♪ manus: china's economy, manufacturing, retail sales, investment near estimates. the yuan weakest in seven years. lows: oil near a seven week , a boost in written numbers. hanjin repairs to

report. manus: it is 5:00 a.m. in london. i am manus cranny. angie: welcome to "blommberg markets: middle east". are watching we today? this massive flight from emerging-market equities, the second day of losses across the asia-pacific region. explain what we are seeing in the markets? japan and the only gain of the day, but massive flight from emerging-market equities because of concern over what a trump presidency means. we thought it would be focused on domestic policy, but of course as speculation increased on what a china trade work and

mean or what a donald trump view on asian equities could mean or asia could mean, we are seeing a selloff in equities. what about you? manus: you were talking about the equity swings. we will talk more about the emerging-market currencies. i will focus on the bond markets. weekweek was the worst since the taper tantrum in 2013. yields are spiking higher. is this overdone? relative strength index of the bottom of the screen, the highest since 2007, but will the bond vigilantes have the last laugh with this trump administration? 1994, the back to bond market vigilantes destroyed the bond markets and took race to 8%.

we had a 30 year (s) week the weakest we have seen. we have an inflation auction that will be closely watched. we'll the bond vigilantes run out of steam. with that in play, how does it play out to the middle east 200, that waspg a up by 3/10 of 1%, industrial, comments, avoid regions of 1%, but what is more pervasive than in the emerging-market is have a look at this. egypt has its own idiosyncratic story. abu dhabi down by 1%. dubai's relationship with iran is critically important. that relationship could come under pressure under a trump administration. that is back to the may lows. ini in ourng-market m

region. angie: the latest from markets right now. still very much risk off. have a look at equity markets. you have bright spots here and there. what is standing out his japan. lifting the overall tide. earnings coming through when -- when japanese markets closed. at the moment, none of that matters. i will talk more about currencies. when you look at what has been equities, not just have a look at the bond markets, the currencies there. the benchmark is down close to 5% from friday. across asia today, volume's have take the, and when you have falling prices and spiking does not bode well

for sentiment. cliff are falling off a comes stabilizing come if you will. new zealand managing some gains coming off a strong earthquake, which is why you're getting a decline at of new zealand. have a look at currencies. valor flexes its muscles against most. musclesr flexes its against most. the dollar continuing to rise. what matters is the japanese yen. you are seeing this the versions between asia and japan because of this. is 7.39, really holding up, have a look at the 12 month chart. for the first time since this above the 200 day

moving average. well above that and hopefully will remain the support level for dollar-yen. wrap things up with a look at the selloff across the bond space. to 2.2 year close percent, australian 10 year, 2.65%, that's the yield, by the way. the bleeding continues across the fixed income space. if you go into your bloomberg, you will get all the opinions on the chinese data. economy remains broadly stable following new measures to cool property prices. tom mackenzie joins us now. side, industrial production disappointing, retail sales, i question this retail sales number.

give us your take. >> that is interesting. picture, a positive the industrial production number 1% line with estimates, 6. year on year. deflationary prices at the factory gate starting to ease off. the 10% increase in october is a surprise for some because the estimate had been 10.7%. officials have said the slowdown in property sales is part of that. chinese consumers using their high property prices as a cushion when they buy products, and of course tightening credit conditions playing into that, but a record number of $18 billion spent online on friday, showing that consumers and sentiment remains confident.

the amount being spent on retail sales, that 10% pickup purchase wage increases, 7.8%, and they as house prices ease off and credit tightens, retail sales could edge down further. fixed asset investment roughly in line with expectations, but state owned enterprises made up a big chunk of that, 20% versus just around 2.9% for the private sector. angie: what are the implications for the unwinding of credit and tackling financial risks? >> that is a key question. what this data does is give policymakers in china space to rein in that credit and try to tackle the high house prices here, but the question is for

how long that space will remain, that sweet spot. bloomberg intelligence points to two risks for early 2017. one of those is the question whether or not trump will impose 45% tariffs on chinese exports and further crimps on the property sector, how much of a bite that will have. those are two cautious elements to play into these factors and what they expect. intelligence says policy makers will take a gradual approach to reining in credit and tackling financial risks in light of that. no more analyst also expect headwinds. gdp, bloombergo still see 6.9% gdp, down marginally from last month, but thatwithin that target policy makers aiming for for the

