tv Bloomberg Markets Middle East Bloomberg May 21, 2017 12:00am-1:01am EDT
♪ tracey: hello and welcome to "bloomberg markets: middle east ." i'm tracy alloway in dubai. the big news, incumbent winsdent rouhani reelection by a landslide. it is 8 a.m. here in dubai. i am tracy alloway. japan'se in news today, softbank says it is close to reaching its $100 billion target for its abu dhabi technology fund. we'll have more free you on the iranian elections later in the show. in the meantime, we also have
kevin cirilli. the rouhani victory comes at a time when donald trump is visiting saudi arabia and the saudi's are going out of their way to welcome him. walk us through what you've seen on the ground in riyadh. presidentnt -->> >> trump is on a dealmaking spree worth billions of dollars. he is met with top ceos and leaders here in saudi arabia. here is what you secretary wilbur ross told me. rosss. secretary wilbur told me. >> i could not imagine a business day mortgage for the united states and for the thedom -- more good for united states and for the kingdom. >> the investigations in the
united states could risk ever shadowing his international trip. he is facing a lot of allegations about his international ties to russia. tracey: we did see u.s. markets take a tumble off the back of some of the domestic headlines surrounding president trump. now that he is in saudi, what is going on on that front in terms of his domestic standing in the u.s.? >> back in the united states and there are intensifying pressures over just over -- just what happened over his firing of former fbi director james comey who will testify in about a week and a half before the u.s. senate. therees at a time when are ongoing investigations into whether or not there was collusion with the russians during the campaign. the administration is trying to turn the page. they brokered a series of deals
worth more than $300 billion in total including a 9000 billion dollar saudi arabia -- a $9 billion saudi arabia and raytheon. withllion dollars deal saudi arabia using boeing and raytheon. tracey: we will be discussing that story more in the show the first saudi arabia's energy minister says all the oil producers he has been talking to our onboard for a nine-month extension of the production cuts of the agreement. willso said saudi arabia not pick up any producers that deviate from the agreed output limit. >> i have not spoken or heard any country against extension.
everyone wants to the extension because we realize we're not achieved our objective. >> are you concerned the market is already pricing all the production cuts in? looking toward the market, i'm not looking for a specific price. what we're looking for is an agreement and a consensus and clarity for the market that we are steady as we go, we are committed to that five-year average. opec and non-opec working together and that should encourage investment. clarity of where the market is going so that people invest. i'm less concerned about prices and market over the next 12 months than i am after three
years, after the decade when supply may be short, demand is approaching $100 million and we have an annual decline taking place. and leslie invest and overcome this decline -- and unless we invest and overcome this decline, we will face a shortage. >> i understand you are not targeting a price but give me, i've been covering opec for almost two decades and the shale producers are part of the equation. say your production cut extension does not have the effect he wanted longer-term, would you think of over pumping so the price goes down. pump to not over squeeze anybody out. i think supply and demand need to balance and we have said saudi arabia has of the
capacity, opec will do what is necessary. the market structure was off a few years ago, the divergence between supply and demand and any opec action in 2014 would not have done the job in terms of cutting. with the restructuring of supply demand to directories that took place -- supply demand trajectories that took place, opec is able to clarify with our partners from outside to bring better.ly-demand by us >> that was saudi energy minister khalid al-falih. coming up in this hour of bloomberg markets: middle east we find out just how investors in tehran arguing rouhani's win. jamie jamie diamond --
tracey: you're watching "bloomberg markets: middle east" live from dubai. let's check out the first word headlines. softbank has secured the first capital commitment to its $100 billion cap -- technology fund. it has agreements with the saudi public investment fund, so far $93 billion has been committed and softbank says it aims to reach 300 billion within six months. it will seek long-term investment in innovative businesses. russia failed to issue a joint statement.
