tv Bloomberg Markets Middle East Bloomberg May 5, 2016 12:00am-1:01am EDT
8:00 in the emirates. ad: welcome -- risha to "bloomberg markets: middle east." lira. the turkish this is where politics takes on a new meaning. we have this political discourse davutoglu.ogan and option traders are paying a premium. betting against the lira. what is going to happen flowing -- happen to money flowing in and out the turkish market? we saw the stock market drop by 2%. it is all about the currency. that is where the real issue is.
that is where the alpha is. there is a flip side. it is exacerbating the situation. the dollar has turned a little bit since april. history is not on your side. nine years, we have been having a bullish trend during may. this could actually exacerbate the declines that we are seeing. has risen against 14 major peers on wednesday. could this carry-on? there is a lot of debate about this. there is a huge amount of debate.
when you look at the comments overnight, this all plays in, doesn't it? that retracement coming into these yen currencies. those percentages are changing. that is adding to the fire. this political situation in turkey makes things worse. .et's get over to istanbul how surprising is this? a political battle between the president and the prime minister could end -- lead to the end of an era. we have been hearing of the divide between the leaders. oh for the last week, the speculation started that davutoglu may resign. yesterday evening for one hour and 40 minutes. even though there was no
official statement, bloomberg has learned is that prime minister davutoglu plans to call a party convention and he will not be a candidate. we are also learning that prime minister duffy told to is expected a hold a press conference in four hours when he could formally announce the plans. rishaad: how did we come to this state of affairs? reporter: as i said, there has been a divide between the camps. speculation of a possible resignation started it on friday, the party stripped prime minister davutoglu as his ability to choose provincial leaders. there are people in the party who wanted him out. one of the main causes of the tension is the fact that erdogan
people think that davutoglu is dragging his feet in transition into the presidential system. a lot of criticism of him being authoritarian. the question is, what let this relationship to become so bad? who can we expect to replace prime minister davutoglu? reporter: there is a lot of uncertainty right now. there are a few names being thrown out about who could replace prime minister davutoglu. one of them is the minister of justice. erdogan'sone is son-in-law. rishaad: thank you a lot for that.
we're going to talk about politics and economics. turning to the u.s. -- we will find it how donald trump's presidency is going to affect the reason. minutes --ed in 10 do not miss it. checking in on other stories, aegon man is with us. >> optimism still outranks pessimism. last night, a china state council meeting said more needed to be done to promote private investment growth. biggest auto recall in
history has doubled in size. the regulator has ordered to to remake moreta replacements. two more deaths have been linked to the airbags in malaysia. ceo saysrio tinto tough times are ahead for the company. he says the board is still reviewing a possible expansion of its goals. early have given out gains in sydney. 31 passengers were hurt on a flight from all who david to jakarta. , afterdhabi to jakarta hitting turbulence. 10 people were taken to the hospital. -- the airline has not
released details. news.s bloomberg latest on's get the the market. asian markets under pressure. asian stocks falling for the seventh day. this is what is driving markets. indexking at the regional excluding japan, we are still and losses.eakness that is the longest losing streak that we have seen since december last year. apart from defensive purchasing in consumer goods, everything is moving lower. china coming through with a reading of 51.8%.
