♪ >> north korea claims success in a new rocket engine test as china and the u.s. debate how best to deal with pyongyang. turkey's rating cut to junk by moody's exciting the increased risk of a financing shock. and this is what it sounds like lindsay said it doesn't cried, markets in the middle east and soar saudi banks leading the charge. is 8 a.m. in dubai, 4:00 a.m.

in london and midday in hong kong, i am tracy. we had a pretty macro heavy week last week, we had the fed we also had noises out of the ecb and the bank of japan. let's look at how markets closed in the u.s. a bit of a mixed day for u.s. market, s&p 500 closing down about three points. as was pointed was up but it seems like the rally lost a .ittle bit of steam the russell 2000, amazing gains since donald trump got elected. let's look at the european markets, the ftse, the dax and -- it seems like the optimism we saw on wednesday was running out of steam. where we saw optimism was here in the middle east where we are two hours away from the opening of a fresh week in emirates

markets. let's take a look at what happened on thursday, strong gains amid a broad rally on emerging markets. dubaillar rally up -- the up twop, qatari stocks thirds of a percent. again, a stunning, stunning rally in emerging markets. a softer dollar and a recovery in oil where we had rent and the wti holdingt and some gains ans after friday's trading. let's check in on the first word headlines from around the world. u.s. treasury secretary steve mnuchin has declared his commitment to free trade during his first meeting with g20 finance ministers in germany. he also said he wanted to

re-examine certain agreements but did not specify which. following the summit the group renewed a previous pledge to provide all sorts of protectionism -- they bow to strengthen trade relations. 202ra has removed prosecutors from duty as part of a crackdown on followers of the u.s. cleric who was involved in orchestrating the failed coup against president heard on best president erdogan. saudi arabia says opec and its allies are prepared to extend production cuts beyond june if global inventories remain high. the minister told bloomberg that not stable, the

curves will be maintained. >> my colleagues from other producing nations have been cooperating with us quite nicely and i think we are on track. daily or weekly fluctuations in price do not keep my eye off the ball. inchinese home prices rose february despite increased restrictions on property transactions. prices of new homes rose in 56 out of 7080 tracked out of the government -- of 70 cities tracked by the government. beijing raised a down payment requirements for second homes 10 percentage points between 60 and 80%. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.

this is bloomberg. tracey: thanks so much. we are going to stick with china now because of the country's foreign minister has urged the u.s. to keep coolheaded over north korea following talks with the secretary of state rex tillerson in beijing. said they will not rule out a nuclear strike on ooongyang if the threat was t much. did the two sides make any leeway in trying to bridge the two sides? this isn't the third stage for this regional tour for secretary of state rex tillerson. he met with the foreign minister i think the latest

test we heard about this morning from north korea that was reported in japanese media highlights the concern and the tension around this issue. what a rex tillerson said is he talked to his chinese counterpart and they agreed to approach the north koreans to try to get them to take a step back. >> the prime minister has agreed that we will work together to see if we cannot bring the government in pyongyang to a place where they want to take a different course and move away from the development of their nuclear weapons but it is with a certain sense of urgency that we both feel because of the current situation we have on the peninsula. >> the key challenges are that north korea appears very wedded to it nuclear program so getting them to's take a step back will be difficult indeed.

china has pushed the u.s. is the north koreans to start talking with the u.s. says they will not talk until the north koreans make a move towards a different path when it comes to that nuclear program. that they taught is still there tante is still there. you mentioned concern, how seriously are both types actually taking the threat of a conflict on the korean pencil of -- peninsula? >> rex tillerson when he was installed described the threat andmminent from north korea after 20 years of diplomacy has failed, the prime minister said we were at a new crossroads in terms of tensions. both sides, the chinese and the and that saying

articulating how concerned they are about this. what we heard from president trump may have made rex tillerson's job a little bit more difficult. donald trump tweeted that north korea was behaving very badly and china had not done anything to help. china provides north korea americand food aid and and washington say they can use more leverage over the north koreans. these conversations are likely to continue at the highest levels between the u.s. and china. they would factor in in that presidential meeting we are going to get in april between president she and president trump. joining us is our guest has four today. we are so happy to have you here.

