four decades. will america become the world's number one producer in 2018. that thee week began saudi prince had been freed after more than two months in detention in rhiaad. he was allowed home after reaching a settlement. he will remain at the helm of his company. i goting his release, more from the story. reporter: we heard earlier last week that they want to wind the whole thing down. they said that 90 people have been released, and they have got 95 people waiting, either to be and taken to the prosecutor or released. over the weekend, we had the release of these very high-profile names. this was the one that captured people's imagination, but there were a couple other business -- billionaires. yousef: two key names. the head of the middle east broadcasting, a very powerful --ure, and the bill enyart the billionaire founder of one of the largest retailers. making it clear they will wind down as they had indicated early on. with the key people on a more applicable -- on a more amicable level, they are avoiding the courts. riad: i think that is partly what was behind all this. they did not necessarily want this to be aired out in public. they took these people to the ritz. it was also a bit of a revolving door. some people left, some people were brought in. some people were released without having to admit to guilt. hasink one of the issues been the question of transparency, and that has been the biggest criticism of all this. it is all well if you want to attack corruption in the saudi arabia. most people find that is a good step to take, but to do it this way, it was unclear what these people were accused of. it was never formally announced, and now it is unclear what is the settlement deal? they can retrieve more than a hundred billion dollars from this. yousef: there is no clarity on if there is a settlement term. has been away since the first week of november and says it was a misunderstanding. riad: he says there were discussions and they were ongoing and be will resolve it. when he was talking to reuters, he said it was 95% resolved, and the next day he was out. we had other officials saying you do not find a settlement agreement without some recognition that something had been done wrong. there was a slight difference in narrative going on. that is really the question, what exactly was he accused of? what was the settlements, what did he agree to? they are not publishing anything on these deals they are doing. yousef: thank you for stopping by. that is our executive editor for the middle east and africa. let's bring in a founding partner at franklin templeton middle east. welcome back to the program. news, your reaction first off. it is another phase of this anticorruption purge, which is agenda,a structured which has been very encouraging, very well received by the markets, and was designed to be able to attract money into the country. structured reform initiative carries some risks in the way it is carried out, i think we have to categorize this as something broadly positive and i suspect this will continue be inforward, and it will general very conducive to attract money to the kingdom. yousef: i look at what is happening with equity markets, and we put this up on a charge for help saudi stocks have performed since the beginning of the corruption. in early november, we highlighted where it all began. the saudi stock market has rallied 7.5% since the beginning of the perch. the question is, how much value in certai -- in fixed income is locked down? for a lot of the key figures, avoiding the courts, avoiding a mud fight. dino: you have a big ketchup upry this -- a big catch story broadly speaking. beeneaction to that has across several fronts. there was a massive direction with spending. wasof fiscal consolidation opening taxes, opening the markets. progressing with the msci. there is a lot of very good momentum, and the oil prices certainly helps investor confidence. there is a lot of good news justifying the momentum we see in saudi. like you said, i think the corruption perch, while it carries some risk, is something that is constructive and positive. i think it reinforces or supports the argument. yousef: the director of the -- theyast and africa should not underestimate the anger among the saudi elite and there is a risk of flight. dino: there is a risk, but we have been here for 20 years, and we have never seen anything like what we have been saying the last couple of years. this feels like a new paradigm. next, the introduction of bac has not led to consumer confidence. we hear from the ceo next. this is bloomberg. ♪ yousef: welcome back to "best of bloomberg markets: middle east." the region's leading shopping mall and leisure company released their 2017 earnings this week. group revenue increased 8% to 32.2 billion. ae company describes challenging business environment. i spoke to the group ceo. >> i think the question as what has not been challenging? we are very happy with the performance in 2017. we have seen very good resilience. year of been a volatility, as we know. thingsthe most important has witnessed the valuations. we have grown around 40% and 8% bottom line. when you look at the performance , we are actually doing very well. yousef: what kind of growth do you expect for the next year or two? do you expect adjustments because of the challenges that do exist in the reason -- in that the region you operate in? >> what i can tell you is i think 2018 is going to be a good year. we have seen in the region a lot of structure changes that have been put in place by markets, egypt, saudi arabia. a lot of the reforms have been actually