Still this slowest growth in asia. Yousef i am yousef gamal eldin. Welcome to blommberg markets middle east. Further weakness for the turkish lira. This is taking its toll, the turkish lira are off 22 . Yousef absolutely. Worst quartershe in recent history, 15 weaker. This chart tells the story. Charted the turkish lira performance on a 2016 basis. That has come down. Major events like the attempted coup in 2016, then the Federal Reserve rate hike, that added additional pressure on the turkish lira. You also have higher oil prices. Currentnot help the account position. You have your external financing requirements and your corporate that load debt load. What did they do . They unexpectedly hold rates. We have calls from some, seeing it weaken further. You can see we are still close their to the overbought line on the relative strength index. Just under two hours away from the opening of the emirates markets. Picture, some volumes have not returned in full. Up, Abu Dhabi Energy down, weighing on the index. Qatar down. 1 . Let me show you saudi arabia, pressure from Health Care Stocks , pressure from energy stocks. The Consumer Staples helping the index, staying in positive territory. A note on egypt, yes, that index was down, but what investors are looking for are what Foreign Investors are doing with their money. Are they putting it to work in egypt . Lets cross back to what is happening with the turkish lira. We talked about it in early asian trade, still under pressure as isis claims it was behind the nightclub attack that killed 39 people. Lets cross live to istanbul and get the latest. What is the latest state of this istanbul,ion now as and the wider world, try to get its head around what happened. Police are conducting raids across the city. Arrested,have been but the assailant is still on the loose. His identity is still unknown, but the government has released new pictures of him. Claimedstate has responsibility for this attack, which killed at least 39 people on new years eve at an istanbul nightclub. Some of the dead are foreigners. This nightclub is extremely popular with turks and tourists alike. The Islamic State says this attack is linked to turkeys military operation in syria. Turkey is not only dealing with terrorism, but also kurdish militants. Than 1004 hundred people have died in terror related attacks. Changed against the dollar pick it up from there. Not only does turkey have to deal with the uncertainty around terrorism, but also the deteriorating macroeconomic nature. We have that macro data coming out of turkey, is that going to bring about right spots that they can cling onto . Simin according to a bloomberg survey, economists predict inflation will increase to 7. 6 percent, fairly in line with withasts. We are dealing rising fuel prices and an increase in foodrelated costs as the turkish lira weakens against the dollar. Some economists predicted doubledigit Inflation Numbers over the next few months. Of course, the turkish lira has depreciated 80 against the dollar in 2016. It is the second worst performer in emergingmarket currencies after the argentine peso. We have to leave things there. Have a happy new year. A quick check of markets in this part of the world, mumbai. 4 . Ng, off by market,e australian 1. 25 to the upside. Benchmark at the highest for one and a half years. Hang seng off highs come up by. 5 . Shanghai moving higher, and some of that down to that better than expected pmi reading. Talking of which, it is the first survey of manufacturing showing signs of strength. 51. 9, the best reading in three years. Haidi lun has the details. Give us an idea of what help to lift this data. Say, it completes a pretty good year when you talk about chinas economic stabilization. Out, buteen this play that number was the highest on record over three years, just after they took over the reading of that gauge from hsbc. What contributed to that overall number, new orders coming in. The highestt was since july 2014, a two and a half year high, also output th consecutiveix month of expansion. Painting and overall picture of stabilization , a robust way to end 2016. In november, we saw growth 7 , so at around comfortably above that 6. 5 to 7 official growth target. Stabilizing,growth we have, well, nearterm challenges, so what is the biggest of them . Nearterm, midterm, longterm, a host of challenges facing china. ,bs saying that at the moment stabilization is not a concern for the chinese economy. We have liquidity concerns, pressure on the interbank market, worries over capital outflows. Are resetting that 50,000 quota for how much Chinese People can convert in any given year, putting further pressure on capital outflows. Is to beand outflows expected. The currency saw its biggest annual decline last year in over 20 years, and policymakers tightening restrictions when it comes to getting money out of the country, and overlaying all that, you have the Property Market overheated in major cities, and leverage, recovery fueled by debt. This year, they will be able to agenda, one reform of the biggest uncertainties facing the economy. Time, ther a long word flexibility and growth targets for chinese policymakers did not fit together. What is the latest in that debate . This growthook at toget set every year, 6. 