tv Bloomberg Markets Middle East Bloomberg August 10, 2016 12:00am-1:01am EDT
>> renewed fears of money global growth. the dollar retreats as gold climbs again. >> turkey and russia repair ties ruptured last year. p says relations must be mended. iran may lose oil markets in india as its biggest buyer considers looking elsewhere for supply. >> the problems are piling up for tehran. the end of sanctions has yet to
improve the economy. a.m. in london. >> welcome to bloomberg markets. ties attempting to be mended between ankara and moscow. the idea that this could be positive longer-term and after that coup attempt, we've seen it just and stocks -- i mean turkish stocks moved to the upside. this coming against the backdrop where it emerging markets are gaining more favor with high valuations as it comes to develop markets. what's happening in turkish stocks is very interesting. we have put this out for you on a chart, you can pull it up on bloomberg.
that a is telling us is lot of turkish stocks, 42% of them have that my signal. two weeks ago you compare that and you see those bars in red, it was 0% of those stocks that had by signals. where also seeing easing in other asset classes as well. the five-year government notes yield shading off 36 basis points just this week. where is all of this going to go from here? as we await the key decision from moody's that will have an impact given that turkey does need to investment grade ratings to maintain a lot of exposure there. let's look at what is going on right now when it comes to equity trading. mom guy coming on -- mumbai
coming on about 20 minutes ago seng .4% to the upside and the topics flat after being down for most of the morning. thereby coming through it 10:00 local time there. this was at the close of the trading day tuesday. building on the games we've had 11.5%. up about that was the close again on tuesday. yousef: with first world headlines from around the world, here is juliet. >> warnings that monetary policy is reaching its limit.
stephen said interest-rate movements alone are not enough to stay in rows and called on the australian government to do more on budget repair. rates are already at record lows. think this rather otherworldly conversation were having isn't going to need to get more hard-nosed, we are kidding ourselves. that will occur, should there be a moment of crisis. it would be better if it occurred before then. , and i think this will complicate a fiscal discussion, we cannot just canme that monetary policy simply dilutes lots of growth and demand that we need. we need to be realistic here. >> egypt is stepping up its fight against like markets. anyone found breaking foreign-exchange regulations now faces prison sentences of
between three and 10 years and fines of over 500,000 u.s. dollars. egypt's parliamentary speaker are axchange bureaus cancer. donald trump has told a rally that second amendment people couldn't stop hillary clinton from in acting anti-gun policies if she becomes president. he said maybe there's something they can do, although that would be a horrible day. dayal news 24 hours a powered by more than 2600 journalists and analysts. turkey and russia have repaired relations that were ruptured in november. the two presidents held talks in st. petersburg, saying the downing of a russian warplane has cast a dark shadow over traditionally close ties. cooperation is not
limited only to energy and gas and power. it is quite multifaceted. it is engineering, the metal industry, trade. today we talked a lot about resuming agricultural supplies. we will do everything in the work of the plants we laid down today. joining us is our moscow editor. importantng was very for both leaders. how did it really go? >> we don't know exactly what happened inside the room but it was a key chance to demonstrate to their public into the west that they are not isolated and that they had economic and political opportunities despite pressure from capitalist in washington and across europe. on the economic front, that seemed to be where most of the progress happened. there were talks through the day between the leaders directly as well as the broader delegations
in the later meeting with business leaders. there was a lot of talk about returning to business as usual which had been interrupted by the downing of the russian plane by turkish forces in november. yousef: economic leaders talked about business returning to usual. how realistically is that going to happen? >> that is not entirely clear. there was rhetoric about resuming trade ties. the russians have not committed to exactly when those things -- trait will be resumed. we heard some indications that agricultural products may return to the russian market by the end of the year. that's an important article for the turkish economy and another big area is tourism.
