Transcripts For BLOOMBERG Bloomberg Markets Middle East 2017

BLOOMBERG Bloomberg Markets Middle East March 5, 2017

Revises outlook from stable to negative. We have a lot to get to. I am yousef gamal eldin. Tracy and in tracy alloway. This is Bloomberg Markets middle east. Lets get to our top story. China has presented its 2017 economic goals at the National Peoples congress in beijing. Correspondent Tom Mackenzie isnt tiananmen square. Tom, can you give us the key points in the report . Yes. Tracy, justs 9 a. M. Beijing time, behind me, this morning, and top of the list in the report was the gdp target. That is now being set at about 6. 5 with the possibility of going higher. That compares to arrange set with last year between 6. 5 and 7 . The member at the end of 2016, gdp hit the comfortable 6. 7 mark. Bloomberg intelligence things the number will probably, in slightly lower. They have estimates at 6. 3 . Other key numbers and targets the premier outlined, the consumer buying inflation target 6. 3 . That is picking up the last few months. The deficit in line with last years number and then the money the loans, the credit growth, so important to the underpinning in the economy here. That has edged down 12 growth in money suppliers, down from 13 last year. Talking about structural reforms, theres a lot on the agenda this morning. Yousef tom, did premier address china fell surging debt pile . Tom he did. That assets are four times the value of gdp and he says looking at things like nonperforming loans, shadow banking, online financing, risks in those areas were front and of his concerns and the concerns of the government. The document i have in front of me points to the fact that policymakers will be shifting focus from stabilizing the economy, which they managed to do toward the end of last year, switching it to the income and credit. Overall the focus is on stability. Are big political events at the end of the year when president xi shim thing is expected to unveil a reshuffled leadership. Other things president xi is expected to unveil a reshuffled leadership. Theyestingly also as well, may review a number of sectors available for Foreign Properties for investing here in china. There are a list of sectors closed off. They may reviews those. They may also encourage Foreign Investment companies to leave on the stock exchanges here in china. All right, lets get some more reaction. Luciana, great to have you back on the program. Lets get straight into the china growth story. Lets get to a charge that highlights the gdp target as well as lets put up on the bloomberg. Where are your thoughts about where the chinese economy will go in 2017 . I think at some point we will see a slowdown. The pattern we have seen over the last 50 years, each time after the term out National Party congress, which takes place only at the end of the year, there should be a slowdown when the internal arrangements, the internal political arrangements in the chinese ilitical party are over, and dont think that until that happens, there will be, you know, i desire to significantly slow down spending. But i also think yeah, but i also think the risk, the external risk, of course, is the stronger dollar and we have already seen that the stronger dollar means more forex outflows. We have seen that the last two months and we will see what that means for the month of february. That means Monetary Policy defective becomes more restrict it. Money is being taken of circulation. Tracy but given the political motivations in china right now, do you think it will be stable at least for this year . It feels like the market has been a entirely focused on trump and the fed, and they have kind of underplayed what a stable china at least for 2017 means for markets. Do you think its getting enough attention from investors now . When we look at china, we typically look at the implications outside china. By at health, it is a segregated capital market. Its difficult for foreigners to invest in china. A by it self, it is segregated capital market. What attention can you give to it . There is not much to invest in. It is a country that started spending, stimulating the economy more last year. It has definitely also then behind the surge in confidence in the urine at the and confidence in the yen at the end of the year was not only trump. It may have been disregarded, and certainly in a context where not be that restrictive, where the doj remains very stimulative, where the Federal Reserve is going to be more restrict it. If we see the dollar going up, the difficulties for china will rise. We have seen that for the last month. Tracy hold that thought. We will be discussing china and the fed. Janet yellen has left little doubt she will raise rates, telling an audience in chicago there are dangers in being too slow to move. Move couldat such a be expected if policymakers determine the economy is staying on track. She also suggested it would not be the only increase this year. Chair yellen at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with expectations. In which case, a further adjustment for the federal funds rate would likely be appropriate. Back toets get luciana, the head of Investment Strategy at other. The seems in march ise rise all but a certainty. Is there any chance as we get hard data over the next couple u. S. Eks notably payrolls and cpi inflation we could be in for a rise in march . I would be surprised. Were going to see some reduction, probably in job creation, but i think inflationary pressures are there. They are not that strong. Inflation, the pce deflator is stable at 1. 