Merge with essilor in a 53 billion deal. It is 8 00 a. M. Across the emirates. I am yousef gamal eldin. Shery i am shery ahn in hong kong. Welcome to Bloomberg Markets middle east. Risk off sentiment, everyone crowding the dollar again with the index up. 4 and the japanese yen strengthening for a session. Secutive a different story for the british pound after breaching that 1. 20 level for the First Time Since the flash crash. That happened during asian trading, so we have to keep an eye on that british currency. Yousef it is dead center in focus. That is what we can say. The british pound and the beating it got off reports that theresa may is seeking to leave the single Currency Union there to regain control of the borders for britain. This is the chart that puts it into perspective. This is a story that goes back to june 2016, every time theresa may spoke, the pound lower. Vote, then theresa may takes power, then their reaction to the speech in october, reports they will seek a hard brexit, the latest number there, again to the downside. The kleins of 19 against the u. S. Dollar since the decision to leave the eu. Downside potential, but lets look at the Market Action in a ship. Sensexim looking at the in mumbai, losing for a second consecutive session, though not a lot of movement, down. 1 . The hang seng index down 1 after it rallied for three consecutive weeks, mainland flowing into hong kong shares to hedge that yuan depreciation and capital controls on the mainland. Down 1 , the yen gathering momentum as it strengthens. Of course, a couple of hours away from the open of trade in the middle east, so what are you watching . 10 00 a. M. Local time here, looking at a mixed picture, Downside Pressure in dubai. Point 1 , real estate stocks driving that off comments after the saudi housing minister spoke. There, that stock was up. Egypt, gains of. 5 , a new record there. A quick note, some of the key emergingmarket currencies, the turkish lira, Goldman Sachs saying it is underweight turkish domestic debt amid geopolitical uncertainty, and the challenging macro dynamics. Lets check the first word headlines. Some korean Media Outlets are reporting prosecutors will seek an arrest , anant for jay y. Lee official decision expected today after prosecutorss question him for 22 hours in koreas undue influence scandal. The countrys pension chief has become the latest public figure to be indicted by prosecutors. Donald trump to recognize the High Sensitivity with regard to taiwan, china saying its one china policy not negotiable. Trump telling the wall street journal that he would only commit to the policy after assessing the progress beijing has made on trade and currency. He is not prepared to declare china a currency manipulator immediately upon being sworn in this friday. John brennan called Donald Trumps comments about the u. S. Intelligence community , suggesting donald trump does not have a full understanding of russias capability or tensions. This comes amid tensions with the Intelligence Community following a series of insults from trump in recent weeks. The at nons Prime Minister holding out hope that trump will reconsider his position on the tpp. The incoming american president said he will with draw the 12nation trade pact. The message that i see is that i believe the new administration of the United States will reconsider its perspective on the tpp, and it will also try to achieve a new generation agreement that will benefit all parties concerned. I see the newly appointed members of the cabinet, many of them are in favor of the tpp, so i think they might reconsider their decision. We have the world covered with 2600 journalists and analysts in more than 120 countries. You are watching bloomberg news. Thank you. The asian regional benchmark retreating after three weeks of gains, energy and real estate leading declines. Lets go to Juliette Saly for a breakdown. Juliette not a lot of conviction in these markets, not a lot for investors to be excited about. We have concerns about the potential u. S. China trade relations, the an auger ration of trump this week, then weakness from the pound, so most asian markets underwater today, 1. 5 . Ng seng off by this is the fifth the session of losses on the shanghai composite. The nikkei also being sold off as they yen strengthens against the dollar for a sixth consecutive session. The nikkei is off by 1. 2 in the afternoon trade, and most Southeast Asia and markets underwater as well. We are seeing upside in the australian market, a big rally coming through in steel, lifting the material players, and also li kashing making got play for duet group, sending its share price up by 5. 6 , Good Movement on new zealands market as well, some upside in the philippines and jakarta as well, but hiding andnvestors not willing to put their money into equities. Down one falling, point 3 , the first time we have seen it at levels like this since the october flash crash. Westpac saying today that we could actually see it fall to 1. 118 as we hear more from theresa may. On the radio this morning, he was saying they think it could fall beyond 1. 