russian economy minister said only one nation opposed the strong language against protectionism, hitting it was at the u.s. the russian commitment to opec short- apec will fall where language about protectionism was watered down. he said recorded evidence was a doctored, he claims he was set up during a take conversation and temer says the accusations with evidence.rt global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, i am tracy alloway, this is bloomberg. whereget back to riyadh
j.p. morgan chase ceo jamie dimon says he is confident to increase his market share against increased competition from rivals. dimon says he is optimistic about global growth and the opportunities it will present to j.p. morgan in the future. >> the world is going to double in size in the next 12 or 15 years. this is opportunity. we have spent a lot of money in technology, we know what we are doing. we help companies go around the world. the emerging markets move twice as fast as the developing markets. >> can you break down the units were you want to defend your market share and where you are trying to aggressively push it? >> i want to push it everywhere. clients want multiple vendors and suppliers and that is completely understandable. we said investment banking in certain areas, and maybe hard to gain share but it is not mean we
cannot gain share in this country or this part of the world. >> what about fixed income, a lot of your competitors are trying to beef up that? >> we have a good share there and i think it will be hard to gain but when you look at it, you look at the number of shares, if you look at what we can do better in this country or that country, we have plenty of things we can do better around the world and a lot of it is going to go to technology. we are going to build and maintain our share. competition is a good thing. you want a competitive world. >> important as long you are better than them. >> it is our goal. >> we talked quite a lot about regulation, what is the mood now , so confident about the future for wall street? >> yeah, when you talk about regulation, the trump administration wants to the regulate certain things and most of us in business think regulation has been holding back
growth. it has been holding back growth for all citizens of these countries. i am optimistic you will have some regulatory reform. after years of regulation, it makes sense to look at what was what can simplify the burden of businesses, which in help people expand employment and grow the economy? no one is asking for a wholesale throwing out of organization -- of regulations. about modernizing glass-steagall? >> glass-steagall was not part of the problem, no when i talked to said that was part of the problem. when you talk about glass-steagall, would you regulate small banks better than the -- small banks differently than the bigger banks, i think yes. >> would you be opposed to foreign acquisitions? on the hunt to do
anything right now that i would not take it off the table down the road. acquisitions will be back in our future. >> is there a region you want to beef up? >> for j.p. morgan chase, there is no area we cannot grow organically. we can have bankers in countries, private bankers, corporate bankers, branches in the night states, branches overseas, there may be acquisitions and technology in countries that make a lot of sense. cyntecax or something -- related, tech related, customer service -- we are already having online of investing and online account opening. if you own treasuries, you can buy and sell -- we are just adding a lot of services.
as long as the client is happy. >> how much of business will be transmitted online? >> bill pay will be moving there, corporate -- we've always seen fx, you see some equities, when we say mobile, ipad, on one, it is all the same to be, it is how do you want to access the services of j.p. morgan chase. >> how are the animal spirits in the united states as well as the world economy? >> japan is growing more than it has in 15 years, europe is doing aggressive, america has been chugging along, that is all pretty good. even the imf, which is always warning, is saying we're going to go a little bit faster. tracey: that was a j.p. morgan jamie dimon speaking on the ground in riyadh. but stick with saudi arabia,
joining us now is the founder of core storm -- cornerstone global associates. let's start with saudi arabia because we have seen all these headlines --trump announcing billion dollars -- >> more than 300. tracey: this is what he wants. he wants to make deals and bring jobs home. muslims, the love first country i visit is for the main muslim country. not only that, they love me. they gave me the biggest deal in u.s. saudi history, $300 billion, creating thousands of jobs in saudi and in the u.s.. tracey: what does saudi arabia want in return? ron,otection against the protection against iran. --protection against iran.
tracey: we heard the saudi foreign minister saying when it comes to iran he wants to cds and not words. >> iran is not only making problems on the nuclear deal, it is interfering in yemen and lebanon. tracey: does the u.s. have the capability to do that unilaterally? >> it is going to be the russians and the chinese but they can lead. >> i just recall the moment former president barack obama was on the ground in cairo, egypt and gave his speech into the arab world. how is this speech going to be different than the last time around? we saw the u.s. president give a speech with a lot of ambition but delivered very little in terms of policy change. >> it all starts haply, let's ends happily.