been activated, which is very good news. as we think it will have a good impact on visitor performance. we have witnessed in 2017 the instability in the region, the at in iraq or elsewhere.. all these things we expect to be behind us and will allow us to plan 2018. yousef: you have a great finger on the pulse for consumer confidence and spending powers and general trends. how much damage was done with the introduction of b.a.t.? and where do you see consumer confidence and spending going from here, in dubai for example and saudi arabia as well? >> i would not say that you have seen damage on consumer confidence and spending because of the 80 i think we managed it quite well. outad very well thought strategies. we have taken in as much as possible of the impact of b.a.t., and it has had a very good impact. yousef: talk to me about some of your expansion ideas for the next few months and years as well. any new markets you are considering? >> we continue to grow in the region, and that is very important for us. , we continue to develop in saudi arabia, the uae, dubai or the other emirates. as well as in egypt. increasingbusiness, spending in the region. i think we had a fantastic year ahead with the opening up the saudi market to the cinemas. we are very excited about what lies ahead and we are ready for it. yousef: you also have quite a bit of financial muscle, and you have not shied away from investing and making a few acquisitions. is there anything on your radar at the moment? you are always up to two nest it -- you are always opportunistic. >> we did the 2017 declaration in oman. we look at opportunities in the market. yousef: would you say you would be more aggressive and acquisitions? >> we would be as we were in 2017. lines. along the same in terms of the risk that exists, because we just heard the state of the union from president donald trump, he did not mention a stronger or weaker dollar. what does that do to your business or bottom line? do you prefer the weakening that we see? >> we have seen the impact in the past years. i think the region has taken a number of things into account, and there is kind of a comeback with commodity spaces. i think president trump has been delivering both in davos and the state of the union a different kind of speech that we have not been used to. the track record is starting to materialize. yousef: in terms of financing, any plans to rollers -- to release further bonds? >> always. yousef: is that a change from last year in any way? >> no. yousef: in terms of risks on your radar, what are you a little worried about? is it the geopolitics clearing up even further? >> we have seen that in 2017. yousef: you have the ongoing iran-saudi rhetoric. it has been a tough year for geopolitics. >> i would say two things. one, the geopolitics has been in sayregion quite -- i would unexpected from time to time. there is nothing new. it is not something that is expected, but we have taken it in and are dealing with it. i think what is important, and where we are also optimistic, i think the very important reforms happening in saudi arabia are coming together and we are starting to see very good results there. egypt is very positive. yousef: what is the highlight of the gulf for you? >> in egypt, we will have the presidential election. a lot of reforms happen, so egypt is back in the right track and we hope things continue. yousef: anymore appetite to push further into africa? >> we are in kenya and have plans to push to east africa. next, counting the cost of the qatar crisis. we hear from the ceo of the tar commercial bank and why he thinks the this is bloomberg. ♪ standoff will this is bloomberg. ♪ lead to higher funding costs. "best of bloomberg markets: middle eas yousef: welcome back to "best of bloomberg markets: middle east." the group ceo of qatar commercial bank said that funding costs will probably rise as a result of the saudi led boycott of the nation. most investors have come to terms with the situation and have moved on. he spoke to me as the bank announced a 20% rise in four year net profit. >> i think the fourth quarter reflects the efforts that have been made in the last 18 months to reshape the bank. if you look at the fourth quarter earnings, we have made $344 million in profit. the previous quarter was averaging about $90 million. basically, if you multiply that somethingyou get o better than what we are at right now. that will be the result of the reshaping we are doing. it is currently low, but will come back as we have finished the cleanup of our legacy. yousef: do you have a range in mind? >> look, i think ultimately the market for qatar is at 15%. our goal is to reach the market averages and outperform them, but that is over a four-year horizon. yousef: the public sector has been an important driver for growth for a lot of investors in qatar.. where do you see growth going for you for the remainder of the quarter? >> i think for the first time in the last three years, commercial bank has outperformed the market in terms of loan growth. we grew at 14% loan growth versus 8% loan growth to the market. we have been historically underweight in the public sector, and this is something we are remedying very quickly. last year, the public-sector group 45%, and we continue to see this as a key area, both but growth opportunities, also diversification of our loan book, more balanced sector was. yousef: it is a very competitive sector, isn't it? i just want to jump in here, in terms of how this perhaps sets the stage for more m&a activity. there are probably too many banks for the qatari banking system. >> i