7 . The headline figure is edging toward 2 . I think the Federal Reserve will act. But what i think is more important, if you look at the longterm yields, they are at areheight again that people once again speculating that in march they will hike. Yousef but that raises the point whether they are moving too fast, too quickly in terms of the rate hike . Others are saying and might be too early. They should leave the rate hike for the Second Quarter really, and given the fact of where Economic Growth is at the moment, it will strengthen the resilience someually we have inflection in the yield curve. Usually the fed tends to be a little bit too early. So, that is definitely the case. On the other hand, we have seen that the dollar is strong. If yields remain contained, if you also think in terms of the Housing Market in the u. S. , lets not such a bad thing. Its sort of paradoxical. Thisl have some inflationary pressure, either through a stronger dollar or higher rates. I think it will be more through a stronger dollar. Dont think its only a matter of soft data. In the u. S. We have seen durable picking upesales substantially over time. I dont think we should be concerned. What matters is the number of rate hikes. I think that they can be contained. They can be contained because the doctor will remain strong and the margins will strengthen. We will continue that conversation. Lets check on headlines around the world. Thanks, yousef. A spokesman for Barack Obama Says president trumps claim he ordered wiretaps on trump tower jim the Election Campaign is simply false. During the Election Campaign is simply false. The claim comes from right part news. Breitbart news. He says that trump has no evidence to support what he calls spectacularly reckless claims. The conservative position and france has unraveled over claims public funds to pay family members for fictitious jobs. Confirmed it has plans to address concerns about capital levels by raising more than 80 you in dollars. The ceo has spent the last two years plotting a course through a series of Legal Investigations and now has headed up an inquiry offering. Willank Advisory Board meet later today and discuss the plans. Scotlands largest insurer is in create one of yours and thefund managers, potential deal would see Standard Life shareholders owning part of aberdeen. The leading ceo of aberdeen has salaries of higher paid staff. Global news 24 is a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Racy thanks later in the show, shares of snapchat have gained 6 simplest thing. We talked to an early investor or his plans to snap out of it. Libyan oil exports. We get you the full story. The u. S. Oil rig counts. This is bloomberg. Yousef you are watching Bloomberg Markets middle east live from dubai. I am yousef gamal eldin. Tracy and im tracy alloway. We look at how u. S. Markets closed on friday, ive got to say, it was a boring end to an exciting week. We had trumps speech to congress and janet yellen talking on friday. All three major indices closed in the green, but really barely moving. The dow jones up 0. 1 and the s p 500 up. 05 . Pretty boring, yousef. Yes, we were two hours away from the opening of the emirates market in dubai and abu dhabi. A good benchmark there. And you can see its pretty much unchanged. That really puts the downside index. E on the the Abu Dhabi Commercial Bank is driving the gains in the abu dhabi stock market. We see big gains and Consumer Discretionary utilities. We have a weak spot with some financial concerns. But your travel, that stock moved under speculation it could have a tie up with big deals out tour in asia. Also egypt, strong gains, up 2. 6 . The finance minister underscored, tracy, the increase is going to happen gradually. Tracy thanks. Oil is never far from our mind in the region and libya and has launched air strikes against a group known as the benghazi oilnse brigade that seized rigs, driving prices higher. Lets get to anthony dipaola. Anthony, welkers through the impact on production. We have seen a price rise. Anthony, walk us through the impact on production. Anthony this is a very volatile situation for libya, also for oil prices. This is one of those big unknown situations where we know production can increase. There is no certainty about how damaged fields have been there. One of the main dockage ages though is exports. When these ports switch the twin hands, one group versus another or they are blocked for political reasons or to get leverage, that really just takes the knees out of the production there, because they cant get it out of the country. Its a very fluid situation and will continue to impact the market because more production is bad news, as it were, for opecs plan to cut production and reduce prices. We will see that vacillating back and forth. Yousef how is it going with the program coming oversupply in the market . Youve got this shale 2. 0 come back. They are leaner, fitter, and faster. Yeah, there are a couple pressures on opec, and some of this pressures come within the group as well. The group needs to comply with the cuts, according to our survey for production, they did meet the got the cuts, the members of the group who agree to cut production did what they said they were going to do. But there are some members left out of that agreement. They dont have to reduce production. They can increase because they werent artificially lower levels prior to this agreement. That brought production up because those countries are increasing outflow. You have shale coming on more strongly. That will be pressure on the market, because we have still got those stockpiles out there is production does continue to ramp up. The delay has drawn up those stockpiles and that will put pressure on prices. We will see be prices belts backandforth and forth, especially when we see strong of libyae we did out last week. Yousef the rising tide of u. S. 609,igs, they are up to the sixth straight week of gains. How concerned are you this will derail opec . Are at 9 million again. They are sort of where they were. Opec is still having a critical impact on the overall oil market and they have been somehow able to decouple the oil price from the dollar over the last month. That is quite remarkable. I would say overall i see somewhere the oil price is not too far from where it is now. You have increasing production as the core as long prices above 50, and Going Forward we are going to see some slow down in the global economy. We will see a stronger dollar. , europe andchina japan are not they are ultimately more recessive than runhing else because they massive commercial surpluses. So i think it is wise to be prudence rather than to optimistic on the oil price. They i want to pick up on oil price because we have seen oil trading in a really tight tracy thats right. What is the prospect of thats