it started with apathy about was happening in the arab spring. so far it is good but we are early days. brought up the obama administration. trump was very critical of the obama administration relationship with saudi arabia. he criticized obama for bowing to the king. now we have pictures of trust affecting -- pictures of trump accepting a metal -- medal. wille white supremacists be shocked but he is with them. if this can translate into thousands of employment, this is good. it is going to be a wait and see game. >> i look to swing across to what is happening on the ground in tehran. this rivalry between the kingdom of saudi arabia and iran.
the closer the united states comes to saudi arabia, the more of an impact it is going to have for the future of iran. would you expect going forward for that rivalry and what it means for iran as well? >> i think the ball is in iran's court. rouhani needs to demonstrate he is ready to reengage the nuclear read --ey would have to to reduce of the interference in the middle east and syria and even places in the gulf. to comeiran will need up with a plan to relate to this new reality. of course of the europeans would be very content with the previous the deal but now with the americans very staunchly in close relations with the sunni is so world and ther eie
much at stake, the iranians will have to decide. we did not have a regime change in iran, we just had a change administrator. tracey: if the u.s. is growing closer with saudi arabia, does that mean rouhani could look more to europe for economic partners? >> absolutely that is the case. the germans, the greeks, italy, britain, france, they all want deals with iran. is it going to be easy? let's see. he will try to reach out to the europeans to compensate but it is still early days and let's see how all the factors and the players stay in. tracey: we're going to be talking more about iran next. this is bloomberg markets middle east. ♪
tracey: this is "bloomberg live fromiddle east" dubai. i'm tracy alloway. yusef: and i'm in tehran. let's take out the conversation in terms of what is happening in this part of the world. very long night at the capital. celebrations, people out and about. bringing the key arteries in tehran in a gridlock. rouhani was able to extend his mandate. an amazing number of people coming out. 41 out of 56 million eligible iranian voters. 57% voting for rouhani. the polls suggested this would be close. but it was not close as the polls suggested. rouhani agives
mandate. now the page turns, what comes next? the first challenge is going to be the domestic challenge because of the highest political authority in the country remains of the supreme leader of the ayatollah khomeini. how much reform can you really push through? the second challenge is going to be the u.s. presidency, donald trump, what they are going to do about sanctions going forward. let's get to our guest who has been talking to us about some of these issues. how much can he really push forward given the fact that he is still within the confines of the islamic republic? .> you are absolutely right i don't think he can do much. he can do very little within the bounds of the islamic republic set by the establishment. maybe he can improve the economy , the way things are produced in
the outside world but the hardliners who are still part of the regime might get even more , mored against reformists than they did in the past. we have to wait and see, it is not a regime change. it is a vote against more extremism -- but the regime is still there. tracey: rouhani is in for another term but it is not mean the continuation of the status quo, what the bank could change going forth? showthink he has to flexibility in terms of expansionism in the middle east. he needs to pull out of syria and yemen and interference in gulf affairs. yet the show flexibility in terms of dealing with the sunni-muslim world. surrounded bye the arab sunni muslim world and
they need to engage with them positively rather than negatively. that will be the key test. yusef: i want to take up only he said about -- now that the u.s. and saudi arabia are growing closer, the government here in tehran may be forced to give up more. how does the iranian government respond to the stronger alliance? >> not proactive, just reduce of the interference, pull out of those sunni muslim countries, engage positively and actively with the sunni muslim world. anything about doing negative, it is rather pulling out of forces, this is not in rouhani's jhands. it is in the hands of the supreme leader. it is something that is very ,uch entrenched in the regime
the revolutionary guard and the supreme leader, they are the ones who need to decide, we have enough interfering with the rest of the middle east, now we need to engage positively. tracey: in terms of the economic opening, this election was seen as a referendum on rouhani's strategy, do you think he will push forward with that and what are the limitations he faces in the terms of the ayatollah? >> i don't think he will push forward on that, it is with greater relations on europe, the economy has mixed messages. unemployment has gone up slightly from 2% to about 30%. inflation has gone down. explicit is, -- mixed messages, too early to say. he will be hoping to reduce inflation further but ultimately he will need to reduce unemployment. tracey: thank you so much.