think in terms of the competitiveness, we are seeing good opportunities because the government is committed to building out infrastructure for the world cup. the blockade has created opportunities as the government creates more self-sufficient opportunities, manufacturing, logistics, etc. in terms of the banking industry, there are a number of very good banks in qatar, and 3 -- mergerk of between three major banks. doneve to see that one get first before anyone talks about consolidation in the sector. that is still a work in progress. yousef: soap you would not say that commercial bank is interested in getting a slice of that m&a action at some point? >> i think whatever happens in the environment, we first have to make sure that we are very andng in terms of capital profit generation, because that is the best position to be in when there is m&a activity, because it put you in much stronger position. that is my primary focus. currently, we are focused on ourng sure that investments in turkey and oman ue. that yo haidi: yousef: give me some insight into how you see funding and funding trends going from here? aa ratedremains a country. there is tremendous appetite for qatari paper, in asia in particular. we did a roadshow last year, and it was quite interesting to see. they put a crisis in the context of their own tracy's. in -- of their own crises. you obviously are going to see a slight increase in our funding costs coming from the blockade, but qatar's fundamentals remain strong, so there is no shortage of demand for the paper. i expect a 20 basis point increase in overall funding costs arriving from the blockade, but there will be demand, particularly as people get more comfortable.if has been about 7, 8 months since the blockade, and qatar has shown to be resilient. the economy continues to grow. that is also mitigating any risk. yousef: we understand that you have extended talks with an investment company to sell your stake in the united arab bank. it is valued at $280 million. run us through your thoughts on when you see that closing, and what you would do with the capital. >> we have extended it for a month, which means they are interested in strong discussions happening right now. if we successfully conclude it come up we will deploy our capital into our strongly growing qatar business, and also turkey. turkey has historically underperformed for us. and we changed the team, see an opportunity there to grow the business into a significant contributor in terms of profits over the next three years. that will need capital. that is helped by the strong linkages between qatar and turkey at the economic level, too. yousef: just briefly, as you look to the remainder of 2018, are you confident or do you expect that all any progress in resolving the ongoing standoff with the rest of the gulf? frank, i do not have a crystal ball on that. what i would say is the qatar baton ami has adjusted and shown its resilient in the banking sector. we are planning on the basis that if it were to continue, we would plan accordingly. we see that as now more or less business as usual because we have adjusted to this new equilibrium level. we are planning that it may continue, but if it comes as a result, that is great news for everyone. yousef: up next, exploring america. why u.s. shale has stout -- saudi arabia considering his firstborn venture. we hear from the ceo of a petrochemical company. yousef: welcome back to "best of bloomberg markets: middle east." of a company told bloomberg that he is considering investing in petrochemical production in the united states, based on shale gas. it would be their first foreign venture, as the firm faces costs at home. i spoke with him. >> i think it is going to be sustainable, at least for the first half of the year. growthectation is the is continuing between 3% and 4%. inh the shortage of supply methanol in china, with the closure of some of the minds, i think it is making some in balance in the supply and demand globally, despite the new capacity that came in from the united states. there could be some decline in the growth or decline in the prices in the the second half, but that is not going to be material that will be impacting the business. yousef: i have been speaking with some of the analysts, and one of the themes was how you have gone about cost efficiencies. any more on the table for the next few quarters? ahmad: definitely. i think apart from the product prices in 2017, we went through a lot of restructuring and keep functions of the company. that translated into earnings and savings. that is going to continue in the form of not necessarily restructuring, but efficiency and creating values, particularly in the market and in shale. yousef: give me a sense of the changing landscape in saudi arabia. the local story, how is that affecting your business? especially with the government coming out with a slightly expansionary budget. >> i think there are mixed messages coming out. in the business and the industry in general, it is the trust and confidence in the business into the infrastructure in a saudi arabia, and that is definitely on the positive side. the transparency is important. definitely on the other side, there are fees, especially on families employees and , energy cost increases. these definitely have that impact on the business. not significant as much as the retail business. what we have seen in the petrochemical two years ago when it government increased substantially, it was a problem. but it was a wake-up call for our industry that we have to change how we were running our business. we have to be more