5 7 for 2016, and a lot of economists and strategists are calling for beijing to abandon that target, or at least to have a greater range rather than sticking to this number seen as , to try to hit that arbitrary number. Boc saying ao the p range of 6 to 7 , it will give you more flexibility for the structural supply side reforms that are difficult to do when youre trying to that growth target. Yousef thank you for that insight. Lets cross over to sophie kamaruddin. Sophie trading in Chinese Government bonds in may halted earlier after what the Shanghai Exchange said were abnormal fluctuations. The bond was stopped and is expected to resume trading. The exchange called on investors to remain rational and reminded them of the risks inherent in trading. Israeli police have questioned Benjamin Netanyahu over allegations he received gifts and favors from business executives. Caution,estion under meaning anything he said could be used in court if he is prosecuted. He has repeatedly denied any wrongdoing. Singapores economy expanded more than expected in the Fourth Quarter. Of first Major Economic data 2017 showed annualized growth of 9. 1 against estimates of 4 . The government and economy have been struggling. Goldman sachs says indonesia is less vulnerable to a global select compared to the taper tantrum in 2013. They do not expect the currency to appreciate significantly as ield give some protection. It is asias best performing currency after the yen. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Sophie later in the show, oman trying to plug a budget deficit caused by low oil prices. Rishaad we will have more on the plan ahead. We talk aboutrst, the top risks facing investors this year. We will break it down for you. Stay tuned for that conversation. This is bloomberg. Yousef welcome back to blommberg markets middle east. I am yousef gamal eldin. I am rishaad salaam is in hong kong. Here is david. At thehave a look markets now, india down. 25 . The volumes are very light. I would not put too much into these to kleins. Declines. Ese inhave been getting a boost the pmi data out of china. Some gold producers on the back of that rally that finished strong into 2016, now cold coming off slightly. The other markets story, data out of china, services, manufacturing, the government, the official read, the private read, again, pointing to the fact that we are stable now. , talk abouteeper the buildup and cheap credit, thats another issue altogether, but the economy does seem to have stabilized for the moment. They are trying to pinpoint our give us a clue of what the next growth target might be. 6. 5 . ,hen the numbers came out shares in hong kong reversed earlier losses and we are getting a. 5 gain. Those two now on the lunch break. Now, some other things i want to note. Australia outperforming today, seeing that rally well into the june 2015 highs for that index. Related to the china data story, have a look at the pop in copper prices, 1. 2 percent, threemonth rolling forward, in london, gold coming off slightly , there we go,. 5 , 1157. Wrapping things up, have a look at the ringgit. Currencies, this is the most tied to oil prices. That said, it is going the opposite direction. Today, we are looking at a weak dollar story. Trading at the lowest level since 1998. Yousef thanks. Lets talk about the u. S. Dollar. It has had quite a performance, up 7 , 8 since september, the best performance since 2008, and that has major implications with the nomination of donald trump coursethe corner, and of your monetary implications with the Federal Reserve continuing on its path of hiking rates. Lets get more on this conversation. Great to have you back on the show. Happy new year. Yousef happy new year. The u. S. Dollar trading higher, a strong start for the greenback. How much further does this have to go . Calls saying we have not seen anything when it comes to the greenback. There is room for it to continue strengthening. The moreat strengthen, the risks pick up on a global level. It is clearly bad for u. S. Exporters that make up so much of the s p 500. We have seen the equity markets in the u. S. Shifting from a much more local from a global exporter to a local Domestic Company now, so the exporters in the u. S. Will struggle, but the strong dollar is hurting us here in the region. We are feeling it, tourism, emerging markets, so continued strengthen the dollar has its risks. The tightening of the fed could strengthen it further. Chart, i put up this 5498, your bullish speculative dollar bet to the latest data point we have. You can see how they built those bullish bets on the u. S. Dollar. If you had to pinpoint the figure as to how much more there is to go in the u. S. Dollar . I think the game of predictions is a tough one. Yousef i know you are king of it. It, but theavoid direction for the