Us why he is eyeing london and. Istanbul for market expansion. First, iraq has joined the united arab emirates, qatar, and oman and calling for opaque and allies to stick with their agreement until the end of the year. That is despite recent price gains. The deal helped lift brent above 70 a barrel this week. Iran has expressed concern. , spurring a renewed push from u. S. Shale producers. Bloomberg spoke to the head of the International Energy agency and the omani Energy Minister and then got more reaction from citi. Today, oil price is about 70. The Global Oil Demand will increase about 1. 4 Million Barrels a day. A lot of new Oil Production is coming from the United States, from brazil, from west of africa, from canada. A lot of oil in the market. We expect is lunch market in the next 12 months to come unless we hit prices. I think thats the point of discussion, because the focus so far has been in the supply side. We often dont discuss the demand side of the equation, and maybe we need to do some more work them up, because all reports suggest that 2018 there will be growth on the gdp worldwide. That will trigger better demand, and i think we have a responsibility to meet that demand. I think this discussion needs to look at both sides. We often discuss the supply side, as if shale oil is an unlimited resource. They have limitation as well, like the rest of us, although i dont know what that limit is. I have a suspicion. We heard them i think yesterday, from one of the speakers here, saying soon shale oil is going to have a peak production that everybody talks about. Everybody forgot to spell it, i think, over the last couple of years, but there is a peak production, even from shale oil producers. Yousef lets get more with ed from citigroup and our energy reporter, anthony. Anthony, let me start with you. You were in abu dhabi. You spent time there and saw the ministerial hustling. What were some of the highlights . Anthony good morning, yousef. The point the opec ministers were trying to make was to stay the course, that this rise to 70 has only lasted a couple hours. It is not a lasting thing. They are saying be calm, we will stick with the cuts, and they are starting to look at demand. They are seeing a lot of that is what we hearing from a lot of the analysts. They are seeing a lot of challenging shale Oil Production coming from the u. S. And they are banking on the fact that rising demand will accommodate that as well as the production they are bringing onto the market. Yousef do you shift a sense in tone from the uae and the minister . Anthony no, not really. I think he has always been a very even keeled. Saying we are going ahead with these cuts, committed for a year , and we are going to keep that. He did seem to be indicating that we might see a price decline back from 70 in the second quarter. He was saying demand is up now because we are at a high winter winter demand period, and we might see prices slide back a little bit. Lets cross over to ed morse. In terms of the opec reaction going into the later part of 2018, could we see more tangible moves to cut the price down . Ed certainly there is an incentive to. They want the price down, because they are fearful of the shale response but also the response of deep water. These are three Unconventional Resources that have seen the structure plummet. We have these longerterm projects, along with shale, which has a short cycle ahead of it, up and down as it responds to prices. Yousef the risk from shale, we put this up on a chart. Wti versus your rate count. Ever soe count edged up slightly. At what point does it become critical . At what price point does opec need to react . When do you expect to see more action . Ed i dont know what action is going to happen from opec, but we have heard from the Russian Oil Minister just before the weekend, and he reiterated the point that was made at the last opec meeting, namely that we have a price just in this agreement, when the countries meet again in june, to see whether it is time to start a process of ratcheting back production. Prices and prices are just too high. With a high price, you got an appreciation in the ruble. Central bank is already active, planning 5 billion or more of intervention in the market. That is to keep the ruble depressed. The high price makes that a hard job. Yousef you look at what Money Managers are doing in the latest fcc data, and they are betting on further gains in wti and brent. How sustainable is that . How much more gains can we have . Ed it depends on what political geopolitical risks are on the horizon. What happens in the u. S. That was certainly part of the speculative activity. The Winter Weather as part of the activity. Post february, as was the case a year ago, we are going to see something more attractive as an asset class for the money that has come into it. This is really speculative money at a record high level in terms of the number of barrels of Oil Equivalent and the percentage of interest. It is not stable. Yousef we heard the uae Energy Minister talk about how 2018 is going to see a return to fundamentals, a market where we have an increase in demand and where we wont have to worry much about the supply