yousef: syria has been an integral part of the disagreements that have occurred the last few months. is there any sign of progress on that front? >> publicly it looked like the leaders agreed to disagree on that. they had different positions on it and left issue for later talks in the evening. turkey has been a supporter of removing president assad in syria. russia intervened last year to do just the opposite. it seems like the tensions there are likely to remain. yousef: that's our senior editor live from moscow. emerging markets are currying favor and we've got more risk on the table. >> that's been the most interesting development, japan
in the afternoon session with a great upside. the nikkei to 25 has been sitting in negative territory. region,e around the it's a divergent victor. strong gains coming through from taiwan. the taiwan dollar jumping the most in over a year as regional inflows are starting to favor that. governor glenn stevens gave his swan song speech saying that monetary policy is not enough to get growth going again. elsewhere around the region, gains coming through from hong kong. the hang seng is touching those 2016 highs. the gaining companies as well as
consumer stocks and agricultural stocks on hopes that the chinese economy is rebalancing. region,e around the indian shares flat after the r.b.i. did not move on rates yesterday. singapore up about .5%. sellofffter the following the ubs earnings earlier this week, lenders are looking the cheapest since the global financial crisis. currencies, a little bit of a risk obsession when it comes to easing money out of sovereigns and going into gold, extending the rally by .7%. also flat at the moment. that playing into a weakness
when it comes to the energy sector in particular. we've been calling for $.78 by number of analysts but were still a little way off from that. a quick reminder that you can get more on that and the rest of the day's news at our digital destination tailor-made for the middle east. all our reports, interviews, and special content only available online. oilaad: a blow to iran's output ambitions. this is bloomberg. ♪
business headlines. iran may be losing oil market share in india because of the arrival of supplies from russia. last year there was a tenure agreement to supply oil but did not say where would source delivery from. indonesia could turn to iran to help supply more oil in the face of rising demand. it pledged to provide crude as well according to an indonesian oil official. the value is estimated at $8.5 billion and would be built-in job. .- in java the u.s. has approved the sale of tanks to saudi arabia. washington said the sale will
not alter the military balance in the middle east but would improve saudi arabia's ability to meet current and future threats. yousef: egypt is stepping up its fight against the black market that authorities blame for chronic shortage of hard currency. with an imf delegation currently in egypt to potentially commit to a line of funding, egypt's economy remains in focus. joining us is the head of asset management for the national investor. sebastian, egypt's woes are ongoing. i pulled up a chart for our viewers to get a sense of the latest numbers in terms of foreign currency reserves, down to the lowest level since march 2015. 11.4% drop in the month of july, $2 billion straight off the top. as egypt continues to negotiate with the imf, how does it find a
way out of what appears to be a growing crisis? >> you are right, each of doesn't have the luxury to wait any longer. pressure onmendous the local currency, it's trading with a massive discount on the black market. 40% is the official rate. as you mentioned, the foreign reserves have reached $15.5 billion in july, which means it's below the critical level of three months. tourists are a key provider of hard currency for egypt. they are still avoiding the might lose $4ey billion of tourist revenue this year. you at egyptian equities and how they perform, and terms of price returns they are still the leading index in the middle
east. do you reconcile that there is a view or play that egypt is on the cusp of a turnaround, if they do come to an agreement with the imf? can you buy into that view? >> we have a lot of local investors taking some positions recently, but the figure you mentioned is in local currency. if you look in dollars, it would not look as good as you have mentioned. sectors mightome from the lot devaluation. i'm thinking for instance of real estate. benefit investors might from the devaluation. does devaluation prevent -- present a buying opportunity, that is the question? to enter intorly
it. we need more detail. the imf agreement is only one part of the story. we need more. triggerreements might some positive news for the country. topt might come back international markets to raise money. there's a planned eurozone issuance of $3 billion and other international institutions, the world bank, but i think it's too early at this stage. don't forget there are also some negative impacts with the devaluation. it will trigger a lot of inflation in the country. 40% of the population lives below the poverty line. you might have some social discontent in the country and the government will have to deal with that. rishaad: what about economic policy, that has to be key here.
egypt need to do to change its mode of growth? is coming in with good reforms related to the introduction of new taxes and at the same time they want to subsidize -- cut subsidies related to energy and food staples. the president has already done the first move two years ago but more is required. don't forget the budget deficit is roughly equivalent of 12% of the gdp, which is a very high figure. yousef: we will have to leave it there. a fascinating story and we'll see how it all unfolds. bloomberg markets, middle east. plenty still to calm including a conversation on the ongoing liquidity challenges and saudi arabia.
yousef: welcome back. you're watching bloomberg. the hong kong exchange is the parent of the stock market here, in a moment coming out with it latest figures. that's what we have at the moment with revenues and other income of 5.6 billion hong kong dollars. let's talk about turkey and have a look at what's going on and bring in philip. thank you very much for joining us. let's start off with this visit by president erdogan.