end of the year. ok.e: tom mackenzie, thank you very much for that. checking in on first word headlines. let's get you to rosalind chin. rosalind: donald trump has named reince priebus to the top job. rnc, andirman of the his nomination is expected to bring donald trump closer to party leadership. his campaign ceo stephen bannon from breitbart news as his senior counselor. the south korean president may be the country's first leader to be questioned and office as an influence peddling scandal makes impeachment a possibility. investigation and close presidential aides and senior executives at leading companies. since theave grown president first apologize, and there is growing pressure on her to quit. zealand's dollar and its key

stock index have recovered from early losses after a powerful earthquake killed two people and cause damage. struck after midnight local time north of christchurch. it has been followed by hundreds of aftershocks. schools and businesses are closed in christchurch in wellington. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. show, air arabia says it remains confident in the long-term prospects. we talk expansion plans with its ceo. biggeste emerging markets selloff has extended to the region. this is "blommberg markets: middle east". this is bloomberg. ♪

manus: welcome back.

you are watching bloomberg. angie: let's get you a quick check of the latest business flash headlines. a u.s.s and talks to buy drugmaker. the companyld value at $8 billion depending on the structure of the deal. company is working with an advisor to explore options. option traders are sensing of bargain and tencent as the relative cost of bullish contracts is near its highest level since july last year. tencent has fallen or 11% from its september high amid a selloff in tech following donald trump's win. tencent's track record reports on wednesday.

stocks and what is the most urban a country have paid off the market upwith and making it the region's best .erformer the digging emerges market selloff has expanded to the gulf. dubai's nearest the lowest level. ourmore let's bring in emerging markets managing editor. thank you very much. we have a great chart on the terminal about the carry trade. it is on the demise. the yield premium is crumbling.

is the great carry trade over? are we at the beginning of a much bigger move? >> the graph looks very impressive. what we are seeing is with the rise of u.s. bond yields, the llure of emerging market bonds has waned, see your getting selling that impacts currencies of emerging markets. now, that is what we are seeing. i suspect that when things start to stabilize and people begin to take the view that maybe the beingate increases are priced in by the truck factor. on board, youaken may see a return to this, but at the moment, worsening quite clearly a waning of the carry trade. angie: how much of this is just how much factor, and

of this is an emerging market phenomenon? >> right now, it is the truck factor,ap -- trump explaining the whole commotion about interest rates rising, the inflationary impact the truck factor is taken to imply in the united states. if you look beneath the hood of emerging markets, we are seeing current account deficits never ring, growth rates in emerging markets that are still outstripping developing markets. if you look at the currency world, the volatility gauges and the constant hedging, losses in market are nowhere as high as they have been, so we are a long way away from the worst of it. there is some pretty good phenomenon out there to look at. angie: let's get more analysis. thank you. let's bring in a focus on

emerging currencies and also markets. trader live in singapore. this assetabout rotation we are seeing in the equity markets for emerging markets to develop markets like investors bringing their money there and putting it to work. where do you see this going in the currency space? >> i think it is a good question. much of the appeal for emerging-market currencies was based on the case for yield. market.are in a placid we are seeing that change over the last 30-45 days and we've seen that move out of regional high-yielding currencies and also low yielding currencies and move into the u.s. on market as

the bond yields start to accelerate higher. the crux of the argument boils factor.the trump with the fiscal spend in the u.s. pretty much rubberstamped through congress, we would anticipate inflation to pick up in the u.s., and based on that interest-rateying differential perspective, the migration back to the u.s., the u.s. dollar is king in this environment, negatively impacting emerging-market currencies. chart,when i look at my i take a couple of moments, the yuan the vibration last year, , we are stillged a long way off in terms of momentum in this market. not all emerging markets are created equal. where should we be looking at as the weakest link in the chain and currency terms? -- and currency terms? going on inwhat is

the bond markets, but we also have to look at the possibility of trade wars escalating with the asia-pacific region and the u.s., if that does come to fruition. emerging-market currencies are more exposed to u.s. trade such as the korean won, the chinese dollar.d the taiwan those currencies would be more susceptible to negative impacts of trade wars accelerate. we are also seeing the impact on the yen. we got some encouraging signs that perhaps exports are helping to create groundwork for greater growth in the third quarter. what are the expectations for a weaker yen moving forward? completelyit is

predicated on the widening of interest rate differentials between the u.s. and japan. the governor kuroda policies are pegging the 10 year yield and 0%, where as we are bond yields0-year bonfield' low past 2%. follow, and wele are seeing that diminish. i would anticipate the u.s. dollar to remain on strong footing, especially against the japanese yen. ?anus: what about the yuan the chinese have done everything to stop it the yuan from the driveway in but if you slap a 45% tariff on china, i wonder c would be sobo enthusiastic to defend. >> i am at a crossroads on the

