♪ the $6 samsung blames billion note 7 fiasco on a irregular batteries. >> trump team offers alternatives to his tax returns. a loyal trades above $55, producers saying supply cuts are having an impact. a kuwait stocks are on bradley, up more than 15% since the start of the year.

will that continue? yousef: it is 8:00 a.m. across the emirates. i am yousef gamal el-din. i am shery ahn in hong kong. it seems to be that seeking safety is a theme for the week, bonds rallying, investors , soing safety, chasing debt caution seems to be the theme, but not necessarily the theme for the last couple of weeks. yousef: i tell you what, we have heard whispers about trump trade unwinding, and yes some asset classes reflect that, but if you look at the bigger picture. story, riskells the on, risk off, one of my favorite functions on the bloomberg. as you can see, we are firmly risk on. greatof volatility, a

index, a global metric. this looks at everything from currencies to volatility to solver and yields, so an accurate reflection of risk sentiment. at the moment, on the upbeat and setting up the broader story that the trump trade is in tact, at least as we speak. sentiment. let's tell you how the middle east markets closed. , ani and abu dhabi interesting picture as earnings trickle in. , downside indubai abu dhabi. saudi arabia up .3%, a therkable recovery after sales giant found itself under pressure. threeextending losses, a .7% slump, down .7% there.

monitoring the turkish lira after the parliament votes ,ver the weekend, reaffirming confirmed the power of president erdogan. down .3% against the greenback. shery: right. pictureeeing some mixed are crossed in asia, japan losing ground on a stronger yen, but other markets seeing some resilience, so let's get the details rom juliette saly -- from juliette saly. >> we are probably likely to see some mixed movement as we await more stimulus plans from president trump. he says markets are waiting for trumpvidence that donald will deliver on fiscal stimulus and deregulation, so markets in a holding pattern. for itsn come on track

best close since june 2015, the stronger yen weighing on the nikkei, down by over 1%, but upside in china, the shanghai composite up .3%, flat on the hang seng, australia weaker by .8%. some of the big market movers in the region today, toshiba rising almost 9% on a report that its chip business is drawing interest. , but risinglat after a consortium move to buy part of ping an. look at this big fall in 17%, the ceon saying he is embarrassed over the profit downgrade as he leads the company after seven years at the home. the japanese yen of course stronger today, 113.63. so much.ank you

samsung electronics has confirmed faulty batteries cause of some of its galaxy note 7 models to burst into flames. rosalind chin as following this for a spirit samsung is blaming it on an affiliate. rosalind: that's right. the batteries were long suspected to be the issue with these note 7 phones, overheating and catching on fire. there has been a lengthy investigation, samsung saying irregular size batteries caused overheating and fires. were made by a samsung affiliate, samsung sdi. electrodes in those batteries came into contact with one another. they found defects in design and manufacturing phases. providedsays we have the target for the battery specifications for the note 7,

and we are taking responsibility for our failure to alter me identify and verify the issues. they have taken several corrective measures to make sure this never happens again. insung had invested a lot finding out what happened to these batteries. did their own investigations in addition to several agencies, and these are the results. the financialbout cost of the note 7 fiasco p at how much will this impacted the balance sheet? rosalind: samsung has not given us details on that right now. estimates have come in saying million,upwards of $6 because the product was recalled . they also had to pull the note 7 line completely.

samsung itself has not done too badly. the company actually posted strong results, the earning side showing the biggest operating profit in three years at $7.8 billion. that the estimates, and we will get more details on how the division is doing tomorrow when samsung posts fourth-quarter results. yousef: all right, let's check in on first word headlines. president trump's pick for secretary of state looking certain to be confirmed as key republican critics drop opposition. lindsey john mccain and graham say they will vote for rex tillerson despite concerns about his relationship with russia, sang the new president deserves the benefit of the doubt. arabia's energy minister saying opec and other producers have cut supply by 1.5 million