innovative, more creative in saving energy run on a able to financial model or business case model. yousef: where is the next big opportunity for you? what are you excited about? to me, i am a strong believer in growth, and we have demonstrated that in the last 15 years. we have grown considerably. in saudi arabia, unfortunately withrowth is very limited the lack of basic products. there are some opportunities, but we have to be very careful. our shale gas, and we are looking into this area. it is not going to be easy because we don't know the landscape or the business targetingbut we are the u.s. and downstream and to saudi arabia. yousef: how aggressive are you going to go with your expansion? are you setting aside a lot of cash for that? wouldn't say a lots, because if we decide to go into we have tostates, party with a u.s. company, as this will be our first international company. we have offices in europe and asia. i would think it is not going to be significant to the point have to go in borrow more money. facilities atside that time. yousef: they are purporting -- proposing half the real a sh are. some of the ceos have talked about rationalization, the high dividends of the passer not necessarily sustainable going forward. is that a conversation you will be having in the coming months as well? dividends slightly lower? ahmad: i think we had that discussion a year ago and we had it six months ago. we have established probably a high expectation last seven years for our shareholders. we are looking at 12.5% of shared value systemically year-over-year until we were hit with higher gas prices, lower products, and 2016 was the first year since we went public that we did not distribute dividends. this year, or last year, i think we realized that and started looking into more balanced dividend policy. t forannounced they have i 2017, and our earnings will be higher for the next few years. yousef: up next, we speak with a ceo about the cooling company's red-hot profits. this is bloomberg. ♪ yousef: welcome back to "best of bloomberg markets: middle east." dhabi-based company announced a 9% rise in net profit. investors will get a dividend, a 23% jump from a year ago. i got more on this with the ceo. >> following through on the strong results from 2017, we continue to focus on the region, uae, specifically abu dhabi and growing our operations in the kingdom of saudi arabia and the new plants we are building. yousef: are we looking at 10%?%, -- 8%, 9%, jasim: the fundamentals are very strong. we have 92 plants across the region and we are positive about these results and it is quite sustainable. yousef: there has been a shift in ownership for the company. they took a sizable stake in that the business. how does that change things for the roads ahead for you in terms of having them on board in any or theshape, developing direction of the business differently? jasim: we are glad to have the biggest energy company in the world owning a sizable chunk of the company. there are opportunities for synergies. they have been operating across europe and asia. on top of that, we look at opening doors potentially outside the gcc. yousef: what kind of markets would you be looking at outside of the gcc? my understanding is that you are looking at markets that it is a bit of a novelty. can you run us through what markets would fit that bill? historically, the market in the gcc has been quite big for us. a strong shareholder able to open doors, we are potentially looking at markets in north africa and india. yousef: would egypt be an option? anim: absolutely, egypt is option we are looking at now. that would be potentially 2018 or 2019. yousef: there is another way of growing your business, and that is in organically through acquisitions. always in the market looking for opportunities. we finalized an opportunity in in7, acquiring a plant abu dhabi. what kind of valuation would that have? marketit depends on the and the taker. it is hard to give you a number. this yearuld you say you are more keen on acquisitions? jasim: absolutely. we are always keen on arabiations, and saudi also is a potential market. acquisitions, we are building existing plants in saudi arabia. yousef: you have quite a sizable market share in abu dhabi. will we see more consolidation possible in the next few months? is that a pocket of opportunity? jasim: in abu dhabi, we are the biggest player. andave 70% of the market, there are smaller cooling providers in abu dhabi and the uae. we continue to look at that. yousef:, u.s. oil production -- 10 about $10 million million barrels a day. will america become the number one producer? we will discuss that next. this is bloomberg. ♪ yousef: u.s. oil production surged above 10 million barrels a day for the first time in more than four decades this week. the milestone came on the heels of a report that says the u.s. is poised are explosive growth in oil output, which would put -- push it past saudi arabia and russia this year. i got more for the managing director for middle east and africa. >> the cartel is still the cartel. opec has distant -- has demonstrated they can still work together. 