trade issue. donald trump's latest rhetoric sounded a little tempered with regards to mexico. he was not talking about a wall going across the country, but some fences in some areas. i also believe there might be too much play on the prospects of a trade war accelerating. after all, if we look at the fundamentals, if the u.s. is planning a massive fiscal spend, they will have to issue bonds to fund those infrastructure bills. if you do anything negative towards countries in asia, it just does not add up. overall, i think cooler heads will prevail. i don't anticipate such a dramatic near-term follow based on what i'm saying right now. angie: good to talk to you. thank you for that. up, hanjin shipping

prepares to report earnings while rivals bid for its bankrupt business. this is bloomberg. ♪

manus: welcome back. you're watching bloomberg. due tohanjin shipping reported earnings on the same day a south korean court may select is preferred bidder for its bankrupt operations. is it likely that the court will make an announcement later? >> the court will make an announcement. it is just a matter of what time they will make the announcement. is between hyundai merchant, which the government has said it

once it to become the national carrier of korea's exports and korea line, a poke shipping company, but seems to want to get into the container shipping business by buying the assets. we will know later today who the winner will be. manus: we will also get earnings release later. what can we expect from those? the earnings will not be pretty. ,e only saw the likes of maersk not that very positive earnings announcement, so are not expecting a lot from hanjin shipping or hyundai merchant when they announce earnings today. overcapacity is still an issue in the shipping business. oute are too many ships there, so it is putting pressure on the rates, some not much to expect on that front with the

announced earnings later today. also, were getting some indication of the toll this will take on the fleet, right? >> a lot of people are saying this is just the start of the end for hanjin shipping. before, they went into court receivership, they had 97 fleets. now they are down to a 10th of that. most of the chartered vessels have been returned to the owners as was the advice from the were also owned ships sold because the banks are lent money for the financing of their ships are wanting to get their money returned, so they are left with a small fleet. do much anyway, so they are selling the u.s. business and the european business. manus: thank you very much. the latest on the hanjin shipping story.

coming up, opec meets in a few weeks. what are the chances of a cut looking like? we discuss on "blommberg

>> it is 12:30 p.m. in hong kong . these are the first word headlines from around the world. chinese economy stabilized last month following new measures to cool the property market. industrial production rose 6.1% in october. retail sales climbed 10%, down 10.7% a month earlier, while fixed asset investment increased. set the monday fax at the weakest since 2009. it is more than 6.5% lower than a year ago.

hasging-market volatility jumped to the highest in three months with donald trump's protectionist stance to allow china stever declines. -- steeper declines. anjin shipping has shrunk to 10th of its size after it returned most vessels since its bankruptcy filing. all but three of the ships are stranded or seized. the district court overseeing the receivership is set to name the preferred bidder when the company reports earnings later on monday. trading near its lowest close in seven weeks as i ran boost output and u.s. explores raise the number of active rigs. ron says it increased the three fields faster than expected. over theve retreated past three and a half weeks over doubts opec can implement an output limit. global news 24 hours a day powered by more than 2600

journalists and analysts in more than 120 countries. this is bloomberg. manus: welcome back. you are watching bloomberg. i am manus cranny. angie: i am angie lau. the latest from our markets now. fresh week, same story, emerging markets getting dumped. -- rotation out of emerging markets and to develop markets in the u.s. dollar. midday in hong kong, this is how markets look, new zealand shot, .6%, so that market managing to close higher, but you look at the rest of asia, if it weren't for japan, the tide would be lower. thetake japan out of equation, msci asia-pacific without japan, a good gauge of what is happening across markets right now.

if you want to be more specific, and you look at the southeast asian gauge, closer to 5% down from thursday's close. is being felt. what is standing out is that since wednesday, volumes have picked up every single day, and the picking up again right now. it does not bode well when you have volumes on the way out and currencies on the way down. have a look at the bond markets, same story, bleeding continues, yields on the way out. you -- there we go. the u.s. 10 year yield, 2.2% now. we started the day at roughly 2.15%. to austrian 10 year is up two point 65%, the selloff continues in the bond markets. wantquickly before i go, i to flesh out for you the emerging markets story. market index,

rolling index, because you have a few markets opening up, things that are closed at the moment, this is how things break down. water, oil and gas come almost every single sector down at the moment. back to win this donald trump was selected theesday asia time, emerging markets or this index lost $450 billion in value from last wednesday. if you like it cheap, have a look at this chart. can we get it out please? betweenount has spiked emerging markets overdeveloped market equities. you're looking at a forward price to earnings there. there you go. not a good day to be an investor right now. manus: thank you very much.