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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. yusef: welcome back. you're watching "bloomberg markets: middle east." i'm here in the heart of the iranian capital tehran. tracey: and i am in dubai. president rouhani promised to reach across iran's social and ideological divide after his campaign was dominated by arguments over increasing inequality. ter 60-year-old cleric won af the nationto steer out of isolation. yusef: i want to go deeper into the conversation around what
this administration can really do in the next few years and ultimately the confines of the islamic republic and the supreme leader play role in that. perspective, he advises a lot of foreign companies, thanks for coming on the program. give us a sense of how realistic or give us some context as to how much we can expect from this administration? ini think president rouhani his second term is going to be much bolder in terms of economic reforms. the expectation of the people has been mountain that has been mounting, especially the poor, and it is going to put a lot of ,mphasis on creating jobs focusing on health care, environment, issues and that people really care about but he is expected to be much bolder in terms of economic reforms.
,usef: that may be the case ambitions are although in good but it would it comes to the reality of a burgeoning u.s. -saudi arabia alliance, sanctions are putting -- are being put in place for the ballistic missile, which is different from sanctions for the nuclear missiles, what does that do? >> despite what you mentioned, president trump's administration just renewed the sanction regime, which is great, that means the trump administration is realizing that this nuclear deal is a good deal and the alternative would be an out-of-control situation like north korea. do we have challenges ahead, absolutely and believe me nobody would have thought that president rouhani could strike a nuclear deal with it two years. i personally did not. he has vowed to bring down the
not nuclear related sanctions which is a huge challenge but if there is one person that can achieve that, it is rouhani and his team. yusef: we saw donald trump and his team criticized the deal. as much as he extended the sanctions, just in terms of who is doing business here, the u.s. is going to be on the back foot here. the clients you are speaking to, where are they coming from? >> it is no secret the biggest fishery of the deal has been the -- the biggest beneficiary of this deal is at the european. gas andve and oil and petrochemical, clean energy, the biggest beneficiary has been europe but you would be surprised to know there are a number of american companies that have obtained opec licenses and this happened in the last 3-4 months, not during the obama
administration. a lot of company still shy away because of the fear of a step back and banking issues but nevertheless i think the trend is towards more companies coming , the direct or through third-party countries like the uae, but we have witnessed a number of interesting companies with offices in tehran. yusef: in terms of the asian influence, who is leading the charge, it has been china, hasn't it? >> our trade with china has surpassed $60 billion mark. a few yearsto iran ago, it was less than 5 billion. it has increased tenfold in a decade or so and the chinese president was here to sign a mo you -- mou. koreans are very strong, china
is leading in being the biggest trade partner with iran and the biggest investor. they just signed a $200 billion plus real deal to connect tehran by high-speed train but they koreans and japanese are coming back to the market. india is a very strategic trade partner, industrial partner. they are investing southeast of iran. we're talking about china, korea, india and to a degree japan. yusef: very fascinating. extra insight in terms of the foreign capital flows, thank you. tracey: let's stay with our other big story. saudi arabia welcomed u.s. resident donald trump with agreement of deals worth tens of thousands -- tens of billions of dollars. let's get back to kevin cirilli for more in riyadh.