next 20 days, continued strengthen the dollar, but the key event is the will he or wont he scenario on the 21st of january. If his plans come into play quicker than anticipated and the fed continues to tighten, this thing could go for gear, but that is pretty dangerous. Could go full year, but that is pretty dangerous. The markets do tend to overshoot in both directions. Have we got past that point or two that point already . To be honest, where else are you going to look at your safe haven moves . U. K. Certainly from a brexit point of view not creating sterling interest. Swiss franc, we are underweight and think it has gone too far. . R the euro do you really want to own more again . It is also about where else do you go. That is part of the problem. U. S. There the is no alternative to the u. S. Dollar at the moment from a safety perspective, and that is driving some of that trade. Rishaad it has then quite strange even to see how the euro has been able to hold its head above water. Many people were predicting parity by the end of 2016, and that did not come to pass. Directional is a play. Unfortunately, it has ended up towards parity. Longterm, i think it could very well break parity. It is not completely unforeseen for that event to take place. We have a couple of political events this year for the eu. Depending on what happens in france, the market seemed to take the italy referendum a little too lightly, so i am a bit confused about that. Inwe see populist movement the eu, we could break that parity. To get we still want into the implications for this part of the world. We will widen that out. You some preview of what is to come on the program. We talk about the biggest risks this year for the middle east region. Will oil prices weigh on growth . What will happen with that fiscal retrenchment and how will it weigh on sentiment . We will get you that story. This is bloomberg. Rishaad welcome back to blommberg markets middle east live on Bloomberg Television and radio. I am Rishaad Salamat in hong kong. I am yousef gamal eldin. You were always particularly concerned about the execution component of the reforms we are seeing across this part of the world. Prices fell, they did these reforms. You are not convinced yet. Been, and it has is a perfect analogy for this part of the world, the oil tanker. You need to move these things slowly and carefully. Things have been moving fast, and with the new plan, how quickly can you effect it . How well did these changes come into play from a next occasion perspective . What are the repercussions of these new point scoring systems. These things around execution, the fact we had an enormous budget for the uae tells you there is positive hope and ability to execute, but on theirher hand, oman, prediction, they blew it out. They are coming back in this year saying they will have a lower deficit, but i feel nervous on whether they are making the reforms to bring the deficit under control. Bright spot is the for 2017 . Which asset class in particular are you keen on . Equities, bonds, egypt . When you look at the uae, it is a wonderful economy in the middle east. Yes, oil is down, but they continue to do things to get themselves up again and keep themselves competitive globally. Broader region, the story is on the debt side, huge issuances, some issuance good, but we dont want to see too much too fast. Nervous, what amounted to come back to the market with, early q2 . Nervous about other markets issuing. Kuwait, does it need the debt issuances . That is a topic for discussion domestically. They have significant surpluses and cash reserves come up but again, thats part of creating a curve for their corporate sector. How much of an issue is that looking at the currency . Under pressure in your view, and how do they defend them with a weaker oil price and the debt issuances as well, which is part and parcel of it . Things oute of those there, so everyone talks about it, but i dismiss it because when you have so much of your revenue and so much of your cost inis, both also denominated dollars, what about devaluation . This is one of the things i would love to see change in the next 1020 years, i would love to see more manufacturing on the ground, and it is good to see that dubai is driving industrial strategy. And less your labor force is happy by being paid by local currency, that they have to repatriate, then what is the point . Rishaad we have to leave it there. Wow, x1 has netflix . Hey, drop a beat. Show me orange is the new black wait, no, bloodline how about bojack, luke cage oh, dj tanner maybe show me lilyhammer stranger things, marseille, the fall in the same place as my basketball . Narcos, fearless, cooked the crown, marco polo, lost and found grace and frankie, hemlock grove, season one of. show me house of cards. Finally, you can now find all of netflix in the same place as all your other entertainment. On xfinity x1. Anything with a screen is a tv. Stream 130 live channels. Plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. It is 12 30 p. M. In hong kong. These of the first word headlines. Of the chinesey economy in the new years shows strengthening. Came in atreading 51. 