side of the equation versus 2017, which was geopolitics a lot as well. Do you agree with that or will we see 2018 swing the other way around . Ed it is not just geopolitics. It is the financial markets. You were talking a couple minutes ago about the u. S. Dollar and what that does for commodities. We have had not just an increase of oil prices, but that increase last week was accompanied by copper prices and iron ore prices. It was a kneejerk reaction for the slippage in the value of the dollar. We have a number of factors that have lined up, and i think we will be seeing that 2018 will repeat a lot of what we had in 2014, 2015, 2016, 2017, namely a very wide band in which oil is trading, probably the same 35 a 25 a barrel as last year and the year before. Yousef coming up, moving on from the qatar crisis. The head of the middle easts largest lender says the bank is ready to press ahead with its expansion plans, despite the sevenmonth long saudi blockade. Our exclusive interview with the Qatar National bank ceo is next. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Qatar National Bank this week posted its slowest Profit Growth in at least 10 years. The ceo said the firm has absorbed the initial shock of saudi arabia and other nations in the gulf, severing diplomatic ties with the country and is now planning to push ahead with its expansion strategy. I spoke exclusively with him. We are on target for our strategy in terms of growth. We are targeting 7 to 9 . We expect 5 to 7 , which is in line with our strategy directions. We expect a good year, 2018. Our diversification will continue. Our strategy will continue. Yousef on that note, the last time we spoke, you were describing a new strategy where you were pushing more into asia, looking at hong kong, other places in asia. How much of a priority does this continue to be going into 2018, 2019, and are there any other new markets you are exploring to offset some of the setback in the gulf . Ali strategy is the same, not changed. As i said, not changing our strategy. No change in our growth targets. We continue to look to become a leading bank by 2020. As you mentioned, these markets, i mean, china, to change our presence there to service hong kong, looking to establish operations there. We already opened india. Hubapore becoming our asian , offering all the prices and services. Islamic banking, asset banking. We try to push more in our existing operations, especially in our three core markets qatar, turkey, and egypt also to expand in southeast asia. As we speak. Yousef would you say it has become more difficult to deal with the realities of the gulf crisis . Would you say the longer this drags on, the more difficult it is going to become for lenders like you to deal with . Ali well, actually, to the contrary. We are adjusting to the new norms. For us, we are operating our business as if this crisis will continue forever. Business is business as usual for us. I think we have already absorbed shock, the first one month, two months of the shock. Our growth targets, risk management, funding, growth, as of this crisis will continue forever. For us, i mean, again, i must say also one thing important, yousef. We see more opportunities Going Forward from the blockade, especially in terms of the local economic growth. The country has been very active in terms of accelerating their vision. Yousef the other take away from 2017 has been your ability to seek or two develop cost efficiencies. Are you going to be looking to do more of that in 2018, become leaner and a bit meaner . Ali our efficiency ratio is 29 , which is one of the best in the world. It is a dream for many banks to achieve a 29 efficiency ratio. Yousef how satisfied are you with the level of u. S. Dollar liquidity available in qatar . Have you had any issues the re . Could it be improved . How comfortable are you with what the central bank is up to on that front . Ali well, you know, i am very comfortable. We dont see issues in terms of the dollar liquidity here. In terms of availability, you can see our growth this year, 16 growth in the funding side, and most of this coming, you know, as a yousef in terms of dollar. The road ahead, and i want to get the big picture outlooks, you said you arent concerned about the ongoing gulf crisis. You are assuming it is going to last forever. If that is not what worries you, what is the biggest risk you see for the remainder of the year for qnb . Ali i mean, the normal risks we see here. Regulatory, the regulations, the line, we also see in terms of geopolitics in the region itself, not just in the gulf, also the macroeconomics conditions. As you know, the Interest Rate will be increasing, so this will put pressure on the cost of funds. We know quantitative easing has stopped in the u. S. This will put pressure on emerging markets, so maybe i would say the biggest challenge we look at it is yousef up next, many say dubai is facing a property glut. Others disagree. Hear my interview next. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Londons Property Market may be sluggish, but one man who is keen on getting more involved is a billionaire chairman of a dubaibased real estate development. He sees plenty of opportunity in the city postbrexit, and he is looking for growth closer to home. I spoke exclusively to him. I think the market has a long way to go. Yes, it has matured, and i dont expect the market or the Company Sales to go like before on 100 or 200 , but i still think dubai has a long way to go. I see very well positioned in dubai as a brand, as one of the best management teams, financially very strong balance sheet. We have about 2 billion in the escrow. We have low leverage. We can acquire more land growth those factors will continue to deliver. Yousef would you say it is going to be 50 50 in terms of that priority, Domestic Versus International . Hussain i would say 60 40. We only have one building in london. We are working on some other projects. But i see dubai will be 60 at least of the total value. Yousef you mentioned the 2 billion, what you are describing as healthy balance sheets. How are you going to leverage that Going Forward . Is this something you could use for acquisitions . Damac is now a big company. It has a lot of muscle. What are other ways of growing the company Going Forward . Hussain i dont see large or opportunity for acquisition in the region, because we have the management team. We have the cash. If we need, we can acquire lands. Overseas acquiring, that could be a possibility. You have two possibilities. You go with acquisition because if you need a big land bank or you need a management team, but we have both and we dont need to do a liquidity. Yousef what are your top three markets abroad that you say, those might be interesting in the next three to five years . Hussain we are looking at london as a future of longterm market. I see istanbul as an interesting market. It has softened quite a lot. In my view, you enter a market when it is soft. You dont enter when it is at peak. Yousef brexit has not turned you off at all . You see an opportunity. No, i see an opportunity, a big opportunity. Yousef in terms of the domestic market in dubai, i was sitting a few weeks ago with a guest, and he was vocal about the Dubai Government doing more to address what he says are clear signs of oversupply. Would you agree with the oversupply story or that the Dubai Government needs to do more in the market to control it . Hussain i think we have one of the most amazing, visionary, unique leaders in dubai. His hands are on the pulse and is driving the city to the best of the best. He has moved the city from a small village to where it is today. I think dubai has huge potential. The tourism is growing. The retail is growing. Some of the sectors like retail is not growing anymore like before, like in the double digits, but that is a mature market. Today, we are getting 15 million tourism. I am very positive. I dont see any issue there. Yousef in terms of damacs Success Story and sharing more perhaps with potential investors, would you be willing to sell a bit of your stake . You own the majority stake in the company. Hussain yes, i dont mind to sell a little bit on the right price and the right time. Yousef i have spent time with analysts tracking your company. One of the concerns i heard was that there might be some changes in the dividend payout over longerterm because of what they saw as reduced cash flow, possibly. Can you say, perhaps reassure them that you dont foresee any major changes in your dividend policy, or at least you dont see a need to change that . Because 2017 was a good year for damac. Hussain i dont see any change in our dividend policy. We have made it clear several times. We will stay with our dividend policy. Subject to the approval of the board, but i dont see many changes in our dividend policy at all. Yousef are you looking to do any additional projects that are thematically built around the trump brand in dubai or elsewhere . Hussain we enjoy a good relation with the trump organization. They have helped us to build and operate one of the best golf courses in the region. On a global level, they are helping us. They helped us with our second golf course. Unfortunately, President Trump announced last year in january that they will not take any more projects outside usa. Yousef if they were to change their policy, you would be open to going for new projects . Hussain we are a business organization. If there is a benefit for us and a benefit for them and a willingness on their side, we can was look at those. Yousef up next, as germanys central bank decides to include the chinese yuan in its own reserves, we hear from a board member. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Germanys central bank this week revealed it would include the chinese yuan in its currency reserves. The announcement was made by a board member at the Asian Financial forum in hong kong. He spoke to bloomberg during our show on monday. Around about the middle of last year, we made the decision in the bundesbank to include the renminbi, but i cannot talk about the amount we can be investing and i cannot talk to you about the technicalities how we will be investing, but we have been in touch with our colleagues from the bundesbank of china maybe half a year ago about this. We had the ecb go first. It is the right way to do it. Other Central Banks sometimes before the ecb. That is also fine. Now, we thought this would be part of the german currency reserves. It is not a major amount, but it is something we decided on and wanted to be part of. The fact that the currency is currently included in the market, the basket, and the fact that European Central bank has decided to do it was both sectors we thought about including it. Reporter you probably have similar concerns that the currency is not a freefloating currency. It has restrictions. There are also strict capital controls in china. Do you share these concerns . Andreas yes, we do. We may have to pay part of our moneys to the imf, so we need accounts. We need to be able to to fulfill our obligations as the fourth largest Monetary Fund in renminbi. We have made that decision. It is a fact we have decided to go forward. Reporter sometimes a journalist obvioussk the most question, and that is why include the renminbi at this time . Andreas we have to fulfill part of our quota. We have to be investing in some Central Banks. Reporter does it also represent the clout, the growing financial clout that china does have and the need for trade financing, a number of different avenues that you want to have this currency . Basically, as a central bank, you have a currency in your currency reserves to the extent you need it. It is not necessarily whether we need it in order to fulfill our obligation as a central bank, but it is also the fact that we want to have the accounts in this currency that we want to understand the markets of government bonds, etc. We share the concerns the imf has, so the answer is two yeses on your question. Reporter do you have any clear indication you said you have had these negotiations for the last six months so do you have any clear indication that china is liberalizing its fx mechanisms . Andreas it is their decision. It depends on how quickly they will want to do this. They are internationalizing. Usedenminbi is much more than it was before. Still, there are obstacles. Sometimes there are interventions. It is not 100 predictable kind what kind of regulatory changes you have. There are also obstacles to. Sing the renminbi in order to make it an even more used international currency, more needs to be done. Renminbi does not have an anchor currency status, as the u. S. Dollar or the euro or the yen. Reporter the biggest obstacles would be the restrictions they have on the trading band and also in the capital controls. Andreas yes, but the International Use is increasing, because the trade lanes with china will intensify. Also the fact that now Foreign Ownership has been liberalized in china. For example, you can know own up to 51 of the financial institution, not only 49 . All of this will make renminbi a more International Used currency in the future. Reporter is this a plan being put forward, or is this something that will start accumulating . Dont talk about timing and amounts, but we have made the decision sometime time ago, and we will execute our plans. We will do this very closely coordinated with the peoples bank of china. Reporter lets talk in broader terms about Central Banks and what some would say the uncoordinated asset purchases. Should the ecb, in your estimations, set a definite end date for bond purchases . Andreas the economy in europe is much stronger than it was. Growth has returned to europe. It has also a positive affect on the labor market you would hope for. The sentiment is many countries, including germany, at an alltime high. All of this means the economy is growing not only this year, but next year above trends. It also means we are closing the output gap and going in the right direction. This is the background for any Monetary Policy decisions. Whatever is going to happen, we have to be very clear about the fact that we are still in a very expansionary Monetary Policy. Which is justified because the Inflation Numbers are not there. Yet. They are not as negative as seems sometimes, but inflation has had ups and downs, and they are not fully at the target. The price stability target. Nevertheless, while we are talking, it is not about braking the car, it is about taking the foot a little bit off the gas pedal. We will still be speeding, but it in and date to those purchases will be justified given the economic background. Reporter so they should set a date for tapering some sort of deadline . Andreas that is exactly what we feel should happen, and i personally would argue for that. Reporter because the ecb plans to keep Interest Rates at the record low they are at now until well past the end of asset purchases. That is quite vague. What do you think well past equals . Andreas i am not going to enter this debate with you, but right now what we are talking about is not exiting this Monetary Policy stance. We are thinking about how much longer will the ecb be buying in the market . This amount has been reduced in half since the beginning of this year, the beginning of this month. You still would need to see how much stronger are you talking about these sort of extraordinary asset purchases, and maybe an end date would see a change in the Forward Guidance and better understanding of what