quiet sunday. one thing that is going on and that is some of the headlines coming out of china. one thing that amazes me in markets is we have all these geopolitical risks and markets tend to look through them. >> i think markets are focused on the economic policies that trump has promised including the policies concerning economic demand and infrastructure in the u.s. there is a risk for ebb and f low. a lot of concern over the dutch elections and then a lot of relief. sense of the geopolitical risk for all but there's nothing for markets to latch onto or start panicking

about. at anyly that may change time but at the moment of the market seems to be focusing on economic fundamentals. of the economic fundamentals, we had the fed decision to hike interest rates. i've seen analysts debating whether or not the fed has been looking at the survey data or the hard data. >> i suspect they are looking at everything. they have a clear mandate on growth and inflation and those things into the heading in the right direction. compared to dovish what people expected going into that meeting. when we went into january, it was not the consensus that the fed was going to move in march. it was in june and the second half of the year. the fact that they brought that ford was a hawkish signal in my view.

whether that momentum continues the way that we are to see some consolidation i think is the key. i do think the fed is a data-driven. i think they want to signal they are not behind the curve. we are seeing inflationary pressures rise not only in the u.s. and the eurozone. that is something euro banks -- that is something central banks are going to have to grapple with especially in the u.k.. we're going to talk central-bank a lot more later in the show. we are also going to be talking oil. will they or won't they extend the output cut? the mixed signals from the saudi's and russia. we're going to look at how political moves are stalling the turkish economy. this is bloomberg. ♪

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tracey: you are watching "bloomberg markets: middle eas". live from dubai. let's look at turkey, the country's rating has been downgraded by moody's. a bad outlook.n turkey, turkey is getting downgraded, how suspected was at this. the three rating agencies downgraded last year. >> we all know the referendum is coming up. everyone is quite nervous about it. it is not unexpected. nothing they said was a surprise. this is in line with what rating agencies do. one thing that surprises me is the reaction in the

market. look at turkish government the bond spreads compared to u.s. treasuries, they have been trending down. we have seen a rally in turkish stocks that are getting close to a record since 2013. why is there is a discrepancy between the rating and what investors see? anthis is all going on in em rally. faltering,has been turkey has been benefiting from that. a lot of people have been living with these risk for a long time. people do develop thick skin. tracey: we're going to be talking more about that in one second but first turkey deputy prime minister has those of the netherlands actions during a diplomatic dispute defy logic. relations between the countries have been restrained after turkey arrested a dutch journalist and the netherlands barred a turkish diplomat from

entering the country. as far as turkey is concerned, treatment of the turkish minister and turkish who were there to welcome the minister certainly doesn't comply with the europeans'standards. the dutch response to the five logic. logic.ed open, freedom of speech, freedom of gathering. things like that. there have been words in frustration and anger, -- >> is a difficult to argue for freedom of each if you jail a journalist? >> turkey has gone through a

very difficult period. turkey is faced with existential threat in terms of terror. turkish democracy survived a vicious attack in the form of a violent to attempt -- coup attempt. unless we look beyond the surface i don't think we can understand each other. 0 would be -- >> with the package of the referendum they gives the president more power help these things are making them worse? the president himself has reserved -- has referred to the dutch as nazis even though the dutch were the victims of nazis. >> i think the outcome of the referendum could serve as a catalyst. turkey needs the closure to put

behind this a difficult episode because the system problems will be settled. i don't think a new constitution gives president erdogan more powers beyond what he has and exercises in the form of government. this, we'reoing is consolidating the powers of prime minister and president in one hand which will be the executive branch everywhere else. the turkish presidential system is fundamentally no different from what the united states has .een practicing for 241 years tracey: that was turkey's deputy prime minister moment contact -- memet simsek. we are talking turkey here and we need to have these twin

trends. one is political trauma unfolding with the european union and the other is economic drama, the interesting way of --htening monetary policy interesting in the british sense. >> if we look at turkey's developments over the last decade, it was driven by eight you conversion story. turkish that the economy was going to move towards potential eu membership. it was going towards growth and stabilization of economic policy and going in line with what the eu would want to say. this goes back to the netherlands and the sign that turkey and the european union -- the political relationship between turkey and the european union is disintegrating.

isn't that story now relevant and what is going to anchor turkey's economic policy going forward? are we going to see growth or reforms and what direction is policy goingomic to take? we are talking about portfolio flows or ethics flows, we are talking about real investment into what is potentially one of the biggest economies in the region. whether that is something that -- or ifto be investors are going to take a step back and say we are not going to be as bullish as we work for. -- as we were before. tracey: you made the point earlier that a lot of what has been happening with turkey as been happening more broadly with emerging markets. we've seen a stunning rally

thanks to the dovish hike from the fed, a stronger dollar, a rebound in oil prices. >> according to the data, it could give further, we have seen the rally stagger a little bit off friday. it is not rise of that much but we still see that there is an opportunity for investment still. you have a lot of cheap assets across em. mexico is still cheap, south africa is still cheap. turkey is still cheap. you still have a long way to go for these things. tracey: thank you. there's plenty more to discuss. this is bloomberg. ♪

