choice,
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stepping off the plane. you have russian, chinese, and british as well. who is the biggest spender in spend per stay? who do you want? >> you want a healthy mix, actually. you do. actually, the russian will be most valuable in terms of spend. but he wants other people staying. which isa good mix, what dubai has always achieved. manus: disruption. airbnb. how big can it be? >> i believe it is another supplier in the market, creating competition. make them pay taxes, be subjected to safety issues. manus: always great to have you with us here. thank you very much.
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gerald lawless. up, the could be about to another cause another headache for japanese officials. ♪
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manus: welcome back to "bloomberg markets middle east." let's get straight across for a market update. en's at an 18 month high. this is a tough day, isn't it? david: equity markets are not taking it well. there is a violent move down in dollar-yen since the last time japan traded. we have an hour in tokyo. suffice to say, first day of may, not really panning out the way long investors would want. especiallyto gauge,
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when you look at markets like jakarta and the philippines, which have elections coming up in nine days. traders are protecting themselves against risk there. is hard to say where growth is going. some of these markets are not open at the moment. %.pan, .75 declines thursday, 3.6%. days.7% over two dollar yen now at 1.06. this is your wildcard. at what point does japan step in and start buying up dollars? jpmorgan says do not rule out 100. 100 might be enough to support dollar yen. 106.57 is the trading range,
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106.12 to 106.70. we tend to break out of daily trading ranges when london and new york starts opening up. at the moment, still very much oversionersion -- retr across asia. manus: it is just over an hour away from the markets opening in the middle east. ad, we will probably go with a sympathetic vote and say property storyar at play and oil taking a are focusing on dollar yen and currency manipulation? rishaad: it is a bit more nu anced. at the thursday boj meeting, there were economist suggesting they would widen the qe program
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or go further into interest rates. they did not do anything like that. upwards. a terror s, spilling over into the rest of the world. six out of the last seven sessions showing negativity. you have the beijing markets in the sunday sessions down. what we really have is the u.s. coming in on friday and saying an dollar-yen market is orderly one and japan must keep its group of 20 commitments. have germany, china, south korea, and taiwan mentioned in that report. it seems like the path of least resistance for the yen is to the upside.
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that is it for this edition of "bloomberg markets middle east."
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whites stocks sink. the ye -- >> stocks sink. the yen is at a high. --s >> i don't think you need a freeze. you must remember that the demand for oil continues to rise. it is not going down. be rising demands and the lack of investments in new supply.


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