9, head of predictions of 50. 9. Chinas latest official pmi data indicates a strong into 22016 with the economy continuing to stabilize. December, a high. Shrunkmanufacturing has as the governments with the draw of high denomination bills hit the market. 49. 6 in december. I continued slowdown could strip india of its position as one of the fastestgrowing Major Economies and poses threat of a backlash. Koreas Container Lines the pair have, been reassessing their future after the failure of hentgen shipping. Hanjin banks former coceo restarting his career. Joining cantor as president. He stepped down in june 2015 amid mounting regulatory and legal problems. Out of work for cantor london. Kim jong un on says north korea is close to the launch of an icbm. He talked about his regimes military achievements. Showsuth says the north no signs of an imminent launch. Present elect donald trump says he could meet kim for nuclear talks. Tweeted that a north Korean Nuclear weapons will not happen. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad welcome back to blommberg markets middle east live on Bloomberg Television and radio. I am rishaad slot in hong kong. Yousef lets pick up the conversation on singapore. It is the first real set of data providing a surprise, the economy growing faster than expected in the Fourth Quarter, but there are copy outs. Sophie kamaruddin has the details. Expectations were for the slowest growth since 2009. The economy grew at the fastest pace in eight years with all three sectors posting growth, and manufacturing the hero of the Fourth Quarter helping that rebound. This is a sharp turnaround from the 2 contraction in the previous three months. The overall performance did surpass estimates. Officials had forecasted a range 1. 5 gdp growth, and this year, 1 to 3 . We will get preliminary numbers in february. Some expecting a downward , and an easing at the april policy meeting. December pmitting numbers tonight, expected to show a small contraction to 50. 1. Singapore of economy is gathering some steam, but the Property Market remains a concern after those cooling measures. What do the numbers tell us . Cooling measures for the property space were introduced seven years ago, and the government in singapore not looking to left that anytime soon. They dont want to overheat the Property Market. This morning, we got an estimate and from official showing a continued drop in private home prices. 2016 the whole year down 3 . ,his is a Third Straight year home values have tumbled 11 from their 2013 peak. Vacancy rates are at the highest and 11 years. When it comes to the way the Property Market has been faring, softer inflation in singapore over the past year alongside the weakness in energy prices, but looking into 2017, we are anticipating more pressure on prices and rents given the property curbs. Yousef might be a buying opportunity. Thanks for that. Lets cross back to this part of the world and iran. Is looking to attract 100 billion dollars in Foreign Investment to bring back , a recurrentdustry theme for 2016. 29 Oil Companies have been approved to bid and upcoming tenders. Iran has been discussing oilfield tenders for over a year now, but how would they move the situation forward with the potential of a Trump Presidency disrupting everything . Morning and happy new year. Trump presidency will be a big issue for 2017 for a lot of industries, and specifically for iran. Tothe Campaign Leading up his election, he was critical of the iran deal that the Obama Administration made a year ago. There is a lot of push in the u. S. For additional sanctions on iran over terrorism financing. Again, the Nuclear Program as well. So how that shapes up will be a big issue. Rex tillerson is an oilman. He has not been a fan of sanctions as a businessman. We will have to see once he gets into office of and has sanctions as a tool how he decides to use that. Trump has been critical that u. S. Companies cannot invest in iran, while foreigners are able to invest, european companies, asian companies, russian companies, so there will be a lot of parts. It seems like the prevailing wisdom from analysts is that trump will not be favorable to he wont, and encourage investment, and there is a lot he can do without trashing the deal that will make it harder for companies to invest in iran, so that will be a hurdle Going Forward and we will have to see how that policy forms this year. Rishaad what is this list of names, the Companies Interested in iran . What are the challenges for its industry . , as you9 companies mentioned, and we see a a lot of the same things we have seen already, signing preliminary contracts, total, russian ,roducers, japanese countries chinese countries like cnpc. Asia is a big market for a run, and they want to for iran, and they want to get their hands on additional resources. Total and shell had been there developing gas. They have signed memorandums of understanding to study fields, but those are not firm deals yet. Getting back to donald trump, these preliminary deals get those companies time to get in, look at iran, kick the tires, and wait and see what the Incoming Administration does in terms of policy. Beenf the iranians have trying to get the Oil Production back to presanction levels. They are currently pumping what . Takeave opec agreeing to 1. 