tracey: you are watching bharara

"bloomberg markets: middle east." we need to talk more about the dollar in the aftermath of the fed. you see a tightening in market, usually with see a stronger dollar. you can see the dollar in blue and the u.s. 10 year yield and white. the gap is the largest it is been in a few months meeting the dollar weakness has been ever done. do you think the softening we have had in the dollar is warranted at this point? >> we don't think it is going to be sustained. a lot of it was driven by the comments after the fosc and the dovish hike. we did thing going for the fed will raise rates by another 50 basis points of this year. they may adjust that based on data going forward. we are looking at another to rate hike and in that context.

when you put it against easing by other central banks or a lack of tightening, we do see dollar strength coming back into play. tracey: let's assume that we have dollar strength come back but not to a really significant degree. much does a stable dollars provide a tell to economy. the gulf region given that we provide to economies in the gulf region? >> it would be helpful to this region to have a lightly stable dollar. every time the dollar strengthens, if you raise competitiveness from the nonoil sectors. governments have been putting emphasis on growth in the nonoil sectors. -- dubai is a largely nonoil economy. every strength in the dollar

makes a dubai less repetitive when you're looking at tourism and wholesale trade. i think for this region it would be great to have a weaker dollar, it is not something that we see. gulf countries are going to have to adapt. we start to see this sort of pressure emerge when we look at the pmi survey, businesses are trying to compensate for the strong dollar by adjusting their prices. tracey: adaptation, diversification, this is a nice research note about fiscal adjustment in the gulf region. how happy are you with the adjustment that has taken place? >> i think it has been forced by circumstances, i think a very sharp drop in oil prices last year really fourth the government's hand -- forced the government's hand to diversify the revenue stream. fiscal policy and budget

revenues were still overly reliant on oil and that i think they have made a big move to address. as it happened fast enough? probably not. it is going to be a painful adjustment but the benefit of being in this region and having accumulated large services over the last decade is there is a cushion for governments and to draw to help households and businesses adjust to this in the regime. tracey: how do you see that adjustment process playing out in on the ground politics? we do have a tension here between raising taxes and boosting the economy. >> i think tax increases or rather a non-increase in oil revenue has had its day. what governments can do is compensate households with cash handouts to try and offset the

off -- impact of tracey: coming up with we talking about a big part of that discussion which is of course oil. we'll hear from saudi arabia's minister next. this is bloomberg. ♪ ways wins.

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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. tracey: it is 8:30 a.m. in dubai, i'm leslie humphrey with the first word headlines around the world. turkey's credit outlook has been lowered to negative by midis oody's, it by m kept its rating one notch below investment grade. 's blames the downgrade on the continuing erosion of turkey's divisional during. -- institutional strength.

s&p maintain the country's rating at the adding that the output for credit in nigeria is stable. growth to be supported by rising oil output and government spending. it seems to the economy expanded nexterage of 3.4% over the few years. ridge antiterrorist police have opened an investigation after a man who sees a weapon at the airport was killed by security personnel. he held a security officer as a human shield before he was killed by three shots. the suspect was born in paris and had been arrested nine times or robbery and drug trafficking. news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. tracey: thank you.

we have some breaking news for you here in the gulf. fh --ines coming out from g gfh financial saying it has a discuss a new strategy for the future. hhat amid speculation that gf was a discussing with shaa. will because talk russia and saudi arabia are sending the signal. moscow says it is too early to discuss a extension while ryad said a rollout is full of uncertainty. before we talk about extensions, let's talk about what has been happening lately. who is doing the heavy lifting in terms of cut? >> it is still saudi that is

doing the heavy lifting. saudi arabia has been producing over the amount they have pledged in this opec agreement. we were talking about how saudi arabia increase production from february. it was still below the level they pledged to cut two. russia is not quite there yet, they have made about half the cuts they have pledged to make energy minister saying they will get up to their pledged level of cut later this year and they will hold. of opec agreement says countries need to hit to their target and maintain that every average of six months such rush only gets to that level in a couple of months, still will not be at that average over the six-month. tracey: here's a big picture question for you, we saw oil trend down a little bit last week before recovery. how much control does opec have over the old price right now

given that we have seen this massive rebound in u.s. shale production? >> they are targeting inventories that are held in the developing countries and a lot of that shale is going to be going into storage if it cannot line market. a big factor they do not control is the shale and the big prize improvement as this companies had to that production, they're going to raise it up and get more barrels on the market. tracey: let's stay with saudi because of the country's energy minister -- energy says the supply may be extended. that hel-falih told thinks markets are not confident of the outlook. >> our objective of doing what we do -- saudi arabia is driven , encouraging