barrels a day since the first of january, more than 80% of their collective target under last year's deal to stabilize prices. best agreements producers have ever had. a meeting in vns agreed on monitoring to ensure 100% compliance. saudi basic industries lying out shells share and a petrochemical business, shells third exit in as many years. shell has been reviewing its rolein in the region. to end the fighting in syria begins monday with russia, turkey, and iran holding talks in kazakhstan. the knighted states been mostly out of the loop. the u.s. ambassador will attend the talks, but it is unclear if

the groups will meet. covered, 2600rld journalists and 100 20 countries. you're watching bloomberg. ♪ thank you. donald trump's trade talk got talker in -- tougher in his inaugural address. he sits down with theresa may this week to discuss they post-brexit deal. kathleen hays in hong kong with us. great to have you here. president trump, still sounds really weird, what did he say exactly that field this anti-trade fear? >> it's great to be watching all of this from afar. it isn't specifically what trump said. it's the fact that when you heard him on the campaign trail talk about trade and representing u.s. workers, it seemed like campaign talk.

now he seems pretty serious. let's listen to just one part of his inaugural address that seems to demonstrate this. >> every decision on trade, on taxes, on immigration, on will be made to benefit of workers and american families. we must protect our borders from the ravages of other countries making our products, stating our companies, and destroying our jobs. website,he white house which now represents donald trump, right? he is the president. he is vowing to withdraw from , renegotiate nafta if he can't get a fair deal for workers, then he will withdraw. what you're going to see is the nafta impact, raising the

question of nafta impact on workers. you see nafta starting, then china enter the wto. meanwhile, the blue line represents imports from mexico , exports and imports have risen steadily between the two countries, so maybe nafta was not so bad entirely for the u.s., but what has fallen definitively is the number of u.s. manufacturing workers and china'she question of currency strategy, how much it impacted it. nevertheless, what is important for mexico is that 80% of their exports go to the u.s.. mexico asent of saying he will seek a respectful dialogue with donald trump guided by national interest. mexico meeting donald trump on january 31. for now, we will sit down and

continue this dialogue and maybe ak, letter hoping to keep things on track. yousef: theresa may talking about a potential trade deal with the u.k. how much traction is she making and what do we know? a white house a tells bloomberg news that they intend to lay the groundwork for a post-brexit trade deal. said publicly she wants to build on the special u.s.-u.k. relationship, not just trade, but national security. trump officials say they believe their talks with may ahead of the brexit vote will hopefully be more aggressive and help her in her dealings with the eu. australia is opening talks as well with the u.k., and as

theresa may says the u.k. is open for business, it looks like she's following up. yousef: let's continue that conversation from this part of the world. great to have you on the program. is trump going to deliver on the promises for fiscal reform and cutting taxes? if you look at what we have seen so far, false fema head, isn't it? >> i think he will make good progress on the promises he has made. the difficulty is knowing which ones he will really follow through on, cutting taxes, the potential for u.s. companies to repatriate cash, deregulation, all areas where we have good progress made. that, and beyond especially foreign policy and trade, it gets more difficult. i know the aggressive talk, but what we feel is more likely is a pragmatic outcome.

once you start engaging and trade restrictions, there is a big risk that you have retaliation. yousef: hold that thought. we will continue our conversation and egg into some of the earnings out of this part of the world and what that tells us about the economy, specifically the region's largest economy, the kingdom of saudi arabia. ♪ yousef: we will also talk more programer guests on the on the donald trump conversation, china, and the of the fact that western democracy could be flawed, one of the arguments being made. this is bloomberg. ♪

yousef: welcome back to

"bloomberg markets: middle east" live on bloomberg tv and radio. i am yousef gamal el-din. i am shery ahn in hong kong. strongly thaness 2016, the market looking for oil between $55 and $60. let's see how the government strategy is hang out. head of middle east research for credit suisse, thank you for sticking around. just got theire fiscal budget, but saudi arabia to haverically known difficulty when it comes to actual spending. the government has consistently overspent every year between 2000-2015. they have missed by an average of 24%. becausee only exception of low oil prices, but given the rebound in the price of oil,