how far is that a snub to the west in a way, also being a pragmatic move in the sense that you need to have good neighborly relations? can you hear me? >> i can hear you. what about president erdogan's visit in st. petersburg, that's what we just ask you about. how far is that a snub to the west and how much of it is pure pragmatism toward good neighborly relations? officially we are investing in the middle east for quite a long time and what is going on for the moment in saudi arabia, obviously liquidity is needed, particularly since we have low oil prices and low economic
growth. therefore for us from an investment perspective it's very important that we see some new issuance coming out of the middle east from sovereign banks and from corporate. what are the big challenges apart from the oil price, which is affecting the whole gamut of the economy. the multiplier effect, how fast is the economy likely to slow and how does that affect the investment horizon? we have done pretty much of our research and we are confident that even the low oil 60, theyween 40 and need some funding on the bond market.
there is some conversation going on but from the investment it's pretty good. we don't see much leverage in the system and therefore we think it's an amazing opportunity for investment. the saudilook at interbank rates and they're up 45% so far this year. we trying to get a sense of the health of the saudi banks. you are saying they are well-positioned, but you do have concerns about how well they will hold up if oil stays lower for longer. isn't that correct? >> exactly. onhave done a stress test the financial metrics of the bank obviously we see the ratings in general two or three notches lower than the big rating agencies, but still the financial metrics, the way it looks at the moment, is pretty
robust. even with the oil price a little per ofiodfor a longer banks. -- we are waiting the issuance of the sovereign and once it comes to the market, the spread curve, hopefully they on different channels. once that is set we will probably ease some banks coming to the market, particularly after what we see going on in brazil or turkey. it's likely some of those banks reach investment grade. it's good to have some new issuance coming to the market so we can diversify our portfolio.
after that the starting point for u.s. banks. wooden that get a little expensive, and is it worth the cost? >> absolutely. that is pretty much the question one had a pretty good spread saudi electric, a little over five years that has performed pretty well. overall it has performed pretty well in the past weeks and froms and has benefited the emerging markets. banks, the stronger way we look at it -- yousef: we will have to leave it
there. still to, the program, a potential setback for iran as it tries to ramp up post-sanction production. production. india may order less hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling like hotcakes? with comcast business internet and wifi pro, they could be. just add a customized message to your wifi pro splash page and you'll reach your customers where their eyes are already - on their devices. order up. it's more than just wifi, it can help grow your business. you don't see that every day. introducing wifi pro, wifi that helps grow your business. comcast business. built for business.
they proposed joint initiatives including the pipeline to carry russian gas to turkey and a shared investment on. yousef: foil extending the client after an expansion of the american stock pile. the highest seasonal level in at least two decades. asia's equity indexes rising for a fifth day, approaching a one-year high. hong kong stocks hit the highest since november while japan declined on a stronger live -- stronger yen. market blamedlack for shortage of hard currency. the speaker parliament called -- call thenge foreign exchange of cancer in egypt's body. 12:30 here in hong kong. yousef: it's a: 30 in dubai. >> its 5:31 a.m. in dublin.
the start of the european trading day, good day to you. so the bank of england runs into a snag. scene on the gilt market. eu but left the yesterday's option, the bank of england try to buy quantitative up to and it did not lead expectations. the market would not part with their guilt. as quantitative easing it a temporary buffer? today, in terms of what's happening with japan. if you look at the transmission mechanism in europe, it actually double the normal easing cycle. what is happening is real
interest rates, anyone who takes alone in europe, it's really having an impact in terms of lending. the bank of england has hit us be bumpy. the data says negative interest rate is working in europe. end?e really at the lower about the corbyn earnings front, what is happening there on your radar? manus: the world's largest temporary staff company, they slashed their earnings a while ago. they have been under pressure. we will try to get a real sense of what's going on. the ceo will be with us a little bit later on. time.aris
what is the brexit impact on wages and how does he see the world? it's a phenomenal guest to have a conversation with in terms of benchmarking global growth. yousef: we look forward to that. lynn stevens has used his final speech to warn of the limits of monetary policy. let's go to paul allen in sydney. who was the warning aimed at? -- glenncal leaders stevens warning that monetary policy is unable to dollar the growth we need and said he has serious reservations about relying on it across the world. in terms of australia, talked about budget repair, saying repairing the budget will be more difficult and more urgent.