investment flows, making sure the global inventories that have been in a glut situation are back to where we should be in terms of long-term averages. that is where i have my eyes focused on and it looks like it is something that can be easily managed. we have many variables at play here and we are on course. i think the fundamentals have significantly improved over the last few months. prices will fluctuate up and down. there are other factors into play like regulators and financial investors. i think looking at the fundamentals i'm quite satisfied that we are in the right direction. also my colleagues from other producing nation have in -- have

been cooperating with us quite nicely and we're satisfied that we are on track and daily or weekly fluctuations in price don't to get to my eye off the ball as far as looking at the fundamentals. >> is it true that inventories have not come down as much as saudi arabia expected and what would be the trigger for you and other opc nations to say make we should cut more? >> we are looking at the global inventories and those inventories -- it is not perfect the demand and the first so itr is not the highest is taking time for some of the data to show but we believe that we are on the right track. -- by midyear i can look at where we are.

i premature for us in mid-march to make a decision on what to do. the six-month program will take its course. we are committed to it and my colleagues from other countries are equally committed. we anticipate in the second quarter we will look at what needs to be done to ensure the fundamental factors we are after are achieved and maintained. >> in terms of extending production cuts, you want to look gets fundamentals, at the six-month mark is it possible you need to sit down with your fellow producers and extend the cut? arehe sign is inventories above the five-year average, if the market is still not confident and the outlook we don't see companies and investors feeling good about the health of the global oil industry and we are to signal to

them that we are going to do what it to bring the industry back to a healthy situation. tracey: that was saudi's energy minister speaking to bloomberg kathleen hays. let's bring in hours correspondent. -- our correspondent. --may be true that saudi a and russia are saying it is premature to extend the cuts. as and was pointing out, it looks difficult. how confident are you that they are going to be where they need to be? >> it looks very challenging. to demandnister said has not been that great in the first quarter. you need to see some improvement in demand as well as some consolidation on the supply side. will they roll over? know is the short answer but what we have to go on as well the five comments from the

saudi's his is that the have been it clear that they are not going to be the only ones are's possible for keeping production low in terms of opec output. if the other countries are not going to take responsibility for meeting their own target, then it is hard for us to see saudi arabia extending the program for another six months and then it is us a doing the cutting. it is still early days. we have a few months to see how things look. will play asaudis little tougher game that perhaps they did in november. >> we saw the saudi oil minister say and to give a long list of things that had to happen that they would look at while deciding whether or not they would extend those cuts. and that is whether they see countries and companies feeling good. what will it take to get some of these countries in this region

of the gcc feeling good about whether they want to see this cuts again? will they see higher or places -- oil prices? soon, myk it is quite sense is that countries in the region would like to the oil prices around $50 or $60 a barrel. if we see a significant drop below say $45 and that remains in place for a time then i think -- it will be weak in this region. if that is enough for the gcc countries to say they will see the -- take the burden of production off of these opec countries. last year, i actually think the

strategy was working quite well of letting the price find it on level and then in november i expected there were a lot of concerns not just from gcc countries but from countries like iran and iraq suffering from lesser oil prices. personal defense is i don't think the duty 60 countries will continue to cut production and allow shale producers to cut their markets. in six months time if we don't see any correction in terms of i think if the rest of opec makes a concerted effort to make that target, i don't think -- tracey: what is the alternative in terms of policy? will they go back to flooding the market? >> i don't think it is a question of flooding the market. saudi's production in february was ever 10,000 barrels a day.

even though they had cut quite aggressively in january, and a technicalt was simply things that needed to happen at that time of year anyway. refineries coming off-line for maintenance and those kind of things. where they are now incidents of will production is not that far from where they were in the middle of last year. there was a big run-up before the opec agreement came in and we saw a big drop down. but when you look at the averages, it is not been that significant a drop in my view in terms of output either. if they were to go back the way they producing in the third or fourth order of last year, -- quarter of last year, i don't think it is going to be a massive increase in supply. and then you have countries facing volatility like liberia and nigeria.

again my sense is it is too early to call whether they will roll over the agreement or not. and the saudi's are still pulling all the weight producers inale north america ramp up production and producing continuing to rise, i don't think there will be an extension of that agreement. tracey: we have to leave it there. thank you for bringing up the latest on the energy market and take you to the head of the research for immigrants for being such a wonderful cohost. thank you. c help to deliver strong results on the back of maternity and fertility demand. wheels big with their new ceo. this is bloomberg. ♪

watchingou're "bloomberg markets: middle east" live from dubai. let's give you one more breaking story. is filing for u.s. bankruptcy protection in the court in new york. that is an interesting one for the energy market in new york. let's turn here to the uae because nmc health is the first uae health care company to list on the london stock exchange. it has been boosted by the turned fertility divisions and rising demand or long-term care. have will abu dhabi's new insurance rules impact the performance. let's discuss that with the new confirmed ceo.