in hong kong, the hang seng index holding on to one-month losses, down 4/10 of 1%. the number of other markets thailand, indonesia, korea. vietnam is the only market moving higher as the country year,argets for the remaining on track despite with the government said was difficulties within the two-year bond yield. also rosemese dong today. new zealand is rising higher. the currencyng
markets in asia because we have seen the australian dollar rise but the greenback really strengthen, putting pressure on emerging market currencies in malaysia. 1%.s down to tenths of of theving a check australian dollar, coming back after a significant selloff earlier in the week. it is back to $74.94. up by about half of the 1%. weakness coming through across the board. growth concerns. just as we thought we may see signs of stabilization in china. there is some weakness still coming through. asian stocks under pressure. the longest losing streak since december. these stories and more all at our new destination, tailor-made
for the middle east. you will find in-depth reports right here from the region. plus, you can watch our reports and interviews. it is only available online. rishaad: banks are queuing up to manage -- coming up later, we will hear from our man in the .dd -- riyadh one billion or changing his mind about the present of republican nominee. we will be talking to khalaf al habtoor next. ♪
one billion dollars. they could sell for less. starwood has been trying to sell real estate before being acquired by marriott. goldfinger expects to tap capital markets to fund new aircraft. speaking in riyadh, khalaf al habtoor says the airline would also finance aircraft through leasing. he highlighted staff reductions as a sign of their turnaround. >> we have done a major restructuring. have more than 6000 employees per today, they have short of 3000. today, a vast majority are newcomers. the company will do a they profits,d, commercial commercial testing.
it could transform the company from the state owned to commercial. industriesudi basic improving operating efficiencies. [indiscernible] we are seeing a pressure on the pricing and profitability. we are leveraging the strategic capability. we have a product portfolio. they will appear like a one-stop shop for all of our customers. the other thing is we are leveraging cost efficiencies. trump is all but assured of going to the republican convention as the presidential nominee.
after his last remaining rival -- john kasich -- made his decision. -- wassich has advised advised to stay in the race but scored just a single victory in his home state of ohio where he is governor. >> as i suspend my campaign faith,i have renewed deeper faith, that the lord will show me the way forward and fulfill the purpose of my life. manus: delhi's donald trump is the sole remaining candidate for the election. many senior party members and donors say that they would the airides if he is only choice. trump has attacked immigrants, muslim, women, nato, prisoners of war, the disabled during his campaign.
in terms of who we are going to talk to, khalaf al habtoor was described donald trump as a fresh -- breath of fresh air that when trump said he plans to stop muslims from entering the united states,,. two are his comments. now the property mogul is there presented candidate. sir put good morning, welcome to "bloomberg markets: middle east." what are your thoughts on the possible trumpet ministration? khalaf: good morning. yesterday andws [indiscernible] in the beginning i advise that the united states need a business to lead rather than a politician and i commended donald trump but unfortunately he diverged into a different line. he did not leave anybody from --
loose cannon. he is a loose cannon. i advised his daughter through e-mail that he should make a projection. but he is doing is making a mistake like making world war. he should make a correction -- unfortunately, i haven't heard from him. doing that, i mean, the -- weans -- we will be have the right to say because the president of the united states of america or the nominee is also affecting us in the muslim world. remember that. -- 1.8re 1.8 million billion muslims in the world. investingp them from in the united states, that is hundreds of billions -- >> [indiscernible] trump has said that he would ban muslims are mentoring
that country. let's say you got into the white house. should our relations go? would they deteriorate dramatically? yes, sir. firstly, ifi mean, we expect american citizens rather than effective arab muslims -- because if they were planning like you are -- therefore, i think that a lot of people are thinking that he gets close to , they would drop unless he makes a major correction which it is too late now. i think it is tooling now. you know, i don't know. americans, americans. i could call him a loose cannon. very dangerous to the world, very dangerous to the world.
manus: let's talk a little bit about your business. you are building. and business,ipo sir jacob we understand that you were all set to go. wipo your business in 2016? khalaf: we are not going to ipo. the reason is because of sympathies and i don't want to do -- not because of any technical thing our financial thing. or evaluation is huge. compared to anybody -- we are transparent. are transparent public company and we take all -- very conservative rules. i think we will look at this may be at the end of 2017. manus: can i ask you, saudi is opening up. get uae families will
hold assets, how do you encourage them to consider it is time to go into the market? i think it is the right time. they are bigger than public companies. this is not the right time. everybody is waiting for a while. interesthem have the to go public because of reasons. dividends --ribute if i am handling it myself, i don't care. that is my company. can carry that she each
company can carry the other. uae -- i do not think they will go ipo. [indiscernible] we have 30 seconds so i need a short, sharp answer. , would that create ?pportunities for you what a brexit offer opportunity for you? khalaf: we are looking to differing countries. central europe more than western europe. western europe, nothing to invest. the relation is old.