we are talking about. Yousef coming up, borrowing from the banks. Is saudi arabias Investment Fund about to ask for International Lenders for money . For the first time . This is bloomberg. Bloombergurces told this week that saudi arabias askinggn wealth fund is for a loan for the first time. The public Investment Fund is said to have held talks with local and interNational Banks. It could raise 5 billion this year. I got more on the story from the head of Investment Strategy at Abu Dhabi Commercial Bank and our middle east finance reporter, matthew martin. What we have heard from banking sources is international and local banks are starting to have conversations with the public Investment Fund about this idea of them starting to borrow for the first time. The idea being they would start to try and use some leverage to get down the massive projects and massive investments. When we had an interview with the head of the public Investment Fund in october, he said this was an idea they were starting to look at, how they can use leverage to boost their investment returns. Now we are starting to see that strategy play out. Yousef we will try to go to the next milestone with the story. Do we know if they have a preference either way . Are they going to have a domestic focus, or are they going to put assets into innovation stories . Matthew well, right now, very early days. They are in preliminary discussions with lenders to gauge appetite. It is clear the domestic banks loan growth has been slow. There is little Credit Demand from the saudi private sector. The local banks will be keen to do loans to the pif, which will essentially be lending to the government. It will be classed as sovereign borrowing, effectively. InterNational Banks as well, given how active the pif is likely to become, the International Sovereignty will be keen to show that they are there for the pif. They want to build that relationship. I think there is going to be a lot of appetite. 20 billion that it sends to blackstone. Yousef excellent reporting, as always. Matthew martin there with the story about what is going on with the public Investment Fund. Lets go to the head of Investment Strategy at Abu Dhabi Commercial Bank. When you hear what pif is doing and you see what the saudi government is doing, bank of america thinks Government Spending is going to come in higher than forecast, how does that place you in terms of putting money to work in saudi arabia . I think saudi arabia is a longterm reform story. If you look at, for instance, the msci inclusion of uae and qatar a couple years ago, the late, theally quite market is actually quite late in picking up on the story. When the inclusion of the waiting list was announced, there was a much faster pickup. I think saudi arabia is a bigger country. There are more variables ongoing. The situation is not as good as a couple years ago in terms of the oil price. There is much more potential of diversification in saudi arabia than anywhere else. The oil price has picked up. Fiscal consolidation is still on track in saudi arabia. Yousef not everyone would agree with you, luciano. Im going to quote straight from the report here. They say the saudi authorities may have underestimated the cost of royal handouts. They are pointing out again that its sort of raises the risk profile. You are saying you clearly disagree with that. You are saying consolidation is still happening at a level you are comfortable with. Luciano you need to look at it from a longerterm perspective. When we think about saudi arabia, we are not thinking equity level. You are not thinking earnings growth. There is a story here to sell. As long as the dollar remains relatively weak, and i believe it will remain weaker versus major global currencies the next six months to nine months, the major conditions are going to remain quite good. We have seen the access of foreigners to capital markets, the restrictions have been relaxed. Msci has applauded that. Over the longterm, the fiscal budget plan makes sense. There have been measures to alleviate burdens for poorer families. At the same time, there is the vap kicking in. This is not something that will work out immediately. I have no doubt there will be sort of disappointments for 2018 as far as the deficit is concerned, but over longerterm trajectory, this is a story of reform. It is not to say the deficit is being compromised. That the fiscal balances are being compromised. Yousef up next, flying high. The ceo of private Aviation Firm vistajet breaks down its latest earnings and tells us what he sees things happening in the middle east in 2018. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. The private Aviation Company vistajet posted its fullyear 2017 results this week. The firm is valued at 2. 