thank you for joining us today. >> let's start with overall demand. tracey: we have had some interesting changes happening including the co-pay rule saying immoralities's have to pay more for their health care. meritatis have to pay more for their health care. >> is made a big change in the -- abu dhabi's health care industry has changed. our understanding was there was definitely the need to take care of the young and the citizens of uae because overdiagnosis could be stopped. we have been focusing on it to make sure we are aligned and our

goals are aligned to the goals of the administration. we are a 30-year-old company. tracey: that is an area of growth, you have invested a lot in that market? thee have invested in eastern province of the kingdom. think there are demands on the health care side. we see changes happening especially after the oil price coming down. looking at less investment at the same time looking to invest in the environment where the private companies invest. tracey: we have seen some consolidation or rumors of consolidation and nmc has been quite active in terms of

acquisitions. that is one of the reasons the share price keeps increasing. you have more to do on that front? >> we have been following a particular strategy that we in 2015.been 2015 -- the recent acquisition we did in is a bank management. we are looking at facilities they are in the right industries on the right part of growth. tracey: are there any industries you're looking at? it is too difficult for me to pinpoint regular acquisitions. lovely a lot of assets are available. -- a lot of assets are available.

the possibilities are there for us to consolidate. we are also looking at markets where the platform cannot transcend into geography. it remains our main focus, libya is an important geography where we want to focus. the knowledge we have created in the uaa -- uae needs to go in saudi arabia. fertility and the knowledge we have acquired in the long-term care has places to grow in the saudi market. tracey: what are you looking at right now, could you borrow money in loan format? could you issue bonds? definitely, if you look at our balance sheet for the last two years, we have been very

financially savvy. when we announced the 2015 strategy we are able to raise $825 billion with 100 business points in that market. we paid $560 billion and also paid $25 billion in equity from the global market. 50% debt. equity and a fixed income market is very interesting, we will look at it but at the same time we have someone who was to make sure there is proper leverage for equity to debt ratios maintained. the money should be used for acquiring assets. we are soliciting at more than 1000 that's and 400 bets are mature. the profits we will see in 2017

35-$50 million and have to get the benefits of this that we opened in 14 and 15. tracey: the newly installed ceo of nmc health, thank you for joining us. coming up, we'll take a look at how the dovish fed boosted the middle east markets and if juice is still left in the rally. this is bloomberg. ♪

tracey: you are watching "bloomberg markets: middle east" live from dubai. the markets here in the region's closed on a strong note posted the dovish fed statement. let's get a look at the week ahead. felipe a, i have to start with consolidation because that is a big theme in the gulf region but

also we had some headlines saying it from gsh had discussed a new strategy for the future. what does that mean and how does it relate to the speculation with a possible deal? >> this is a very interesting story that is developing as it goes. we see a strong reaction and the start market here doesn't stop market here in the uae. they say they are looking for acquisitions in the market and looking to extend. both of them have been giving indications that a big merger could be on the way. now we have a surging volume of trading with both of these stocks here in dubai. gfh was a company based here in bahrain.

they had trade in kuwait as well. we have various bronze for much of the investors can that and i think it is the main topic that will remain on top of everyone's mind. tracey: that feeds it seamlessly into what i was going to ask you. we have a rebound in the oil prices. what you be looking out for? oil for saudi, we know how important to the oil market is for saudi arabia as a oil -- as a whole. you have several different segments that can react. we saw very strong performance from banks and saudi last week especially amid the big em after the fed decision. saudi could show more overreaction and be more sensitive to oil talk this week and here in dubai partly what we

will see is a lots of peculation related to what may come next in terms of this view. tracey: the liquidity improvement in saudi banks has been impressive even after they raise rates following the fed decision. thank you for joining us and to bring us the latest on gold market. now, if you want to catch they show and all of our conversations again you can find them on tvgo. you will see previous interviews and to into any of the securities and bloomberg functions we talked about. you can become part of the conversation by sending us instant messages in our shows. that is for bloomberg subscribers only but if you are so excited about consolidation us gold market you can send your thoughts. i've had to say that is it for this edition of "bloomberg markets: middle east."

you will be live from the region at the same time tomorrow. this is bloomberg. ♪

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