right. Prospect of a the change before opec meets in may . All right, those margins are itsu know, very difficult to forecast the oil price in the very near term. I think it is important to have in mind there is a cap there. It cant go too high, and in the region, also the governments are prepared for that. They are taking fiscal measures to that extent. But to exactly time it, i think you know that is very difficult. All right, thank you very much. Always a pleasure having you on the show. Qatars outlook from negative to stable. What was the reason . This is bloomberg. Yousef you are watching Bloomberg Markets middle east. Live from dubai, i am yousef gamal eldin. Tracy and im tracy alloway. And s p saysg cut, the rating reflects risks the country could deteriorate further. Yousef good to see you. Good morning. Yousef lets start with the qatar story. Its another example of the changing times we are in. Changing in the region, whether it is wars, political stability. To be not expect this really surprising, actually, for countries like qatar, where they are not diversified. And we will know what is happening with those, too. Are spending. They are hosting the world cup, hopefully soon, and they still have to keep things going. Keepis could actually going this direction for a while, until you see a change in the way things are done, whether oil prices come back to where they were a couple years ago, or income starts to be diversified in qatar or several countries. Tracy one of the big stories in the region over the past year has been sales of middle eastern debt from governments and companies. E have this change in outlook is that not an appetite for qatari debt or gulf debt elsewhere in the region . I dont think its the appetite. I think rates will go a bit higher. The first time you borrow, your Balance Sheet is clear. The third time you borrow, you become a riskier borrower, and it keeps going like that. Your rating will go down and the premium will be higher. Be era also recapitalization plan, they laid out some of the details for the next two years. You spent some time digesting this plan. What does it mean in terms of how you see this company . Know they have a great legacy. They built most of the projects in dubai. They have to go through what they have done through last two or three years. I think starting with selling the noncore assets is a good start. You dont need your noncore assets at the moment. Recapitalize the company. You will have operating cash flow and be able to submit and apply for new projects. They do have new projects in the pipeline. I totally believe that this company could make a comeback if the Restructuring Plan goes the right direction. But again, selling noncore assets is a good way to raise cash. Tracy lets broaden it out a little bit to one of our other big themes for the show, and that of course is the possibility of the fed raising rates as soon as march. What do you think the impact of fed tightening will be on the region given that we have a dollar peg from a lot of countries . Nabil thats right. Years, it will be a quarterpoint for each of them. In the short term, i dont think it will really affect that. Longterm, if they keep hiking hatsates by a quarter or point every year, you will have problems in borrowing. Every year, point your problems of borrowing. Yousef we will continue our conversation. Checking the first word headlines around the world china is targeting growth at 6. 5 , or higher this year, focusing on a twice a decade leadership transition. Announced the goals at the peoples congress. The chinese economy has proven resilient. Focus is on excessive borrowing. Fed chair janet yellen has left little doubt she will raise rates, telling an audience in chicago there is a danger in being too slow to move. She also said that such a move could be expected if believe the economy is on track. She said also that it may not be the only rise this year. Yellen at the meeting later this month, we will evaluate whether implement and inflation are continuing to evolve in line with our expectations. In which case an adjustment of the federal funds rate would likely be appropriate. Prime minister shinzo abe has strengthened his grip on japan, changing the rules of the liberal Democratic Party to allow the minister to serve three terms. He could potentially remain in office through 2021. G7is the longest serving leader after chancellor merkel. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yousef, tracy. Thanks so much. Im very excited to announce an inaugural segment on the Bloomberg Markets middle east show. It is called battle of the charts. You may be unfamiliar with it from our u. S. And european programs. Yousef and i will go headtohead in bring you an interesting chart of the day and hour guest for the day, nabil, will be our adjudicator. No pressure, nabil. Yousef, show us your chart. Yousef we have been showing about records after records, but there is a reality, if you are looking for a contrarian call this is the chart i put together. Show me the money. It Shows Increased demand. You can see that copper has gone down. For, the2 watch out going down, of course, what has been driving a lot of the rallies and gains, the hope and the dream of more Infrastructure Spending, which is not delivered, and the industrial surprise index really underscores that, tracy. Tracy i hate to say it, use of, but i do like this chart a lot. Theme and u. S. G equity markets right now, which, of course, is you have a divergence between the hard Bloomberg Markets<\/a> middle east. Lets get to our top story. China has presented its 2017 economic goals at the National Peoples<\/a> congress in beijing. Correspondent Tom Mackenzie<\/a> isnt tiananmen square. Tom, can you give us the key points in the report . Yes. Tracy, justs 9 a. M. Beijing time, behind me, this morning, and top of the list in the report was the gdp target. That is now being set at about 6. 5 with the possibility of going higher. That compares to arrange set with last year between 6. 5 and 7 . The member at the end of 2016, gdp hit the comfortable 6. 7 mark. Bloomberg intelligence things the number will probably, in slightly lower. They have estimates at 6. 