8 Million Barrels a day out of the system. It does not seem to add up. These were two victories for iran, the increase in Oil Production as they ramped up Oil Production as prices were coming back, and in that opec deal they reached at the end of last year, iran was not asked to cut. They were able to increase production by another 90,000 barrels a day, getting closer to that presanction level. These deals are longerterm deals for the countrys future, so we are looking at projects that would start bringing oil back onto the market towards the end of the decade. Opec and many analysts say that we have not had investment in the last 23 years in the oil industry, and that has taken out a lot of potential supply we will need towards the end of the decade as demand increases, so iran is looking to get back into the market and hit that spot when demand increases. The investment now wont hit that opec cut this year. Yousef always great having you on the show. Staying with energy, the rise in oil prices has had an immediate benefit for the middle east. If you look at borrowing costs, they fell more than a quarter him a helping exploration and production plans. Then are the good morning. It is a function of different factors. The first is higher oil prices. They have increased 53 . This allowed Oil Companies to use revenue to Fund Operations and exploration rather than new loans. Loans during the second half pretty much disappeared. National Oil Companies, their costs have declined after lower oil prices. Asy squeeze contractors efficiency gains came in. The most significant factor is a bunchernments issued of sovereign debt. Saudi arabia had their issue at 17. 5 billion, kuwait may come up soon. Ended the siphoning of cash from national Oil Companies that would have been the traditional route for governments to plug deficits. See Companies Like aramco and others think about ipos, this might have changed the way a payor for as sovereign debt and liabilities, and now Oil Companies are more professional and can go out and decide when they need loans based on Market Conditions rather than yousef , whatd looking at this are people saying about the year ahead . What is the outlook . 26 last yearown compared to 2015. Its also important to remember that last year was this secondbiggest year in terms of , sos in the region 20152016, a third of all loans that bloomberg has tracked have been issued in the last two years, and this encapsulates that oil prices are down for these companies that were once cash rich. They do need the money. The trend is shifting towards sovereign debt, so fewer energy loans, and with projects delayed or shelved, we will see less loans going towards Oil Companies and other Energy Producers in the region. Rishaad thank you very much indeed. Stability. Seeking we will speak with angus blair about whether 20 17 will be a fruitful year for egypt. Yousef welcome back to blommberg markets middle east live on bloomberg tv and radio. I am yousef gamal eldin. Rishaad i am rishaad slum it in hong kong. Oman said to be preparing a bond sale, seeking to plug a budget deficit caused by low oil prices. They have sent invitations to banks to arrange the sale, and responses are due this week. Last month, they said the government would like to raise 2 billion through bond sales this year. A shareholder to develop a residential project, 20 million square feet, a 1400 , a shopping tall, apartments, and hotels. Rishaad dubai insurance stocks on the up. Insurance and others gaining 15 monday. They are the main contributors to the indexs advance. These are rumors of mergers and acquisition, but nothing has been confirmed. Bloomberg has been asking some of the biggest newsmakers in business and finance about the risks they see ahead in 2017. It is not surprising that geopolitics is looming large. The biggest risk i see in 2017 are two. First, the expectations being so high and the inability of government to move as quickly as expectations might need. All president s come in with great ambitions and expectations. Expectations being lowered is a big risk. The weakening of democracies in europe and the united states, a wave of right wing populism that will sweep away the pillars of democracy if we are not careful. If north korea acts out to get attention by an attack on south korea, that is a risk. India and pakistan, the struggle between them is heating up, death on both sides, both Nuclear Weapons powers. Reallybiggest worry is donald trump makes good on his campaign promise, which is really starting to impose restrictions or tariffs on trade. Other than that, 2017 World Economic policy are on the progrowth side, so i am quite optimistic