there's so much fanfare around trump's visit to saudi, do we have any indication that his reception there, really a glowing reception is going to detract -- distract from some his problems on the ground in the u.s.? >> it was a glowing reception. president trump met with leaders of the kingdom last night during a very much celebratory dinner. i spoke with one saudi-based ceo at the form yesterday who told me this is a president who campaigned with bruising rhetoric against the muslim community but now they are hopeful he will govern in a different way and they do a lot of emphasis on president trump decision to make it the first country he visits. i interviewed u.s. commerce secretary wilbur ross to get some perspective on just
how much of a historic day it was for president trump to the meeting with ceos and business leaders here in saudi arabia. take a listen. >> the summit is going to accomplish the goals, i'm here as a watcher and a helper and is a fan cheering it on. , i cannotenses imagine another business day as good for the united states and for the kingdom. >> there has been a bevy of controversy.com, has that impacted the president's first foreign trip? >> absolutely not. the president is interested in managing the affairs of the country, making them a better place for the business and the citizens. he is going to keep doing that. >> yesterday at this u.s.-audi u.s.-saudi forum,
the first of its kind, investors total, $300 billion in they are hoping it will help to revitalize not just the saudi economy and culture but also u.s. businesses back on, prominent businesses like boeing, lockheed martin and raytheon. tracey: we have these billions of dollars worth of deals, is there any indication from the trump side what they think they are going to have to get saudi ive saudi return -- go arabia in return? >> defense and national security. those are the common grounds the nations feel they can work on, in combating terrorism, particularly as it pertains to the cyberspace. you heard this in a press conference with u.s. secretary
of state rex tillerson and his counterpart in the kingdom. the investigation still ongoing but also facing pressure from republicans within his own political party. tracey: kevin cirilli on the ground in riyadh. coming up, we are joined by the ceo of an award-winning frontier front in the middle east. joining us to discuss of the saudi economy as president trump makes riyadh's first overseas destination. this is bloomberg. ♪
tracey: and i'm tracy alloway. let's check in on the first word headlines from around the world. softbank has secured the first capital commitment to its $100 billion technology fund. the japanese tech firm is investing $20 billion and has agreements with the saudi public investment fund, so far $93 billion has been committed and softbank says it aims to reach 600 billion within six months. it will seek long-term investments in innovative businesses. and russia says aipac may have failed to issue a joint they met vietnam.on -- in the russian economy minister said only one nation opposed strong nation -- strong language against protectionism, hinting it was at the u.s. his comments head that apex will fallshort, that aipac will
short where language protecting against protectionism was water down. says he was set up during a taped conversation and says of the recordings failed to support legislation -- allegations leveled at him. the accusation was the president engaged in passive corruption. let's head back to the region because we are joining with the cio of dubai-based fim partners. let's kick off with iran. we have been talking about the outcome of the iranian presidential election. citigroupa note from saying they believe the rising market implications of tensions between the u.s. and iran --
you are investor experience in frontier market, you think investors are underpricing the risks? >> i have to disagree a little bit. i don't think the implication on the iran-u.s. situation will be very strong on global market and specifically frontier market. from our perspective the most important thing is to see the current deal stays in place which we believe would be the case and that the opening of the iranian economy to the rest of the world remains on track and that opens possibilities for frontier market investors like herself -- like ourselves. yusef: let me jump in here, i know iran is not part of your portfolio, you feel very strongly about saudi arabia, the archrival of iran.
the rising geopolitical tensions keeping quite a few investors on edge. the trump visit opens new opportunities for quite a few companies. how does your strategy change were playing saudi arabian equities from your? -- from here? >> the visit of trump overseas into saudi arabia is a positive thing for saudi given the geopolitical tensions in the yemen war, and we are seeing economic deals towards saudi and the u.s. that saudi gains of the relationship with the u.s. and we view all of the forlopment as very positive the strength and stability of saudi within the region. in terms of equity markets, the focus for us remains the reform agenda which we think it's very
in -- it's very positive terms of the brent and fiscal deficits. revenues have -- will avenues have grown, expenditures reduced 3% in q1 and at the same time no will growth remains solid at plus 1% so it seems a fiscal consolidation is happening. we believe that is very positive. liquidity is back in the system. we are seeing the cost of deposits for banks are below cyber, about 30 does below -- 30 below. the banking sector is a lot healthier and a lot more liquid. of great will be something we will be looking at very closely over the next few weeks. tracey: economic growth in saudi arabia has been improving but