3 . Other key numbers and targets the premier outlined, the consumer buying inflation target 6. 3 . That is picking up the last few months. The deficit in line with last years number and then the money the loans, the credit growth, so important to the underpinning in the economy here. That has edged down 12 growth in money suppliers, down from 13 last year. Talking about structural reforms, theres a lot on the agenda this morning. Yousef tom, did premier address china fell surging debt pile . Tom he did. That assets are four times the value of gdp and he says looking at things like nonperforming loans, shadow banking, online financing, risks in those areas were front and of his concerns and the concerns of the government. The document i have in front of me points to the fact that policymakers will be shifting focus from stabilizing the economy, which they managed to do toward the end of last year, switching it to the income and credit. Overall the focus is on stability. Are big political events at the end of the year when president xi shim thing is expected to unveil a reshuffled leadership. Other things president xi is expected to unveil a reshuffled leadership. Theyestingly also as well, may review a number of sectors available for Foreign Properties<\/a> for investing here in china. There are a list of sectors closed off. They may reviews those. They may also encourage Foreign Investment<\/a> companies to leave on the stock exchanges here in china. All right, lets get some more reaction. Luciana, great to have you back on the program. Lets get straight into the china growth story. Lets get to a charge that highlights the gdp target as well as lets put up on the bloomberg. Where are your thoughts about where the chinese economy will go in 2017 . I think at some point we will see a slowdown. The pattern we have seen over the last 50 years, each time after the term out National Party<\/a> congress, which takes place only at the end of the year, there should be a slowdown when the internal arrangements, the internal political arrangements in the chinese ilitical party are over, and dont think that until that happens, there will be, you know, i desire to significantly slow down spending. But i also think yeah, but i also think the risk, the external risk, of course, is the stronger dollar and we have already seen that the stronger dollar means more forex outflows. We have seen that the last two months and we will see what that means for the month of february. That means Monetary Policy<\/a> defective becomes more restrict it. Money is being taken of circulation. Tracy but given the political motivations in china right now, do you think it will be stable at least for this year . It feels like the market has been a entirely focused on trump and the fed, and they have kind of underplayed what a stable china at least for 2017 means for markets. Do you think its getting enough attention from investors now . When we look at china, we typically look at the implications outside china. By at health, it is a segregated capital market. Its difficult for foreigners to invest in china. A by it self, it is segregated capital market. What attention can you give to it . There is not much to invest in. It is a country that started spending, stimulating the economy more last year. It has definitely also then behind the surge in confidence in the urine at the and confidence in the yen at the end of the year was not only trump. It may have been disregarded, and certainly in a context where not be that restrictive, where the doj remains very stimulative, where the Federal Reserve<\/a> is going to be more restrict it. If we see the dollar going up, the difficulties for china will rise. We have seen that for the last month. Tracy hold that thought. We will be discussing china and the fed. Janet yellen has left little doubt she will raise rates, telling an audience in chicago there are dangers in being too slow to move. Move couldat such a be expected if policymakers determine the economy is staying on track. She also suggested it would not be the only increase this year. Chair yellen at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with expectations. In which case, a further adjustment for the federal funds rate would likely be appropriate. Back toets get luciana, the head of Investment Strategy<\/a> at other. The seems in march ise rise all but a certainty. Is there any chance as we get hard data over the next couple u. S. Eks notably payrolls and cpi inflation we could be in for a rise in march . I would be surprised. Were going to see some reduction, probably in job creation, but i think inflationary pressures are there. They are not that strong. Inflation, the pce deflator is stable at 1. 7 . The headline figure is edging toward 2 . I think the Federal Reserve<\/a> will act. But what i think is more important, if you look at the longterm yields, they are at areheight again that people once again speculating that in march they will hike. Yousef but that raises the point whether they are moving too fast, too quickly in terms of the rate hike . Others are saying and might be too early. They should leave the rate hike for the Second Quarter<\/a> really, and given the fact of where Economic Growth<\/a> is at the moment, it will strengthen the resilience someually we have inflection in the yield curve. Usually the fed tends to be a little bit too early. So, that is definitely the case. On the other hand, we have seen that the dollar is strong. If yields remain contained, if you also think in terms of the Housing Market<\/a> in the u. S. , lets not such a bad thing. Its sort of paradoxical. Thisl have some inflationary pressure, either through a stronger dollar or higher rates. I think it will be more through a stronger dollar. Dont think its only a matter of soft data. In the u. S. We have seen durable picking upesales substantially over time. I dont think we should be concerned. What matters is the number of rate hikes. I think that they can be contained. They can be contained because the doctor will remain strong and the margins will strengthen. We will continue that conversation. Lets check on headlines around the world. Thanks, yousef. A spokesman for Barack Obama Says<\/a> president trumps claim he