12 months,r the last they have demonstrated the abilities to head in the right direction. but the interesting story about oil at the moment is everyone is getting excited because of global growth. it is a demand story that you could argue will continue to drive commodities. not just oil, but commodities, up. which creates the inflation risks we see coming this year. yousef: you are not worried about more supply coming out of the united states? hangir: for the moments, we all anticipate what happened after the last few years that shale would come back. you see a lot of that if you look at the high-yield market that our team looks at all the time. you see that the energy in the shale sector will reemerge back. at $70 a barrel, that technology, the incentive is there to cap these resources. can we stabilize at that level, that is the bigger question. a look at your median forecast for the second quarter at about 68 dollars a barrel. that has a major impact on this region. you just came back from sin -- from saudi arabia. walk us through your experience on the ground and where you see pockets of potential opportunities and risks as well. jahangir: the purge is coming to an end and i think they achieved a lot of what they set out to do. they say they got 107. have they reestablished the rule of law? done, thereess is debate about what is going on. when you are on the ground, there is definitely a sense of fear, or respect come up for the way things will go forward. that comes from the uncertainty. now the rule is following the rules more. yousef: it could be positive long term. i think it will be definitely positive long-term unless it leads to something else. ,he thing i like on the ground and our debt team does this. i will give you a postcard from saudi. i love the fact that when i arrived at immigration, people are welcoming. that used to be a system down a few years ago. that is very welcoming for foreigners coming in. when i come in, a year ago, the hotelsaudi's were at my check-in and i was spending 15 or 20 minutes there. now they say, welcome back. they have been trained, given opportunities. i think we see another statement that is localizing certain sectors of the employment market. they are putting their people to work. it takes time but there is upside. yousef: what is the best way to get exposure? jahangir: i think a lot of clients are maintaining caution and neutrality. driven seen a pickup primarily by the rising or oil prices -- by the rise in oil prices. you see private investors and corporate looking at the market and saying, how do i cap this? the reform is playing out and it is playing out at the underground level. it is impacting humans on the grounds, and it is amazing how quickly that moves. yousef: with oil prices recovering and the u.s. dollar hovering around three year lows, where does that leave gulf credit? franklin templeton investments say they are chronically underweight. >> last year was a record year in terms of issuance. human -- you mentioned a on thecant dollar bloc fixed income landscape. our expectation is we should have another $80 billion or so. this is a significant part of the landscape. we have done a lot of research. whether we are looking to maximize returns or minimize risk, we have discovered that adding a significant proportion of debt reduces risk. we are obviously very excited about the prospects for the region. yousef: we are looking at a few graphics as well that we put together on the basis of your research showing the composition of some of the outstanding emerging market allocations. you say chronically underweight. why is that? events because of happening like the anticorruption probe in saudi arabia? with that noise gone, could not bring back some of the money? is it sentiment or something more fundamental? dino: i think it is more fundamental. the news flow is difficult for some people. you mentioned the corruption but generally speaking, you have negative geopolitical news that comes out of the region. there is a strong association with oil and prices are volatile. people think if you add debts, you increase risk. but the counterintuitive reality is that adding gcc bonds to a global fixed income portfolio or a region equity portfolio reduces risk, diversifies return, is recommended. historicallyot focused on fixed income in this region. they seem to be stuck in this no man's land. our hope is that with this wave , itssuance at this pace helps the region emerge as a significant bloc. we would encourage people to invest in the bond markets. yousef: what is the story from a corporate bond market perspective? it has been a tale of two stories. it has not been as straightforward as the other sovereign story. dino: in a way, it has been. this region has billions in debt outstanding. about $2 billion is in corporate or qualified government entities si-government entities. to access theable market have been the blue-chip companies. it tends to be the better credits. as we move lowered, we suspect we will start seeing more independent corporate's, more crossover, riskier names coming into the market. that is something we are quite excited about. yousef: it is not a homogeneous situation, because you have standouts like rain who are -- like bahrain who are at the week end of the story. dino: it used to be everyone is well off. everyone has high credit ratings and surpluses and reserves. today, you have weaker credits. somewhere in the middle is saudi arabia, who is on a much stronger footing. it is definitely on an improved trajectory. and you have strong credits like so thered even qatar, is some risk given the geopolitical situation. we are quite optimistic about that. yousef: that is it for this "best of bloomberg markets: middle east." we have a busy week ahead in the region and we will be right here at the start of the trading week in the gulf, sunday morning at 8:00. join me then. this is bloomberg. ♪ ♪ >> brilliant ideas, powered by hyundai motor. ♪ >> ♪ i-d-e-a, ideas ♪ ♪ narrator: he keeps inventing new, amazing experiences. narrator: an assortment of video, color, and soundrk