there we go, do think we will see another time when saudi arabia goes back to old habits and puts reform on the back corner -- back burner? >> there is some level of spending to come back. last year was the first year on record when we saw that level of overspending disappear. it is reflective of the fact the government has a renewed focus on keeping expenditure under control, but with revenue picking up, the scope for that but ing to increase, would doubt it goes back to that 24% average. have had earnings from different sectors and saudi arabia, and this is the first opportunity for all abuzz to be able to gauge the health of saudi corporates after austerity measures have begun taking effect. what is your call as to well those saudi corporates are at

the moment? a lot of them missed expectations. >> i think you are seeing the impact of that austerity come into force, discretionary , saudig under pressure banks reporting higher aovisions, though that is not huge surprise because traditionally q4 has been when tend to have their provision higher than expected anyway, so i would not say a huge surprise. overall trend of earnings, q2 and q3, a solid quarter in terms of positive earnings surprise, and earnings growth has been under pressure, but you are starting to see earnings growth bottom out and improve, so from quarter to quarter you might see deviations, but the underlying trend, there is still a positive trend. we see non-oiln

revenue and saudi arabia start supporting the economy? >> that is ultimately the big question, how much success can the saudi government push on a non-oilrowing revenue base? the push will come beyond 2018 vat is targeted to be introduced. the initial few years, it will be a slower buildup and non-oil revenues. yousef: this chart tells an interesting story, a big theme when oil prices were lower, the contracts ofrward dropped significantly in the last 3-4 months, now the lowest in 16 months. that is your line in white. the line in blue is rent crude. -- brent crude. thehe oil price is stock in

$45 to $60 range, could there be downside pressure? the forwards, the stock market, the interbank rate? definitely. we have seen rates come off of little bit due to the bond issue. the currency that was a cheap bet for the market to make, limited downside risks, but now the oil prices managing to sustain better than the market was anticipating, so those bets are fading away as well. it there. will leave always a pleasure to have you on the show. let's get you a preview of what is still to come, opec and friends agree on a way to make sure everybody sticks to the agreed output cuts. we will get you the full story behind the cartel and what they have planned, details next. this is bloomberg. ♪

shery: welcome back. i'm shery ahn in hong kong. i am yousef gamalfsanjan el-din. takata having a difficult day. they have lost 45% of their worth since monday. shery: foxconn chairman weighing an investment with apple in the display factory. moreacility would cost than $7 billion and could create 50,000 jobs. at u.s. protectionism is

inevitable, american consumers may not be willing to pay higher prices for products made at home. utility companies in california seeking $1 billion to promote electric cars. looking to boost spending on charging stations to meet the goal of zero emission cars on the road by 2025. it onrnia is pushing for cutting greenhouse gas omissions despite donald trump's promise to kill similar efforts of the federal level. haveand other producers agreed on a way to monitor compliance with their historic output deal. anthony, how does opec say it is doing on these compliance cuts? we hear whispers on most every day now. >> good morning. they say they are doing well on the compliance, not 100% yet.

the saudi energy minister says they help to reach 100% in february, everyone complying fully with their quota levels. they have cut 1.5 million , and the day so far target is 1.8. saudi arabia, going beyond their commitment. the russians are working there and on the way there, looking to cut 300,000 barrels a day by april or may. that a lot of analysts and market watchers told me would be the laggards like iraq are on the way as well, so opec doing well and they say they deal that these reductions will have the impact on the market they were looking for. so how is opec monitoring this compliance? what are they looking at? the point of

yesterday's meeting, to set up the mechanism about how they would communicate that to the market, so they are setting up a committee of several countries to look at exports, look at so-called secondary sources, look ate analysts that the market, count tankers, talk to sources, develop their own estimates for what countries are producing, and a look at those production estimates and make sure they are in line with cuts. they will look at exports as a way to backup that data, so that's what they will be looking at to monitor those cuts. they will meet and in march and may to look at compliance on the market. much forank you so joining as per the latest from opec, brent prices holding above $55 a barrel, although some downward pressure. coming up, on the rise, what is helping kuwaiti stocks.