profitworking to make and we are looking at central europe and united states of , other, illinois countries, new york, chicago, central america. half toe are going to draw this conversation to an end. the opportunity for the hotel group -- come and join us in the studio. rishaad:. opec looking set to head -- nope. ♪ --
"bloomberg markets: middle east." as we look at opec without a proposal to freeze output. oil hovering under $45 a barrel. any analysts are convinced that prices will rise slowly. where does the this leave opec? inorter: representatives at the end i yesterday to discuss what they see is the improving it seemsnamics and that this shifting dynamics they are seeing means that they no longer see the need to discuss the caps on output as they did in until. doha.they did in it is continuing to increase
since the meeting in spite of the doha meeting and a rich $48.50 a barrel. that is what is taking some of the pressure off of opec. rishaad: what has changed in the market? the international energy agency sees global demand getting closer to balance in the second half of the year and that is these historically low prices put a cap on production from outside opec. has fallen for eight consecutive weeks and speculation that it will continue to do so because at these prices nobody wants to drill. rishaad: alex -- reporter: unplanned outages -- rishaad: [indiscernible]
hsbc said to be among the contenders to manage the saudi public offering. it is 12:30 here in hong kong. manus: it is a: 30 here in hong kong. 530 here in london -- counting down to the beginning of the trading day in europe. a real reminder just this morning about the way that politics can play into your investment strategy and it takes a number of forms in the european day ahead. let's talk about the turkey story per you have been talking about turkey already this morning. president erdogan, and the prime minister falling out. the leadership contest the prime minister role set to take place printer prime minister is not on that list, according to people familiar with the story. the prime minister will be leaving by the end is made. raising questions once again
about how resilient the turkish democratic institutions are for this power grab that the president has unleashed and it seems that groups saying it is going to be a hot summer in turkey suggesting that it could be more of this to come? manus: when we look at the market reaction, the lira is where a lot of it is playing at. when he goes toward impeachment, assets rallied. it is a different story. in the reaction that you've caught anna:anna:? absolutely, a risk story for the turkish political situation so you mentioned what happened to the currency? i have a chart that shows what happened to the 10 year bonds. this is the yields in turkey so bonds lurking down -- turkey -- declining from an 11th month this is an emerging market story, tie in with the fed. yields over the last month because of expectations. that an increase in cash that
was a move downwards. then bounce upwards as a result of this political tension country that a night which a deficit of 4.5%, getting investors nervous. manus: i know you are a queen of the praise it. we have an hour and a half to talk in that. how does the agenda look? anna: it is not the brexit vote today, it is local elections on the fifth of may which means that we will see pulling around the various local elections. the mayoral election in london, though welsh assembly, the scottish parliament. it will be the first test of jeremy corbyn of the labour party. how badly they will do in .cotland is one question there
the nationalist party in scotland -- it is difficult to draw line between what is happening today and jim. one key thing that people will be watching, how well with a u.k. independence party data jacob the stake their reputation on some sort of exit from your so how well they do could be some kind of gauge as to just how much people are focusing on the june 23 issue. how much distance as a managed to put between himself and the leader of the labour party? it will be an interesting one. it is not brexit vote, that is in june. politics, markets, we will witness the interplay. manus: i will be back with anna .hortly morgan stanley and jpmorgan are said to be two of the international brings on the shortlist and manage the saudi
stock exchange ipo. joining us on the ground -- who tops the list? what we have seen with the shortlist for advising the ipo is a who's who of the international banks. goldman sachs, hsbc, jpmorgan, morgan stanley, along with local banks. we will see an international team. appeal to the locals , perhaps and try to international investors. about gold to me
fat. bahrain, we have a capital markets here, big deal here? reporter: the sovereignty of drags onone of the performance has been the government stake in gold -- google fair -- gulf air. one of the wealthiest airlines in the region, facing competition from the emirates .nd qatar airways the government is driving to restructure the airline. -- they want to replace a lot of old inefficient aircraft to keep up with the likes of regional
rivals. that will cost a lot of money. -- noternment of bahrain a lot of money to spend an aircraft. they seem to be looking at the strategy of going to the capital market to strengthen aircraft. exposeds not has lossmaking parts of the gulf air group. everybody seems to be speaking capitalism, qatar, abu dhabi. you are going to keep that theme going. middle east credit rating, downward pressure. liquidity conditions could be the trigger.