specific proposals do come up from time to time that would actually make a difference. yousef: it looks like we lost our connection to paul over there. .ishaad: thanks for that take a look at what's going on when it comes to the trading day with oil in london. brent just a tad below that u.s. $45 a barrel level. expecting a windfall after the sanctions were lifted and another bit of a blur here as well. the second biggest customer is india, losing market share possibly there. our energy editors right here with me now. it's the decision to shift away from iranian supplies.
the managing director said when the deal comes up, they invest in one refinery, and one of the first to back out would be the iranian crude. that is part of the larger move we've seen in india, investing deeper into russia. producers there have bought more than $4 billion worth of stakes in some of the fields offered in siberia. so you would see this like for india, they would be pulling in more which could be from any place, and from elsewhere and pushing that some of the iranian stuff, which has been rising sanctions were lifted. dependent is india on iranian oil, and vice verse a?
there's been a boost of export from iran. iran is now probably the fourth biggest supplier to india. looking the other way, iran is dependent on india as second-largest. the second biggest these days is now india. in a weird way you can see that iran depends more on india more than india needs iran. what more can india do in the wider asian stander? >> they have an investment in a smaller petroleum company that intends to invest a few billion dollars to expand refinery. if he turned to china, its , china hasket allowed a lot of smaller independent refineries to bring in more of their own oil. and that we the iranians are
trying to find a way in. the recently signed a deal to they can then sell it to independent refineries which could give them another outlet. first: let's check in on word headlines from around the world. here is juliette. >> iran and the u.k. have pledged to advance their relationship seven months after sanctions were lifted under the nuclear deal. president rouhani said he and the prime minister will work side by side and she promised to play an active role in implementing the agreement. kuwait has signed a deal to buy helicopters from airbus. the order was formalized in paris for 20 aircraft to be used in combat search and rescue operations.
more than 500 have been delivered worldwide. the olympics are briefly out of the headlines in brazil. suspended president is said to have me shoes public funds. out she's not been charged with fraud, unlike her accusers. the acting president will remain in power as the cabinet was linked to elicit campaign contribution. all three say the financing was legal. global news 24 hours a day in more than 120 countries. this is bloomberg. just weeks after thrown open the doors of shanghai disney, it is already breaking ground on an expansion. here's more about the significance of the project. >> the reaction to it in china has been great.
the visitation has come from all over china. with taking great advantage of shanghai as a tourist destination, to kimberly in the summer. the intent to visit is very high and awareness is extremely high. people are staying about two hours longer per visit than predicted. per capita spending has been really strong. we had estimates but were really just guessing about how it would do because it's a brand-new product in a brand-new market for us but we are extremely pleased with what we've seen so far. well over a million people have visited part since it opened in june and the prospects look really strong. so much so that we had already broken ground on expansion and feel great about it. >> give us some advice because we talk a lot about china and western companies. as you say, you spent 17 years. you've had a lot of success at
learning how to work with the most senior leadership all the way at the top of china. had acompanies have tougher time. what advice to you have for others who want to go into business in china? >> i've thought about that question. i've been asked it a few times. it's not an easy answer because i'm not sure any to situations are the same. we came to china as a known entity. disney is well known in china and a trusted brand and trusted company. it took a tremendous amount of communication, a lot of candor, patience, perseverance and tenacity. there were many times when it would've been easy to fold our tent and say it's just going to take too long or be too hard, and yet we didn't do that because we truly believed in the market and how our product would perform in the market. so we never backed down, and we had to be -- we created a tremendous rapport with our
partners and multiple segments of the government run beijing to shanghai, and ultimately built up a trust for they believe what you are saying because you are speaking the truth, and you have some faith in them. and frankly as partners, they have been great partners to us throughout this process. bob eiger talking to david west. whileity tightening lenders are leaning toward more international bond sales. this is bloomberg. ♪
it's an important pulse to the health of oil companies in this part of the world. versusin with a loss, 421 million. first half revenue down 19%. once again showcasing the ongoing pressure that lower oil prices are putting on corporate that also on the banking sector. let's get more perspective on that with the chief economist at all we got a commercial banker and she joins us live. looking at the numbers and the interbank rates that keep creeping up, what is your read on the health -- health of liquidity in the united arab emirates? >> we've seen a continued tightening in liquidity in the first half of the year and
that's reflected in the continued rising of the interbank rates. thecritical point is that pace of tightening has moderated from the second half of the year. fiscal tightening, but not at the same pace, a bit more comfortable. that theould you say road ahead is going to be turbulent? is the stress level one to grow before things start getting better? it as a tighte liquidity environment going forward. as you mentioned, much of it has to do with the low oil prices. we've seen downside pressure on the low oil prices. it's still very much the same story. one improvement in the second quarter of the year, when you break down the data, is the changes in government deposits. deposits have increased since the middle of last year.