we will have the details. this is bloomberg. ♪

i am yousef gamal el-din. these of the first word headlines from around the world. president trump breaking a campaign promise, top advisers saying he has no intentions of releasing his tax returns. may ons with theresa friday to talk about a post-brexit deal. they have stepped up their war with the u.s. media over the size of the inauguration audience. samsung electronics says blame for its to flammable note 7 fiasco. overheating and fires caused by separation film in the batteries.

the companies apologized and promised to strengthen battery safety. company's deepest business crisis and killed off its flagship smartphone and may have cost at $6 billion. the wall street journal says the sec has opened an investigation into data breaches that yahoo!. unidentified sources saying the inquiry will look at whether the company should have reported the hacker earlier. the report also said that yahoo! thought the breach affected fewer than 500 million users eventually disclosed. turkish lawmakers have given their verbal to president erdogan's attempt to secure sweeping executive authority. members voted to make the president had of the executive and abolish the job of prime minister. the move triggers a referendum that could be held in early april. the changes will concentrate dangerous power in a single authority, opponents say. global news 24 hours a day

powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. shery: kuwaiti stocks are on a world-beating rally, the index rising for 13 straight days, up 15% since the start of the year. for more on the rally and how long it might go on for, let's go to tracy alloway in abu dhabi . what is driving these gains? >> that's right. i don't know about you, but if someone asked me the best-performing stock market index, i would not have thought about the kuwait stock index, and yet here we are. have happen is this perfect confluence of factors events that have combined to create a positive environment for kuwaiti assets. one is the rising oil price, more generally the case for the

gulf. on the other hand, if you look uaehat saudi arabia and the are doing, you could think away may begin to do a similar thing this year. you also have the kuwaiti investment authority, the sovereign wealth on promising to buy domestic equities. pakistan, one of the best-performing stock exchanges last year, boosting itself to emerging market status this year, and that leaves a hole in front tier markets that kuwait could fill, so a laundry list of things pushing up kuwaiti equities right now. yousef: i'm looking at some of these by you way should and's, and it is reminiscent of the moroccan stock market during the first two weeks of the year, seemingly collective euphoria, then people bailing when metrics get stretch.

what you looking at, which one stand out? tracy: that's right. there is a saying that markets can stay rational for quite some time. if you look at the technical indicators around kuwait he stocks, there is another record the exchange holes, the exchange in the world with the highest percentage of overvalued stocks based on something called the relative strength indicator, something like 70% of the 182 stocks in the kuwait stock index are flashing that overbought symbol. on the other hand, volume's remain healthy. quites in kuwait are strong when a lot of other gulf markets have been struggling to boost activities. we have seen money managers, one saying he thinks the index has a further 20% to go, so it seems like this will

be an interesting story to watch in the coming months. yousef: thanks, tracy. let's widen out the conversation and returned to the region's largest economy, where the fifth-largest bank reported a rise. the bank has a strong capital position. can investors be rewarded with a boost in dividends. joining us is the managing , let me ask you about the liquidity situation in saudi arabia. we spoke to the governor of said he was comfortable with the easing of interbank rates. what happens with the massive shift in government spending and how will that affect how you see 2017 for the kingdom? >> thank you for having me on your program. regarding the quiddity, i think

the government already decided to pay all payments for contractors for the last two months, which has helped much and has good liquidity in the markets. billione more than 100 and the government could continue spending for their budgets, and definitely government spending is one key item for liquidity in the markets. yousef: where is your lending growth going to come from in 2017? >> in fact, let me give you a brief about the bank. the bank achieve new records during the last quarter, lending exceeded 70 billion, and the

total assets on the balance billion.eeded 104 at the same time, deposits grew by 23% during 2016, so lending , as well0% plus deposits did grow in 2016 by more than 23%, so -- jump in,f i can just what is going to drive the lending growth this year and 2017? what will keep that momentum? driver is the infrastructure projects that started two years ago and will take 3-5 years, metro project in saudi arabia, that is definitely representing large opportunities, as well as since , oil will shortage