18, so this is one currency we are keeping an i on. The pound weakness is seeing emergingmarket currencies fall against the greenback, the indonesian rupiah is one in particular today. Shery thank you. Continue our discussion on the pound as the u. K. Government draws of planes to reassure investors falling reports that theresa may will outline plans for a hard brexit in london on tuesday. , theng us now for more global chief economist for standard. Thank you for talking to us. You believe the reality of a hard brexit has been fully priced in to what the pound is doing, or could we see further Downside Pressure . I think we can see further Downside Pressure. For us at Standard Chartered, a hard brexit is a starting position. It looks like the most likely outcome. Could get more complicated than just a hard brexit, because we can have britain exiting the European Union without access to the common market, and without access to any transition deal being reached in the meantime, so uncertainty will be elevated. The biggestill export market for Great Britain, and some more Downside Risk for the pound sterling will persist in the next few months. Geopolitical economics is how you termed it. We are looking forward to the speech theresa may will give on tuesday. We understand she is drying up plans to reinsurer investors. What do expect from that speech in terms of final detail . Itthe details are short, and is not certain what britain is after. That is part of the problem of the referendum. People voted for brexit, but there was no question or choice what type of exit people type of brexit people preferred. Sure theresa may can do a lot to reassure markets when it comes to the currency, because it is a negotiation. There will be to bank parties, and the European Union party can be complex and reaching consensus, so it is not entirely up to her or britain. What europe thinks is equally important, and she has no control over that. What does a hard brexit due to your forecasts . We need to bear in mind about britain is something that we have seen already, the pound sterling takes most of the hit. That allows the currency to act as a shock absorber, and because it acts that way, the economy is more limited in terms of impact. There will be Downside Risks to growth, but if sterling was not taking such a big hit, the hit on the economy would have been much harder. As far as europe is concerned, it is a concern that britain is leaving, but there are more serious issues in europe that are not related to Great Britain. I think we need to keep a close eye on italy. In 2018,al election and the fact that almost all of the opposition parties favor at , if notiting the euro the European Union altogether, so italy will be a much more serious challenge for europe and Great Britain is. Shery in focus for investors, speech, butresa may also the supreme court, which is now set to rule this month or parliament carries the power to invoke or exit. Does the pound risk a violent rally if the Court Decides to decide with parliament instead . I doubt it. If it does, it will be shortlived, because even if it is the parliament that votes to start brexit, it is very difficult to imagine a situation where the parliament would vote against brexit. There was a referendum, people voted. Binding, but it would be difficult for members of parliament, the existing parliament, to go against the popular vote, so one way or another, whether the government or the parliament, i think the Brexit Process will be starting in 2017. Shery stick around. We want to broaden the discussion to include the u. S. , the protectionism, and so much more. Be joining us later in the show. Up next, as the middle easts bestperforming stock market rises for an eighth straight day, we look behind the optimism. Yousef a conversation with Standard Chartered resumes, welcome to the jungle is how he called his report last time around, increasing uncertainty about what the words of donald trump mean and whether he will really followthrough with any of it. Stay tuned for some answers. This is bloomberg. Yousef back to two Bloomberg Markets middle east live on bloomberg tv and radio. Am yousef gamal eldin shery indias government may step into help bank struggling to deal with bad loans. The press trust of india reported the finance ministry will finalize a Capital Infusion plan for state run lenders this week. The report says government could offer more than 3. 5 billion in assistance, which would be announced in the budget february 1. Ft says luxottica and essilor have agreed to a 53 billion merger. Luxottica is the worlds biggest eyeglasses maker. Bans,r makes ray oakleys, and chanel frames. Luxottica was up 4 at one point, and essilor up. 3 . Shery li kashing seeking to expand Energy Assets by buying duet group for five point 5 billion. Shares surged 6 in sydney. It is subject to regulatory approval, but is expected to go ahead. It is the latest of tempe li kashing to bolster his business. Investors are shifting their view on the trump trade. They have gone from one more than 1 billion in november 2 nothing. We put the chart up for you. The initial excitement and enthusiasm off the back of the trump election, two key industries, biotech and aerospace and defense, to virtually nothing now. Again, the growing anxiety of what donald trump is saying. One person who has always been guest,al has been our youve never bought into a lot of the optimism. Now that you have had 34 additional weeks to listen to donald trump, what is your analysis . It remains the same. We were one of the few banks that argued for a long time that the west needed a strong fiscal stimulus to kickstart Economic Activity. That leaving it up to Central Banks was not going to be enough, but this time, i have a lot of questions about the effectiveness of the fiscal stimulus in the United States. The first question is related to what kind of fiscal stimulus are we going to see. Through tax cuts to the wealthiest part of the population, the impact on growth will be limited. If it is mostly through infrastructure