about 2017. Thannk it will be better 2016, and asset prices will be higher. The overall Business Environment and political environment are things we watch closely. Those could have a big impact on the economy one way or the other. The other is obviously any time there is any kind of exogenous terrorist event or things of that nature, that could impact Consumer Confidence around the world, so we are always doing that external look at the Business Environment and trying to understand those types of things that would impact consumers, impact government approaches, regulations, things of that nature. Is theink there possibility of a black swan, some Foreign Policy or economic crisis we dont anticipate today. George w bush expected to do many things and then 9 11 happened. I think the unexpected is the biggest risk. Of the those are some biggest risks for 2017, and a lot of that ties back to the strong u. S. Dollar. That certainly gives they centralbank Bank Something to think about. 1. 7 billion in november, up by a third from the previous month. Let me show you this chart here. This will show you the egyptian pound. To october 2015. You can see the first tiny circle, the first in violation in march, and this is the spread between the official rate and the 12 month nondeliverable forward. Off thesee that big pop big devaluation in november, and the spread of little bit above to egyptian pounds. Lets get more on the story with angus blair. Good to have you on the show. 2017, is the egyptian pound hold steady, will the Central Bank Policies be successful given the uncertainty from abroad and domestically . Banksically the central and the government are waiting to see if foreignexchange revenues are rising. Revenues are pretty flat. Tourism looks like it is turning around at last. , highe capacity increased occupancy and hotels, so tourism has begun to pick up. We need more than that, particularly exports. It is quite likely we will see shortterm pressure on the currency. Because of the delays of the central bank in moving the currency, they have moved the currency in june rather than november we would be talking about 14 per dollar rather than 20. Yousef what is a new administration with donald trump going to mean for each ofs prospects this year . What kind of risk does it present as a whole . It is interesting that already presidency see and donald trump have met. And donald trump have met. There is an effort at the top level to ensure the relationship with america will be better than the Obama Administration, so interesting on a variety of levels. On a personal level, i think they want to make it work. Economically, im not sure there will be a particular difference in terms of trade. Much of that will have to come from egypt itself in trying to increase exports. A mixed bago be because much of it depends on global policies coming out from the trump administration, not just the personal level. Else, we wille have to wait and see how it pans out. All right, we will see how it plays out. Live fromr joining us cairo. Still to calm, commodities, and specifically iron ore. 2016 may be at the risk of a meltdown. We will tell you why exactly. This is bloomberg. A solid iron ore saw rally in 2016 with prices rising 80 , but those gains could melt as supply looks to overtake demand. Why are they predicting the rally is likely to go in the other direction . Well, as you say, extraordinary performance in 2016 from iron ore, rallying 80 . The fess in this and in the market is calculating the factors that fueled of that performance last year are unlikely to be sustained this year on the demand side. We see steel output in china, the biggest iron ore and porter, sustained by fiscal stimulus and china. There are doubts whether that will persist through the year. Have been mixed. On the supply side, there is a shifting landscape. We saw the first signs of real restraint from the biggest suppliers last year. Now in a matter of weeks, we will see the largest iron ore exporter opening their new mine and begin shipments from that operation. So we will see the arrival of new tons on the market, and it is that combination of and certainty over demand and the arrival of new supply that is fueling that pessimism about the outlook for iron ore this year. Rishaad quickly, there is nothing to stop these forecasters from being wrong, and what could make them be wrong. How could they defy expectations again this year . They defied expectations last r, and the issue this you this year will be the supply side will they continue to show discipline and keep the export market and balance. David stringer, thank you very much indeed. That is it for this tuesday edition. That is it for Bloomberg Markets middle east. Yousef we will have all the top stories from around the world next. This is bloomberg. Women update of our top stories. The chinese economy further strengthening. Of manufacturer up, ahead predictions of 50. 9 . The highest in nearly three years. Totrong and 2016 end 2016. Of 2065 was in may halted due to abnormal fluctuations. This is