thank you very much, indeed, for coming. guest: the middle east is undergoing a major transformation. lower price of government has changed the picture. this is a good lesson for the middle east because i think that this time around, most of the judicial authorities are taking seriously this message and they are aiming to transform the economy effectively weakening to some extent of the high dependence on oil prices per part of transformation plan if you want will involve getting more leverage in order to found the growing deficit. rishaad: we've got these problems of liquidity concerns. guest: liquidity conditions, local banks, which usually are the major buyers of local
credit, have come under pressure because obviously have the lloyd revenues. since february, we have seen a slight improvement in liquidity conditions. at the same time, assuming that the premium levels are -- rishaad: well, absolutely. there is always liquidity, isn't there jacob but at the right price. they end up paying much more for less, that is the thing. lenders, thergest bank lenders are japanese banks are currently having offloading int of the lending capacity the gcc country and i think this will continue assuming a negative environment continues in europe -- more. -- flowing into the gcc because obviously they will get -- rishaad: names of people you are concerned about? particular. anna:1 --
guest: fairy brolly, most of the gcc banks are still in a rishaad: healthy --rishaad: guest: anna: guest: but it goes beyond guest: the banks some of the sectors are more of a challenge -- the real estate sector tends to be more cyclical. nevertheless, following the dubai names which were a lot of negative sentiments about the entities -- we haven't really seen any major warning signs it. theyually obviously if continue these large projects in the economy continues to slow down in me run into some sort of a trouble. course a oil price continues to fall down words which most probably not likely -- rishaad: tell me something here as well -- [indiscernible] bond.looking at a they are said to be playing this. abu dhabi has been extremely successful.
is a very -- rishaad: it is the world's [indiscernible] --[indiscernible] guest: debt in qatar.w i definitely see strong demand. one thing we talk about is the low oil price. arabia being rather vulnerable to all of this. what point do the alarm bells go off you go guest: there was a negative i do expectout -- the march data -- they reserved the patient has started to normalize and will continue to do so -- rishaad: [indiscernible] what is more likely to
happen in five years, i see a scenario that most of the gcc countries decide on a union currency. certainly i don't really see any areas of currency -- rishaad: thank you very much, indeed. manus? manus: let's check in on the other stories making headlines. brazilian president dilma rousseff has suffered a new blow as a senate committee recommended impeachment proceedings against her. there is evidence to try .ourself -- try rouseff there are no legal grounds for the senate committee will vote on friday with her to accept the report.
the palestinian authority has suspended all cooperation with in protests that continued military operations in the west bank. rising tension along the border which saw gunfire on wednesday. the chief negotiators said the plo executive committee would redefine all relationships with israel including political, economic, and security. a state of emergency declared in alberta as a wildfire in canada forces more than 80,000 people to leave home. elise to 1600 buildings have been damaged or destroyed in fort mcmurray. will touch shell are among the companies reducing production in northern alberta. high temperatures are fueling the fire. officials fear a large portion of the town may be lost. injing has put a new weapon
the fight over disputed south china sea islands. sent singers and magicians to entertain soldiers and workers on an island claimed by the philippines. they have a tradition of putting on shows to promote ideology. one of the songs features and disorders working on land reclamation who postpones his wedding. this is bloomberg news. cutter said to plan a q qata -- ♪
the phone on monday. japan has been closed. it will not reopen until tomorrow. still having selloff continue. mainly due to the tight asian -- really just showing more pockets whenakness coming through we were hoping for signs of stabilization. .n hong kong, losses , its longestssion losing streak since in about three months. elsewhere, markets open in southeast asia. thailandouth korea and and indonesia closed it today. there has been a pickup in vietnam. they are on track for 6.7% growth this year.