bring percentages for lending to all financial institutions because they will sell the gap as needed for those projects to be finance. you have high real estate and construction sector exposure, almost a quarter there. will we see more delinquencies this year? >> already the minister of housing announced their plan two days ago. inre are many opportunities the real estate sector, but you have to look at what type of real estate. there are many different types. second is mortgage, infrastructure, and also different areas, so i would say that will be the acceptable limit, and we are following exactly our strategy in the direction of funding the real

thate within the limits have earned even decided by the bank. shery: what about your net interest margins. we have been talking about easing liquidity, but we have seen this interbank rate pickup, and your bank in that sector, net interest margins not recovering, why is that? definitely, the recovery will come gradually. we have lost some growth, and we believe with interest rates rising, the margin will also go up. as you know, some of our fixed, and some is floated. those fixed for a long time will take some time, but they have already hedged, and the other int will be intron chose -- tranches coming soon.

very briefly, sir, i will jump in. your branch network, are you looking to expand that? how much further can you grow your network? >> the bank started 10 years ago, and we are still suffering some shortages. branches across the kingdom, and we are planning also to add branches during 2017. shery: right, sir, thank you so much for joining us. bank ceo and managing director joining us. china says it is ready to cooperate with the trump administration, but there are some lines that cannot be crossed. this is bloomberg. ♪

yousef: welcome back. you are watching bloomberg. i am yousef gamal el-din. saudi arabia will do fading as oill rises, one year forward contracts the lowest in 16 months. toy are used by speculate on the dollar. eject looking for international gold miners to participate in its first exploration since 2009. the two bank companies in the country already opting to mine o out. cairo had abandoned mining. dubai's airport retailer

says it sees sales rising by 5%, driven by chinese travelers. the ceo says he expects brexit and europeanpact visitors will remain the biggest spenders. traffic through the airport reached 84.5 million and may top 90 million in 2017. china seems to be offering donald trump and all of ranch, congratulating him on his presidency and hoping for win-win relations. however, democracy all comes in for renewed criticism in one arm of state media. saying one thing, then criticizing democracy as a whole on the other side. >> they have been doing that a long time. sure, after the inauguration and

after trump re-emphasize the america first policies that will extend to currency trade, also geopolitical. softeras come out with a tone on some of their editor ariel's. one saying there are hoping for a win-win cooperation on the economic front with united states. congratulated donald trump for their of inauguration. china daily struck a similar tone, saying the two countries should strive for an updated, more desirable globalization. these editorials mentioned steps china is trying to take to open up its markets to more foreign competition and restricted areas like banking, mutual funds, insurance, and others, so they outline that. they also say they are making progress on intellectual property rights. editorials have been critical of rex tillerson, the secretary of state nominee, also peter navarro, wilbur ross,

these individuals what china called the great wall of protectionism. nottrump-china relationship off to a great start, but at least offering some sort of he's offering in-state media. the thing, you have ,he communist party congress where does china draw the line with trump? >> they will pander to the domestic audience there. they claimed these are nonnegotiable issues, the finding core interests is how one editorial pointed it out. another strident editorial came out from the people's daily attacking democracy, which they have done repeatedly over the decades. is thatom line

democracy has reached its limits and deterioration is the inevitable future of capitalism. report,p out with a growing signs that the trump administration is heading for an attack in his stick relationship with china. not really a newsflash there. yousef: let's discuss all of this with the executive director think tank institute in sydney. let's get your view on, again, a lot at stake with a china, the communist party congress, at the same time having to show strength and find middle ground with the donald trump administration. where is this going to go from where you are sitting? well, as with every aspect of mr. trump presidency and foreign policy, completely unpredictable. is cleare hand, it that being telefon china is a core pillar of his early foreign tough on islamic

state, the trump grande strategy, so that is possible, but you have a confrontational competitive relationship between the united states and china, but squinting my eyes, i could equally see a more accommodating relationship between china and the united states and a couple of years, because from mr. trump's point of view, what is he care about these issues like taiwan? what does he care about half submerged water features in the south china sea, so it is unpredictable and china is hoping for a deal, and that's why you have seen a moderate response really from china to some of these on orthodox comments from mr. trump, hoping they can get to some kind of accommodation with mr. trump here it -- mr. trump. loved one of your recent publications calling international politics taking