ordered wiretaps on trump tower jim the Election Campaign<\/a> is simply false. During the Election Campaign<\/a> is simply false. The claim comes from right part news. Breitbart news. He says that trump has no evidence to support what he calls spectacularly reckless claims. The conservative position and france has unraveled over claims public funds to pay family members for fictitious jobs. Confirmed it has plans to address concerns about capital levels by raising more than 80 you in dollars. The ceo has spent the last two years plotting a course through a series of Legal Investigations<\/a> and now has headed up an inquiry offering. Willank Advisory Board<\/a> meet later today and discuss the plans. Scotlands largest insurer is in create one of yours and thefund managers, potential deal would see Standard Life<\/a> shareholders owning part of aberdeen. The leading ceo of aberdeen has salaries of higher paid staff. Global news 24 is a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Racy thanks later in the show, shares of snapchat have gained 6 simplest thing. We talked to an early investor or his plans to snap out of it. Libyan oil exports. We get you the full story. The u. S. Oil rig counts. This is bloomberg. Yousef you are watching Bloomberg Markets<\/a> middle east live from dubai. I am yousef gamal eldin. Tracy and im tracy alloway. We look at how u. S. Markets closed on friday, ive got to say, it was a boring end to an exciting week. We had trumps speech to congress and janet yellen talking on friday. All three major indices closed in the green, but really barely moving. The dow jones up 0. 1 and the s p 500 up. 05 . Pretty boring, yousef. Yes, we were two hours away from the opening of the emirates market in dubai and abu dhabi. A good benchmark there. And you can see its pretty much unchanged. That really puts the downside index. E on the the Abu Dhabi Commercial Bank<\/a> is driving the gains in the abu dhabi stock market. We see big gains and Consumer Discretionary<\/a> utilities. We have a weak spot with some financial concerns. But your travel, that stock moved under speculation it could have a tie up with big deals out tour in asia. Also egypt, strong gains, up 2. 6 . The finance minister underscored, tracy, the increase is going to happen gradually. Tracy thanks. Oil is never far from our mind in the region and libya and has launched air strikes against a group known as the benghazi oilnse brigade that seized rigs, driving prices higher. Lets get to anthony dipaola. Anthony, welkers through the impact on production. We have seen a price rise. Anthony, walk us through the impact on production. Anthony this is a very volatile situation for libya, also for oil prices. This is one of those big unknown situations where we know production can increase. There is no certainty about how damaged fields have been there. One of the main dockage ages though is exports. When these ports switch the twin hands, one group versus another or they are blocked for political reasons or to get leverage, that really just takes the knees out of the production there, because they cant get it out of the country. Its a very fluid situation and will continue to impact the market because more production is bad news, as it were, for opecs plan to cut production and reduce prices. We will see that vacillating back and forth. Yousef how is it going with the program coming oversupply in the market . Youve got this shale 2. 0 come back. They are leaner, fitter, and faster. Yeah, there are a couple pressures on opec, and some of this pressures come within the group as well. The group needs to comply with the cuts, according to our survey for production, they did meet the got the cuts, the members of the group who agree to cut production did what they said they were going to do. But there are some members left out of that agreement. They dont have to reduce production. They can increase because they werent artificially lower levels prior to this agreement. That brought production up because those countries are increasing outflow. You have shale coming on more strongly. That will be pressure on the market, because we have still got those stockpiles out there is production does continue to ramp up. The delay has drawn up those stockpiles and that will put pressure on prices. We will see be prices belts backandforth and forth, especially when we see strong of libyae we did out last week. Yousef the rising tide of u. S. 609,igs, they are up to the sixth straight week of gains. How concerned are you this will derail opec . Are at 9 million again. They are sort of where they were. Opec is still having a critical impact on the overall oil market and they have been somehow able to decouple the oil price from the dollar over the last month. That is quite remarkable. I would say overall i see somewhere the oil price is not too far from where it is now. You have increasing production as the core as long prices above 50, and Going Forward<\/a> we are going to see some slow down in the global economy. We will see a stronger dollar. , europe andchina japan are not they are ultimately more recessive than runhing else because they massive commercial surpluses. So i think it is wise to be prudence rather than to optimistic on the oil price. They i want to pick up on oil price because we have seen oil trading in a really tight tracy thats right. What is the prospect of thats right. Prospect of a the change before opec meets in may . All right, those margins are itsu know, very difficult to forecast the oil price in the very near term. I think it is important to have in mind there is a cap there. It cant go too high, and in the region, also the governments are prepared for that. They are taking fiscal measures to that extent. But to exactly time it, i think you know that is very difficult. All right, thank you very much. Always a pleasure having you on the show. Qatars outlook from negative to stable. What was the reason . This is bloomberg. Yousef you are watching Bloomberg Markets<\/a> middle east. Live from dubai, i am yousef gamal eldin. Tracy and im tracy alloway. And s p saysg cut, the rating reflects risks the country could deteriorate further. Yousef good to see you. Good morning. Yousef lets