expenditure, then it can really work, and if this is what we end up seeing, then we have to be more positive, but it is not clear that infrastructure will be the priority in this fiscal stimulus plan. Yousef one of the key concerns you pointed out was that the tightening conditions are going to take hold faster. Is that still the case . Absolutely. Fiscal stimulus works when Interest Rates are close to zero, but Interest Rates should not be rising. If Interest Rates are rising and the fed is keen to increase Interest Rates, then the Monetary Policy tightening will offset any benefit from fiscal policies, so even if the fiscal plan is well designed and well interest tightening rates and the stronger dollar tighteningsequent will offset any benefit from fiscal policy. We are seeing the tightening of Monetary Policy now, rates moving higher, the dollar stronger, and we have not seen anything from fiscal policy, and fiscal policy notoriously works with very big news out ofing japan, the finance ministers says they will sell ¥1. 4 trillion in additional japan poster shares, 12. 3 billion. 4. 7 ,post extending falls the most since november. The ministry of finance will sell up to 1. 4 train yen in additional japan poster shares. , letse with my guest discuss a little bit about japan, because were talking about fiscal stimulus coming from the u. S. , fiscal stimulus across the world, and this donald trump trade starting to fade a little bit, but still the biggest winner so far has in japan, and japans boj as we see this extended decline in the japanese yen, do expect this positive momentum for the whole economy there to continue . Helpseaker yen definitely , and as i was mentioning, the big impact of the trump trade right now is on the currency, and it will be better news for other countries, mostly other countries than the United States. Beneficiary biggest from a fiscal stimulus in the u. S. Is not going to be japan or the United States. The biggest beneficiary will be europe, because europe runs a massive trade surplus with the United States. Usually be the currency of least resistance when it comes to weakening against the dollar, and a weaker too will provide some help the eurozone. You mentioned that we are seeing fiscal stimulus across the world. I think we are not. This is the biggest problem for the United States. Policy stimulus, if it is coordinated amongst the biggest economies in the world, then it can be very helpful. If it is not coordinated and mostly the United States that goes ahead with the fiscal stimulus, then you will see reaction on Interest Rates, reaction on the currency, and ofs will offset the impact the fiscal stimulus, so that challenge the u. S. Is facing is the lack of coordination across the world. Shery that is very interesting. The gains could be there. Thank you for joining us. The global chief economist at Standard Chartered. Coming up, south korean prosecutors will soon decide whether or not to seek an arrest warrant for samsung vicechairman jay y. Lee. We will be live with the latest. This is bloomberg. Yousef welcome back. You are watching bloomberg. I am yousef gamal eldin. Shery i am shery and in hong kong. Some south korean Media Outlets are reporting prosecutors will seek an arrest warrant for samsung vicechairman jay y. Lee. For more, here is sophie kamaruddin. What are they saying . Whate they are looking at could be the allegations in the arrest warrant. There is a likely decision by 1 30 p. M. Hong kong time. Prosecutors may seek an arrest warrant for bribery, her jury, and embezzlement. Mention of have made these charges in previous statements. We were expecting that decision over the weekend, but on sunday, a spokesperson said it would be delayed. The Economic Impact of such a high profile arrest is being taken into account. Prosecutors have been interviewing all materials gathered over the course of the investigation, and they are studying legal principles for the case. Said that biggest concern is not whether they will but theee, ramifications for the President Park geunhye scandal. Shery the prosecutors are seeking to arrest that arrest warrant. Sophie this is the latest update. This morning, we did get an update regarding an indictment. Shery so we will get the latest on that. News out of south korea, the prosecutors are potentialmsungs arrest, given those allegations that he donated money to a friend of President Park geunhye. We will get the latest as soon as we have it. This is bloomberg. I am rishaad salamat, theresa may will outline plans for a hard brexit on tuesday. It is believe she will say they are willing to quit the Single Market to take back control of immigration and borders. The pound has fallen to its lowest level against the dollar. Plunging aftera the company agreed to pay 1 billion to settle a case in the u. S. The payment removing to a hurdle to the sale of the company after the biggest product recall in automotive history. It admitted hiding risk for 15 years and agreed to plead guilty to one criminal charge in the settlement. The creation of a palestinian state remains the only acceptable solution to the conflict, the conclusion of an international conference. The 1967 borders would be the basis of any agreement. To paris forum has tried restart the stalled peace process. Spacex returning to the skies saturday with the launch of a queue munication satellite, the first flight since a rocket destroyed its payload. Spacex is hoping to launch 2024 rockets this year from eight missions in 2016. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yousef welcome back. You are watchin