let's see how the spreads continue to trade. arabiaget carrier air jumped 26%. it is the nation's only publicly listed airline, and we have the honor of having the chief executive with us on the show. welcome to bloomberg. third-quarter numbers, strong, net income of 26%, caring 2.7 million passengers, up 14%, talk me through the biggest factors that led to this increase. i'm looking at your revenue number, little changed from last year. why so? >> thank you for having me. yes, we are pleased with the good results for the quarter. it is mainly driven by two factors. and more cost optimization.

that really was the key factor driving this particular quarter. talk abouts shareholders. you have the honor of being the only quoted airline in the region, which i love. it is a great management to have. dividends for shareholders, when and what is the possibility on a timeline and the payout? >> i think we have followed a loves where the region dividends, and since we have gone public in 2007, we have been fortunate enough to make these profits. we have -- the lowest dividends we have paid since 2008 going on from 7% to 10%. last year, a 9% dividend. our calendar year finishes and

december, so by april, the board meets and decides how best to use the profit. tend to enjoy the dividends. about the's talk operating factors here. of really critical amongst them. there was a lot of anticipation that we would see airline orders drop as a result because of lower fuel prices, but how have you been able to factor in and how is that affecting your strategy to either expand your aircraft moving ford? >-- moving forward. , good oil prices w oil price does not impact the economy. on the economy side, budget carriers tend to do better.

result, we have grown the business 14%. we are getting delivery of six more airplanes, particularly morocco, by 20% in which mainly serves the 25 airports in europe, and here, we put in four extra units which regional and focusing on central asia in 2017. the expansion will continue next year, another 12% expansion on the seats and the routes we will be doing. seven new opening routes in total next year, so all in all, we will continue with the strategy we have had of the last 10 years

anything between 10% and 12% expansion, and we will see the number of passengers flying not change within the region. in total market, so the market is growing and puts pressure on the yields. manus: that is good to hear that from you. was warning us to get ready for lower for longer. are constantly looking for tieups and have explained we are hobby expansion will be, give us a sense of where you will be in 2017 in terms of partnerships. in anotherke a stake arrow line, will there be consolidation? present, we have four hopes. ubs.o we have one in egypt, alexandria

innd we opened a new hub oman. we will be happy to look at the opportunity when they come up so long as it fits our business philosophy and our network expansion and good for our investor. to what comesed up in the market so long as it fits our needs. angie: thank you so much for that. the chief executive officer of air arabia. reasons foring optimism after third-quarter gdp smashed expectations. let's get through the numbers right now for you. what is behind the surprise? number was thert

key figure in gdp in terms of the change. exports minus imports come the impact a 0.5% in terms of gdp growth. part of that is that import for fuel, been lower and that has helped a lot for japan, but we have seen improvement in external demand. demand in southeast asia and ,ome good numbers for sales smartphone parts, manufacturing and equipment exports, and semiconductors. manus: let's talk about the ability of this to continue. .ook at dollar-yen can it continue? can this momentum continuing the trade numbers? >> that is a good question. the yen did react in a different way to what many people expected

with the election of donald trump. a lot of people expected a flight to quality which would have strengthened the yen, but for the moment, the outlook for exporters in terms of the yen is quite good, but the other part is what it means for protectionism. in new yorkabe later this week to speak to donald trump to see where that is going to go. like the tpp is off, and that is bad news for abe, so we will have to see. it is good news of the moment, but the question about protectionism is still out there. talked about protectionism and express interest in talking free trade with donald trump, and of course that is the external picture for japan, but domestically, what does the picture look like? that is a little gloomy actually. when we look at business

investment, the numbers were flat for these latest gdp figures. also, personal consumption from households has not changed the to see we really need change their in terms of driving the domestic economy. we also see that come out in falling forces, cpi seven straight months in japan, and that is bad news for the boj in governor kuroda. manus: thank you very much for joining us. brett miller with the latest on the japanese trade data. coming up on "blommberg markets: middle east", more on the emerging-market route. gary dugan joins us to discuss what is on donald trump's to do marketsd the bond headache. ♪

angie: welcome back. you are watching bloomberg.