start with the qatar story. Its another example of the changing times we are in. Changing in the region, whether it is wars, political stability. To be not expect this really surprising, actually, for countries like qatar, where they are not diversified. And we will know what is happening with those, too. Are spending. They are hosting the world cup, hopefully soon, and they still have to keep things going. Keepis could actually going this direction for a while, until you see a change in the way things are done, whether oil prices come back to where they were a couple years ago, or income starts to be diversified in qatar or several countries. Tracy one of the big stories in the region over the past year has been sales of middle eastern debt from governments and companies. E have this change in outlook is that not an appetite for qatari debt or gulf debt elsewhere in the region . I dont think its the appetite. I think rates will go a bit higher. The first time you borrow, your Balance Sheet<\/a> is clear. The third time you borrow, you become a riskier borrower, and it keeps going like that. Your rating will go down and the premium will be higher. Be era also recapitalization plan, they laid out some of the details for the next two years. You spent some time digesting this plan. What does it mean in terms of how you see this company . Know they have a great legacy. They built most of the projects in dubai. They have to go through what they have done through last two or three years. I think starting with selling the noncore assets is a good start. You dont need your noncore assets at the moment. Recapitalize the company. You will have operating cash flow and be able to submit and apply for new projects. They do have new projects in the pipeline. I totally believe that this company could make a comeback if the Restructuring Plan<\/a> goes the right direction. But again, selling noncore assets is a good way to raise cash. Tracy lets broaden it out a little bit to one of our other big themes for the show, and that of course is the possibility of the fed raising rates as soon as march. What do you think the impact of fed tightening will be on the region given that we have a dollar peg from a lot of countries . Nabil thats right. Years, it will be a quarterpoint for each of them. In the short term, i dont think it will really affect that. Longterm, if they keep hiking hatsates by a quarter or point every year, you will have problems in borrowing. Every year, point your problems of borrowing. Yousef we will continue our conversation. Checking the first word headlines around the world china is targeting growth at 6. 5 , or higher this year, focusing on a twice a decade leadership transition. Announced the goals at the peoples congress. The chinese economy has proven resilient. Focus is on excessive borrowing. Fed chair janet yellen has left little doubt she will raise rates, telling an audience in chicago there is a danger in being too slow to move. She also said that such a move could be expected if believe the economy is on track. She said also that it may not be the only rise this year. Yellen at the meeting later this month, we will evaluate whether implement and inflation are continuing to evolve in line with our expectations. In which case an adjustment of the federal funds rate would likely be appropriate. Prime minister shinzo abe has strengthened his grip on japan, changing the rules of the liberal Democratic Party<\/a> to allow the minister to serve three terms. He could potentially remain in office through 2021. G7is the longest serving leader after chancellor merkel. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Yousef, tracy. Thanks so much. Im very excited to announce an inaugural segment on the Bloomberg Markets<\/a> middle east show. It is called battle of the charts. You may be unfamiliar with it from our u. S. And european programs. Yousef and i will go headtohead in bring you an interesting chart of the day and hour guest for the day, nabil, will be our adjudicator. No pressure, nabil. Yousef, show us your chart. Yousef we have been showing about records after records, but there is a reality, if you are looking for a contrarian call this is the chart i put together. Show me the money. It Shows Increased<\/a> demand. You can see that copper has gone down. For, the2 watch out going down, of course, what has been driving a lot of the rallies and gains, the hope and the dream of more Infrastructure Spending<\/a>, which is not delivered, and the industrial surprise index really underscores that, tracy. Tracy i hate to say it, use of, but i do like this chart a lot. Theme and u. S. G equity markets right now, which, of course, is you have a divergence between the hard Economic Data<\/a> and the soft Economic Data<\/a>, such as surveys. While you have hard Economic Data<\/a> increasing what a lot, you have the hard data liking behind, you have the surveys showing a lot of optimism. We have yet to reconcile that. Shall i show you my chart . Yousef yes, i am all ears and eyes. Basically if you look at what is driving chinese gdp growth, it is still lending, still credit creation. That is the red line in this chart which shows china financing. This is a multiyear record. Meanwhile, you have chinas fx reserves and those are continuing to decline. If you think that chinese gdp is quite healthy, you look at those blue bars and you wonder, how sustainable is that credit creation Going Forward<\/a> . Yousef that begs the question, will do . L nabil what am i supposed to decide on again . Supposed to say who wins . The copper contrarian play, the reality check, or this china chart . Nabil i would go for the china chart actually. Sorry for that, yousef. I do have my reasoning. The Infrastructure Spending<\/a> could go up at any minute, and then the copper demand could change anywhere else on earth. This is a very china centric issue when you see the spending increasing that is a big reality check, by the way, china is a very large economy, and this is a bit alarming. L, thank you so much for your chance to get back at me next sunday. Nextf i dont know about sunday. Maybe after the show. Before we move on, i do want to dig deeper into the emerging markets. At the gulf story. Theres plenty happening. , you are talking to me during the break, these tier 2 stocks, shift in the way people are allocating capital. What is happening . Actually, last year, we have seen investors shifting from what we call the bluechip firms. Es to more tier 2 the reason is everyone has been seeing liquidity to last 7, 8 months. People are trying to create stories around them. One of the interesting stories i find are the Financial Group<\/a> and if you connect the dots, you have a finance house, an investment bank, a company. So, this could be a big story that theye are buying will create something really humongous on a regional, maybe even global level. So that story was sold to investors. The liquidity has been shifted to these stocks. 