sx 200 comingthe under pressure. mining.in energy and looking at the regional index of 1%.ng japan, down 13 seven sessions of losses now. having a look at some of the individual stocks. the national australia bank in australia coming through with an increase. that was better than expected alsoore under pressure here in hong kong, property stocks under pressure. that is goldman's -- rishaad: things very much, indeed, for that. manus? this is the world largest liquefied natural gas exporter.
have appointed hsbc, deutsche, barclays. bloomberg news golf bureau chief joins me on set. they are on doing it, aren't they? abu dhabi looking for money. what do we know? it is going to be the first was his 2011. it is probably going to happen as early as this month. barclays, deutsche, bank of america, others. we saw the yield go of the bit. up 2.5%. it is just slightly more obvious situation here which is why are they doing it? if you actually look at the deficit -- put it in context for me. reporter: they may be running a deficit of 13 billion which, it
is tiny compared to the money may have. interest rates are really low. they will probably plug issuing debt. this seems to be what we are seeing. -- there isnt to been a lot of talk to joe that. so that companies will find it easier to issue debt. manus: i mean, this is a changing landscape. i mentioned the obligor the bond issue. bond issue. reporter: i think there are different elements. , they arebi and qatar not scraping for money. reserves have been going down quite a lot with audio coming down and they are cutting subsidies. there is more a need of diversifying away from oil. they are still pretty solid
qatar has the third highest graded -- credit rating. manus: i come down here in ac -- and i see a written like that reporter: -- i guess that is what they are hoping for -- where can you get money these days if you put money into that? hopefully. manus: there's a lot of hungry people out there. great to have you on the show. rishaad: loading up on gold. coming up, we will find out why he has made the precious metal his biggest currency allocation. stay with us, this is "bloomberg markets: middle east." ♪
east.". yesterday i was talking about gold. we are coming off -- money -- there is one big investor open interest in gold. ats, the highest influences 2013. .his man says load of he says the market is exhausted, three years of unproductive markets are on the way. -- he wente average out going to get that again. he would really really say that gold is where he wants to put his wager. this is the man. he has a fairly good track record. the question is, what happens next with the dollar?
it is all about the dollar, we -- rishaad?aad mentioning,you are he started the show talking about this. this month of may is one of the best months historically speaking -- nine out of 11 years -- may has proved the be a very good month for the dollar in fact it has risen so if you will is,on the -- now, the thing where does cool to? gold coast in the opposite direction. this is what we've got, of course. they brexit vote is on the 23rd of june. in sydney, probably an inflection point -- you know, we've got gold. we have also got diamonds, very much. in fact, he joins. i dimon the size --
-- which means light"-- our it is the second-largest diamond ever found. at thegest was found turn of the last century. it is part of the british crown jewels. fetch $70cted to million. he picked up a- 12 caret jim last year. you know, manus, who he gave it to? he gave it to his daughter, so that is what we have, really -- manus, i mean, can you imagine -- before it is even to? how many diamonds could come out
of it? they are talking perhaps 400 carats 10 and of course, those of smaller ones out of that, as all -- so, there we go, cold, and diamonds, and the dollar. manus: it is how you cut up all those pieces of pie, isn't it? i love that conversation with habtoor here. al course, we've got the price of oil. we have qatar potentially coming to the bond market. we are going to find it is the banks are in play there. friday. with that note, we are going to do it all again. we're going to have the best of "bloomberg markets: middle east."
anna: seven days selloff. asian stocks continue their losing streak. the turkish prime minister is said to be planning to step down after losing a power struggle with president erdogan. prepare for trump. money manager jeff goodlatte says get ready for the presumptive republican nominee's presidency. ♪ welcome to "countdown