i am angie lau. manus: i am manus cranny. let's get you up to speed with the business flash headlines. toyo tire with the biggest intraday decline since may. the tire maker blames the yen and worsening market conditions. the biggest aluminum producer triple net and, on cost-cutting. net income climbed to $65 million, exceeding estimates. dalco has set up a committee to decide on the offering. shares have more than doubled this year, the best performer. east-westna's planned

trade route has moved a step closer with the opening of a new international port in pakistan. productsex will ship to africa and the middle east. the project links maritime from china through southwest pakistan. it is struggling with insurgent violence, and the pakistani army is guarding the port. joining us now is scary dugan -- gary dugan. thank you for coming in. time to digest everything, so i can get off with a chart. longest rally, 32 months longer than the average since the 1930's, 15 months of her earnings recession, do you buy

the truck rally? do you buy these equity markets. it may not last long. we do believe that the enthusiasm around donald trump is well-founded. he will spend a lot of money. commitment,that leading to an improvement in the earnings outlook in the near term, but the one thing that kill this rally off is the rise in the interest rates, also market interest rates with long bonds rising towards 3%. already seeing rotation from emerging markets into the u.s., europe. do you expect that to hit emerging markets hard? we are already seeing it in asia today. big think there will be a difference between developed markets and emerging markets.

the rise in u.s. interest rates along the curve will be damaging for those countries still struggling and dollar peg. people will be fearful of china allowing the currency to weaken thatst the dollar, and tends to put a freeze on the performance of emerging markets, particularly asia. manus: the inflation expectations, the ratcheting higher, not one analyst thought these rates -- the bond yields would break 2% before the end of the year. ,onald trump in the white house but the market is assuming inflation. offt yellen wanted to get zero, good news, so what is on the table for next year, three hikes, four hikes? it depends on how quickly he spends the money. if it is frontloaded, it will be an inflation problem. given that the u.s. is getting

close to full capacity, and unemployment rates are down now. thefront loading of spending will lead to inflation pressure in the u.s.. markets fed will do, are anticipating two great increases next year after a rate increase at the end of this year , but if he decides to frontload, then market expectations can only go up. what do you advise then? if you are taking a look at the climb asare saying it the dow hit a record, but are there headwinds likely? i think we can see further upside in equities, but it has to be combined with upgrades to earnings forecasts. people have to get enthusiastic for the growth rate for 2017. donald trump has talked about

moving the country back to the pace of growth of 3.5% and 4%. manus: if we are not paranoid and schizophrenic enough about brexit, there is the elections across europe. germany,rance and widening, risks are widening, contagion, where do cp contagion coming through? italy, france, what is next? >> if the election goes against the government in italy and they vote no, then you're looking at fresh elections and some political analysts seeing italy leave the european union as early as the middle of next year. it is not a one-way bet on equities. there is still considerable risks that would lead to a rally in bonds again. angie: what about commodities here?

we are seeing a major selloff in gold, but there is expectation as you said, interest rate is rising, it could be good in terms of global economic growth, so where do you see the demand on commodities going? >> on precious metals and gold, you're getting a great buying opportunity. there are too many risks out there. 5% ofays suggest around your wealth and gold. commodity space, they're going down at the moment because the dollar is going up, but if you think growth will be stronger in the u.s., this will be good news for commodities over the medium term. copper has reacted, but not other base metals. commodities will rise, but it needs those italian elections out of the way with positive results. are a lot of risks on the table, but you will be

back with this again later this year and next year. up, a group of investors planned retail therapy. will there bet on e-commerce playoff? this is bloomberg. ♪

ands: a group of investors saudi arabia's sovereign wealth fund plan to set up an e-commerce venture in the middle east, each putting up $500 million to tap into the fast-growing retail market. they hope it will not take too long to reach profitability. >> i would say five years. i would be happy with five years. it will please all the shareholders. manus: let's get more on this

story. $1 billion in investment, look, you spent three hours at this news conference yesterday, well done. this is flattery, isn't it? amazon, alibaba, here we are in the middle east. what you think? it is interesting. they are hoping to tap into what they estimate is a $3 billion market in the middle east of online sales. this is a huge market in the arab world, three hundred million people, a demographic of young people who are increasingly doing all of their shopping online. is plenty of opportunity here, but also establish competition already. what markets are they focusing on and what will they

be selling? they essentially go live in january, and initially will be looking at the saudi arabia and markets, but will roll out to the wider region after that. , 2017-2018, and those are big markets to go into to be profitable within five years. again, there is a lot of competition from existing online retailers, so it will be interesting to see how it plays out in that market. manus: well done. i think it is fascinating. coming together, great story. the very latest on the online retail commerce here. that is it for us in dubai. thanks.

great working with you. that is it for this edition of "blommberg markets: middle east" . ♪

>> it is 1:00 here in hong kong. china's economy stabilize last month following new measures to cool the property market in almost two dozen big cities. industrial production rose 6.1% in october from a year ago. retail sales climbed to 10%, down slightly from 10.7 a month earlier. donald trump has named reince priebus as his chief of staff when he takes office in january. he is chairm