one of the other stories we are tracking is opec and the prospect of another production cut agreement. the one in november, most of it has fallen squarely on the shoulders of saudi arabia. if we get another in, what effect would that have on saudi arabia's economic growth. >> saudi committed to these cuts and we're finding out they had cut production more than they committed to. 100,000 barrels more than they have committed to. they had been producing less than 10 million barrels. a role in they next round of cuts, continuing cuts in production. that obviously would impact its revenues. we still believe the price impact is more important than the volume impact, in which case saudi continues to monitor and commit to the global production cuts over the next few months. tracey: hold that thought, we're
yusef: you're watching "bloomberg markets: middle east ." in yousef gamal el-din tehran. tracey: just over an hour away from the middle east market open, let's take a look at some of the companies you might want to be watching out for as we near the start of the training day. the commercial bank of qatar negative to positive by moody's. the uae telecoms the giant has big one, the big
one for the region has to be oil prices. we have the saudi arabian energy minister saying opec will agree on a nether production cut agreement when it meets in the im vienna. benchmark will be the focus given the competition between opec and shale production. you said rouhani has managed this victory but now comes the hard part, yes the night a divided nation and convince everyone of the importance of opening up to the world. how is he planning on doing? >> yes a lot of ambitions. -- fact that 57%
tracey: looks like we lost yousef in tehran. ceo of fimack to the partners. we were discussing in the previous segment about saudi arabia and the relation with the u.s.. looks like improving relations with the u.s. how do you suggest investors try to monetize what is going on there in terms of geopolitics? >> >> the current situation is improving as the closer ties with the u.s. makes it a market that will be much more stable and the perception of saudi within the region will mean it is safe for investment. in terms of how we can monetize it today, we are looking at two sets particularly interesting. the banks are finally an interesting space, why, because
of the liquidity is improving. we've seen the deposits growth is that 1.7% month on month. quite attractive and the cost of deposit has decreased below cyber which means that the liquidity situation has improved dramatically. latest print we have seen and if you wanted to take the view on it to moving forward as well as the low growth and potentially the lower cost of risk for banks, i think that space is particularly interesting. the second sector i would look at very closely, which is more tied to the reform, is insurance sector and the health care insurance sector in particular. we are seeing several initiatives, what is the ministry of education is pushing
or giving the option for public employees to see whether they would want to subscribe to private policies. that could increase the market today from 18 billion market to 24 billion market. there's also the enforcement gap in the insurance sector. it was implementing the unified insurance policy, that would mean we would see a lot more real insurance policies in the market and finally there is some consolidation in the market. we've heard a couple of small players consolidating, which means it would be much healthier competitive landscape. i think playing the large players, positioning with the positioning is potentially very lucrative positioning and the saudi market. -- in the saudi market.
tracey: let me jump to another story in the region, we had news sellg oman was looking to $2 billion worth of fresh bonds. you think they will be able to get that deal done since they just had this downgrade from s&p and are they going to have to pay up for it? >> the short answer is yes, i think they will be able to close it for two reasons, the perception in the market is that oman continues to be supported by other gcc countries and at the same time we are seeing appetite for emerging market debt. from that perspective, we're coming into the market -- they are coming into the market in a very positive environment for emerging market debt and i think of they should monetize of that opportunity and go to the market the way they are doing. finally i would say there is
real plan for fiscal consolidation within oman. they expect the fiscal deficit will decrease over the next 12-18 months. we're going to have to leave it there. thank you so much for joining us today. let's get back to kevin cirilli who is in riyadh for us. kevin, trump is heading to israel next, wikileaks spect from that particular -- what can we expect? >> president trump will make a speech on national security with counterparts in the region to combat terrorism and then he had to israel where he will meet with israeli prime minister benjamin netanyahu. these the two leaders have had a storied history and a strong relation ship as they look to work together to combat terrorism. israel being one of the most important u.s. allies and president trump has come out
against the controversial iran deal that was negotiated by former president barack obama. tracey: kevin, do we have an idea of the particular agenda that trump is going to be pursuing in israel, what is on his wish list? >> he is going to be delivering remarks later while he is in jerusalem and he will be touring several of the sites in israel including the western wall where he will potentially be visiting -- a details of which are still being worked out. he will be accompanied by his family, including first daughter and special assistant to the president yvonne cattrall. tracey: bloomberg's kevin cirilli, thanks so much. that's it for this edition of "bloomberg markets: middle east. will be live from the region at the same time tomorrow.
jonathan: from new york city, i am jonathan ferro. with 30 minutes dedicated to the fixed income, this is "bloomberg real yield." ♪ jonathan: coming up, the biggest crisis of the trump presidency breaks the calm on wall street. investors ask, is the trump trade dead? treasury yields grind down. will the chaos in washington throw chair yellen of course? is it a wake-up call for em? we start with the big issue. a week of messy politics.