bizarrowadays in a world, the fictional planet from d.c. comics, so what does it take to get the upper hand in this new political environment? .> it is very hard what i said in that article in the financial times is that we are seeing the opposite occurring all over the world, the opposite of what you would expect to occur. the brits normally vote in their own self-interest, and they voted against their self-interest with brexit. in the u.s. elections come you would think that everything mr. trump had done would make him appear unfit for the presidency, and yet he has won this historic victory. things are very topsy-turvy. just as the international legal community gives a crystal-clear view on the legalities of the south china sea, the philippines of alexa a president who steps back from that and looks like he's moving towards china, so things are very unpredictable

and the chinese would be feeling that at the moment. they would field the ball is not bouncing in their direction at the moment. they are not used to having a president who is prepared to raise sacred items like the one china policy. they are not accustomed to this kind of approach, and they will be hoping things moderate and this bizarro world comes to an end and there is a more rational relationship between washington and beijing him about the signs aren't great at the moment. yousef: if you put this bizarro world in a zero-some framework, stands to gain out of all of this in asia? >> there are so many moving pieces that it is hard to say. japan atle, you take the moment, on the one hand, mr. trump has spent several decades criticizing the japanese. he was taking out

full-page ads, saying the japanese were ripping off the united states. we know he is not really sympathetic to our alliances. for thes that allies most part are ripping the united states off. isthe other hand, mr. abe the allied that mr. trump says he wants, someone prepared to step up. if the united states wants to take on china, they will need a country like japan on their side , so it is hard to say who is the winner in bizarro world. i think we have all just got to strap in and be alive to the circumstances. british prime minister theresa may, what does she need to get out of her meeting with donald trump this week? >> i think she needs mr. trump one that two things, the u.s. will remain as a global

leader, and secondly, that mr. trump the leaves and alliances like nato and in east asia. all of us want to hear this to bring points from mr. trump. shery: thank you so much for joining us today. coming up on the program, qata'' s fifth-largest bank reported a decline in net profits. we get to the bottom of that with the ceo of doha bank. this is bloomberg. ♪

yousef: banks across the middle east are struggling with the fallout from cheap oil. bank reporting and 85% decrease. talk me about what happened in the fourth quarter and why the earnings came in weaker than bloomberg analysts had expected.

>> good morning. , consolidations, regulation , conservative and setting benchmarks. an approach, increasing the provision cover. we have nonperforming loans, 120% coverage. we have capital rules getting changed. we have to have a cautious optimism in 2017 in order to strengthen the balance sheet. shery: how are you going to improve your numbers this year? where you have to implement more cost-cutting measures? >> we have to look at incremental revenues. at the look

rationalization of structured principles, that opportunity exists in increasing revenues. new markets into like india with extraordinary possibilities there. trade, with our global representations in 16 countries, we can work on it. also have a mix in terms of investment, so multiple ways we can increase revenue and rationalize costs. yousef: right. let me jump in in terms of a possible bond issuance and raising capital, may be want to get one more in? >> absolutely. the mix inreduce

interest rates. we have taken the decision to increase capital by 20% and subject to regulatory approvals. theill increase the debt by second quarter. we will borrow on the international markets. we want to brawl cost-effectively. yousef: we will leave it there and keep a close eye on the story. the chief executive officer at doha bank. we are counting down to the market open in the emirates. some stocks you should watch alsos the board, unb, focus asnet, again, in there are mergers and acquisitions in this part of the world. some other stocks you should watch as well.

that's all we have for "bloomberg markets: middle east" . shery: top stories next and bloomberg tech. this is bloomberg. ♪

shery: it is 1:00 p.m. in hong kong and i have an update on the top stories. president trump is breaking a campaign promise, the white house saying they have no intention of releasing his tax returns. kellyanne conway told nbc that people just don't care about his tax affairs. however, more than 230,000 people have signed a petition demanding that release. united airlines have lifted a grounding order in the u.s. after problems resulting from computer failure. all planes a serving domestic airports were affected for about two and a half hours. says theing site third-biggest u.s. carrier has 481 delays