you've seen borrowing from the banking sector stable and that can be the result of two things. we had the sovereign issuance in april but it also could be an acknowledgment of the tightening in liquidity. the critical point remains that credit growth continues to outstrip deposit rose. we see that across the region. yousef: we've seen some central banks provide short-term temporary liquidity scenarios, if you will. is that enough, or do you expect more going forward? , we expect a couple of things. we think the regulatory seedling will likely have to be increased. we also believe that other reforms could be taken, the reduction in the reserve
requirement ratio is something else we could see. thea critical point is also sovereign issues we are expecting from saudi arabia. that could boost short-term the bondsif some of raised are deposited in the banking sector. over $6 billion went into deposits in the banking sector, based on the data available. credit: you mentioned growth outstripping that of deposit growth. the thing is, unit -- you cannot keep on going back, authorities cannot effectively keep on doing this. at what point do they have to draw the line and let the banks do that for themselves? >> i think it's going to be a number of things.
if we look at the loan to deposit ceiling, there is growth for further regulatory loosening. also you're going to see banks look to different forms of funding. as you discussed earlier in the you will likely see a turning to the international debt capital markets to raise funding. i think it's a response it has to come from both sides. but the spaces available for the regulators there, for the central banks. it's made easier when you have interest rates by the fed so low. we also had brexit, of course. but in the whole gamut of things , how does it fit into the hole in emerging markets picture?
looking at banks and beyond, as a result, as people look for you asian's, how does it all look to you? do the emerging markets actually benefit? >> absolutely. there is benefit with improved sentiment toward emerging markets from the second order. that is one key linkage to the global side. secondly there's the search for yield, as you mentioned. you have saudi arabia and other countries that are investment grade by the rating agencies and the yield story is there. you have more probability of a rate hike in the u.s. after the strong payroll data. ratesve negative interest in other major central banks,
japan, the ecb. i think this will support sentiment toward emerging government debt levels remain very low. that will be supportive for demand as well. one of the things that caught my attention is the studies in the u.k. suggesting that banks are likely to lose their bond buying rights with britain from of the european union. does that have any implications for where you are at the moment? >> i think there is still a lot of uncertainty on what this brexit will look like when it takes shape. i think it creates a lot of uncertainty towards the u.k. and the eurozone, the but the
financial fallout on the global side has been relatively muted and conditions have eased since the vote in june. at the moment we're not seeing that much fallout. if you do see more pressure, it's more towards emerging markets. not ak that's going to be big factor from where we stand. rishaad: thank you so much, monica, so good of you to join us today. still to come, the problems are piling up for iran's president. months after the lifting of sanctions, the economics -- economic benefits are barely apparent. we will have the details for you. this is bloomberg. ♪
under increasing pressure them with growing dissatisfaction about the economy. months after the lifting of sanctions, there is unhappiness that the groundbreaking deal has not translated into a better standard of living. how much should we read into what is effectively a decrease in popularity for rouhani? after thes a decrease deal that was carried out in june. expectations were so high for the results of the deal, and six months into the sanctions being lifted, we're seeing the targets the government have set are far -- ineing reached in the terms of the level of direct investment and the number of contracts being penalized -- being finalized. result, the question that is rising now within the population is, what impact is
that having in my life? three force of the people who were interviewed said they felt absolutely no change in their life. of whatses the question does it do for us. the globaloining community and so on, but what does it mean for me? rishaad: these things do take time and there is no material difference in the moment perhaps and that's how they are looking at it, but we have this election in may. i guess rouhani is hoping things are better there. >> in some ways it should be seen as a challenge, but what's happening right now is the sense of discontent is giving ammunition to his rivals. who had always
questioned the need to actually have a dialogue or negotiations, in particularly with the west and the u.s.. it is providing ammunition for these people to step in and say we had warned of that. the supreme leader is the highest authority in iran, also questioning the benefits that came from this deal and in some way starting to dissociate himself. so it's deathly going to be a challenge for rouhani if things stay as they are right now. yousef: that's it for this edition of bloomberg markets middle east. a quick market check. the open is upon us over there theye european capitals,