1nd you see the top tier stocks hardly trading during the session, while these stocks do control 70 to 80 of the market liquidity in some sessions. The reason that investors keep going there, it is a domino effect. Though my entry and exit could be much easier, and this has been very clear and the difference has been seen in the last 12 months. Middle eastern equity market still dominated by investors, but give us some insight into what invest Foreign Investors<\/a> have been doing this year, because i see a lot of u. S. Investors have achieved their targets for the year. Are they coming into emerging markets . Not to be middle east. We have not been seeing much in foreign funds. More that is rebalancing of whatever they have at the moment. They still ive this part of the world as high risk for the reasons we all know, geopolitical issues and oil prices. Nabil, thank you for being on the show. I do hope you give it another thought nabil next time. Yousef lets give you a taste of an amazing feature you can pull up on your bloomberg. Go. Can pull it up on tv < you will be able to dive into any of the securities functions. You can see that copper chart and be part of the conversation by sending us an instant message during the show. Go ahead and use that function. You can maybe shed some light on why nabil is wrong on that call. Tracy very subtle. Thank you, yousef. European Commission Vice<\/a> president told bloomberg that is seeking input on its future direction from Member States<\/a> and citizens. The majority of europeans are in favor of the eu, and they are also in favor of the euro. Of so, this seems to be the underlying fact. But at the moment, there are many other factors which are changing politics and changing the traditional parties speaking with the electric. So, the eu is not the primary target of the populaces the eu is only one of those issues which primary target of the populists. The eu is only one of those issues which populists are using. There was a white paper on the future of europe, and it gave some opportunity to Member States<\/a>, but also to citizens to likehat eu 27 should look whatthe u. K. Is leaving eu 27 should look at. When the u. K. Is leaving, it does not mean that it will disappear. Eu 27 will emerge. They can offer the birth certificate eu 27 now. From now, it might be the end of the year, there will be a period where Member States<\/a>, national parliaments, and citizens have a right to say what eu 27 should look like. After that, the european council, the heads of governments will decide on the future of europe. The program,n Rising Energy<\/a> costs boosting numbers. How bond markets reacting and what the future holds. This is bloomberg. Yousef you are watching Bloomberg Markets<\/a> middle east live from dubai. I am yousef gamal eldin. Tracy and i am tracy alloway. A quick roundup of stories from the middle east. Iran says it has tested a sophisticated russianmade air defense system. It is capable of tracking and striking multiple targets and involved the range of flying objects, including missiles. It received the system last year. Russia delayed delivery after strong objections from the u. S. And israel. Yousef turkish president erdogan says that terrorist should be on trial. Erdogan said that a reporter was jailed because he was a spy. Tracy and the world fell top independent oil trader is the worlds top independent oil trader is leading a deal to buy petrol sec. Raders are petrol ofisi market share of roughly 23 . Sticking with turkey. Inflation in the country has surged to its highest level since 2012. Higher Energy Prices<\/a> pushed februarys rating up. Yousef for more on this story, we have our global stories partner. Thank you for coming on the program. I put up a chart for additional context in terms of how inflation has built. A line of blue right here and then you have the line in yellow. That of course is the competitive yield on 10 year turkish paper. You see that towards the end. I have the likes of morgan reachy saying this may 11 in march and april. Where do you stand on this story . Hi, everyone. Thanks for having me. That is the consensus. The 11 number is what we are all expecting the next few months. The risk is we could stay in doubledigit inflation for most of this year. Thats a bit of a new development, i would say, because the pressures are a bit stronger, then at least i thought. The currencyices, pass through, sticky prices are having and negative influence. Price inflation and Different Exchange<\/a> rates. All of these different factors are an indication of Inflation Expectation<\/a> as well. Are talking definitely 11 , i would say. But the risk is double digits for a while longer. Murat, the other big news out of turkey was the finance minister talking about budget pressures. He thought that turkey could balance the need for fresh stimulus with budgetary discipline. He thought turkey would be able to do it. How realistic is that . They already have a bit of room. The budget a love for loosening. There is a bit of room there. Expectation could get worse. They are targeting Something Like<\/a> 1. 