5 billion, making it one of the top five european unicorn companies. It has gone from three to 72 longrange aircraft, making it one of the largest private fleets in the world. I spoke to the chairman and founder, thomas flohr, about where he sees future growth coming from. Thomas we see growth all over the world in every single region. The middle east has been strong. As you know, our key product is the program where customers subscribe. We have a subscription business model. We have guaranteed availability jets anytime, anywhere in the world. Taking the middle east, we have over 50 of more new subscription clients in this region. United states is a key highlight for us. The growth in the United States has accelerated. We see strong growth all around the world. The United States, middle east, and asia are the highlights. Yousef in terms of what is likely to outperform when you look at those markets, what will be one geography you would say this is going to be key for 2018 . Where might it be challenging , either because of a changing external environment or because of some of the domestic challenges . Thomas in every single region in the world, certainly the that certainly the tech sector in the u. S. Has surprised us. Because of the growth we have, we can also now do transpacific flying. We saw strong growth, west coast u. S. , numbers up 40 in the United States. Our goal is to be a Market Leader in every single region around the world. Middle east is extremely strong, as you know. 70 of the world can be reached within an eighthour flight. Obviously the middle east is at the center of this growth. You said in the past, at least in 2017, that you have seen a falling role of ownership in Business Jets in the United States. Is that trend continuing, and how are you working around or with that . Thomas there is a market of 7000 airplanes in our market. It is the longrange, business market. We see a trend around the world that boards wont approve a 40 anymore a 50 million Aircraft Purchase and put it on the balance sheet. Now, we offered that availability, the guaranteed availability, exactly like ownership, in the subscription model. It is a very strong micro trend. We dont see reverse on that. It is not only the u. S. It is here, and asia, in europe, everywhere. That is driving the growth away from fractional ownership and full ownership. Yousef what about Higher Energy prices . It is a very different brent crude price now than it was in 2017. Is it stays at that level, if it goes further, it has an impact not just on some of the more public aviation companies, but also smaller, privatelyrun Companies Like yourself. Thomas mmhmm. Well, the oil price is a passthrough. We are not affected by that. It is a fraction of the overall cost. We dont see it as a slow down. It is a passthrough from our own performance point of view. Yousef is it a positive or a net negative . Thomas i definitely see it as a net positive. In the First Quarter when there was a crisis in Energy Prices down around the world. People and corporations have more money and they spend more money. They spend it on a very efficient business tool, which is really what a private jet is. We are offering time. We are making time for our clients, because they can be faster, anywhere, anytime around the globe. Yousef you mentioned changes in the boardrooms around the United States. Those are all around the world. A lot of the ceos that i speak to describe how they have had to adapt. Some have been flying private and now have to fly firstclass commercial. In terms of how the demand is broken out in the gulf, which markets are still standout . I mean, if you had to divide it up, saudi arabia, the uae where , are you seeing interesting trends . Who is spending money . Thomas ok, the strongest growth is here in the uae, definitely in saudi. Saudi is the biggest market in the region. We see both kuwait and oman picking up strongly in the last three to four quarters. But it is corporations. Corporate business it is part of it. Executives have more time available, going to many locations in the shortest period of time. Corporations are spending. Corporations are participating in global growth. To get you to a remote location, vistajet is getting you there faster. Yousef a lot of your outlook has been positive, and you see a lot of strength in a lot of key economies. There is a was going to be a challenge and a risk. What is your top risk going into 2018 . What makes you sleep a little less at night . You have got to give me something. Thomas ok. There is always macroeconomic, micro political risk. We have seen it, especially in north korea and situations like that. That we can never influence. What we do see is that there is very strong growth currently. Europe has been a highlight over the last three to four quarters. Geopolitical risks are always something we need to watch very closely, but we have been through many crises over the last seven to eight years, going back to europe and the debt crisis and so on. We feel strong. Yousef that is it for this best of Bloomberg Markets middle east. We have a busy week ahead in the region. We will be right here for the start of the trading week in the gulf, sunday morning at 8 00 p. M. In the uae on bloomberg television. Im yousef gamal eldin. Do join me then. This is bloomberg. Coming up on bloomberg best, the stories that shaped the week in business around the world. Big news for some big banks, it it is a big week for earning report. This is down 50 , now, that business is over 40 of earnings, that should only increase from here. 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