5 of gdp. Im expecting 2 . Its not the end of the world, forecast is basically they are going to have a hard primarytrolling expenditures, which has never on top ofanyway, but that, the resilience of the revenue side will fade away later this year because of the weak economy. So it will be a larger deficit than they are targeting. They havehink been very creative so far and theres a lot of resilience in the budget. I think that will continue to some extent. And one last thought. Theres a lot of nonbudgetary means they are using. Credit glut triggered by the state banks. There are a lot of budgetary mechanisms. Yousef what a remarkable recovery. This has been one of the best performing current sues over the last six weeks or so, but wheres that trade going to go . Turkish central bank, how are they going to navigate that, and what does it mean for the turkish lira . Urat the ref and pressures, as you obviously know. If the pressure continues, they will have to do something again. They cannot allow this vicious cycle to continue. They are reluctant to act. They have the meeting, as you know, march 16. Until then, it will be a lot about what will we see . We could see further pressures. This is really about the relative turnaround and centralbank hikes. But, you know, theres a very hard structural effects in turkey because we have this high financing requirement and the monetary environment is tightening. It again, as you know, they are trying to balance growth with weakness. They will tolerate a bit more weakness, i would say. This is not the highest level we have seen. 3. 9 orthe highest is so on the dollar. They will eventually have to hike more. Going conventional will help a lot. Going conventional meeting what seems like a temporary hike, it , thatmanent actually would be very helpful because men investors would see ahead. There would be more predictability. That would improve. But at the moment, right before the referendum, it will be very difficult for them to, you know, come up with a bold hike. Politically, its almost an impossibility. ,racy all right, murat ucer thank you so much for joining us today. Coming up, we are taking a detour to the u. S. Where snaps postipo search as the markets divided. We will talk to an early investor next. This is bloomberg. Tracy you are watching Bloomberg Markets<\/a> middle east live from dubai. I am tracy alloway. Yousef i am yousef gamal eldin. Company is the biggest listed Construction Company<\/a> in the uae. It has had a bit of a ride. It all started when earnings missed expectations a quite a large margin. The latest news from late chursday, aerotech arabte nounced the recovery plan. You are seeing the losses and they are looking to introduce at a risk management, soft legacy issues, and sell noncore assets. They are looking at preparing this is for the future, delivering projects ontime and on budget. We will see more analysts digesting the latest plan and we will see reaction in the stock price. Also, we have news from this company they have abandoned a well in egypt after drilling that did not yield commercial quantities of natural gas. The well couldf be transformational. So, again, dana gas. We will see how that stock reacts. For stocks in out del potro, after the recent outlook was revised downward stocks in doha after the recent revised downward by s p. Public sector debts have pushed up key elements of some of the elements we are watching their. The rally is transparent in the two day. Rebirth ofis as the interesting young platforms and companies. Others see it as bears on the prowl. Of a lets get the view partner at a company that has put more than 50 million into snap. Alex, just to begin with, how surprised have you been by this threeday pop in the share price. Up 60 . Does that mean the ipo was under price . We as investors are obviously happy to see that growth and the interest from the public markets. I think longterm investors that are looking at this will do case,well, and in that the ipo is priced really well. I think there is a certain amount of inbound demand, and that is where you saw oversubscription from demand into supply. Tell me. You have clearly spent a lot of money and are on your way to make even more money with this trade. What is your exit strategy . When do you call it quits . We are out to maximize returns for investors and we are very excited about the possibilities snapchat has a we will hold it. One of the areas you can kind of look at is they raised 2. 4 billion in this ipo. I would give them at least two years of cash on hand, and the stock that they have led, even the biggest Cap Companies<\/a> have outpaced them in terms of innovation, theres a really good signs for snapchat, so we will continue to hold it. I know this is a young company, but its not as if the social media spaces empty. I hear from a younger friends they are leaving snapchat for other platforms. Where do you think demand is going to come from in the coming years . And what will snaps revenues be or their sources of revenues . What we are seeing in the market, whats snap did really well was redefined the way Media Consumption<\/a> was taking place on mobile for the millennial generation and how advertising was taking place. Yes, there will be competition. But i think that snap has outpaced on innovation to the point where competitors are copying what snap is doing. Thats an indication they have the right sentiment from the market. I think longterm, as long as snap continues to lead and leading innovation on new products, i think they will do quite well. What is your biggest concern for the snap story Going Forward<\/a> . That i have any one big concern. I guess if they continue to execute the way they have and innovate, i see a lot of great new things coming out from them. Yousef all right. That is alex joining us live from the u. S. Army snapchat story. Are you much of a Snapchat User<\/a> . Not, actually. I see my younger colleagues using it. At some point it became a popular left room for finance discussions as well, which is amazing if you think about it. Yousef i have not seen finance discussions, but im starting to appreciate snapchat more. Im getting into a little bit. Tracy do have a chart. Do you have a chart . Yousef not yet. Thats what im going to do. Tracy we will be live from the region again at the same time tomorrow. The following is a paid program. Star vista entertainment. Announcer before, your tv looked like this. On that friday evening, on every television in america, something magical happened. 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