anchor: saudi arabia sink oil is worsening public finances. riyadh insists the move has not covered. china goes for the u.s. won't. aftercoin is on the rise plunging. it has suffered some recent body blows. >> london's worst terror attack in a decade leaves five dead.

they suspect links to international terrorism. >> it is 8:00 a.m. across the emirates. i'm yousef gamal el-din and by -- in dubai. >> let's have a look at markets. more momentum as we made our way across em and to china where we are getting a decent bit of cross market. especially when you look at the smaller markets. i talked about vietnam. indonesian stocks topping another record high. yousef: in this part of the world, we're just under two hours away from the emirates market. dubai and abu dhabi at 10:00 a.m. local time, there was some downside pressure from the lawyer oil price and hitting it hard. down 1% to industrials and materials.

space beingfected consumer discretionary, down 1.2%. interesting what is happening over in kuwait. we are seeing a lot of buying from local investors in particular. we are watching where oil prices are trending. .rent has not recovered inventory reports showed a continuous builds in the u.s. supplies. pressure. this is the interesting one because there is still some demand. not reflected in the gold price. pretty much where was earlier. currently called slightly higher. mostly can agree. a lot of things happening in the world. let's check in with first world

headlines. reporter: they're working on the assumption the attack in london was inspired by islamist terrorism. officerly stabbed an before being shot and killed by police. the head of counterterrorism saying investigators have identified the attacker but would not give further detail. comment on this stage it of the attacker. our working assumption he was inspired by national terrorism. prime minister theresa may described the attacks as sick and depraved. it is the worst attack since the transport network was attacked in 2005. people were urged not to be afraid. >> the values our parliament represents -- democracy, freedom, human rights, the rule

of law -- command the admiration and respect of free people everywhere. that is why it is a target for those who reject those values. , as i make it clear today have had cause to do before. any attempt to defeat those values through violence and terror is doomed to failure. reporter: may says lawmakers will meet in parliament on thursday as per usual. in the u.s., secretary of state rex tillerson has urged the 68 nation coalition fighting the islamic state to contribute more. the campaign is evolving from a military operation to stabilizing areas free from the group known as isis. tillerson promised the u.s. would remain involved in the process. tuneen the forces of isis

in to their tvs or their computer monitors, they will see the strength of a combined 68 stations and organizations. toether we share a resolve deal isis a lasting defeat. our coalition is united in stopping an eye since resurgence and discrediting its ideological narrative. reporter: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. david: saudi arabia -- yousef: saudi arabia's credit rating has been cut by one level. the kingdom's rating was reduced to a plus on par with moody's rating. >> the primary reason is the impact on finances on oil prices.

you look at the fiscal balance, there was a deficit of almost 18% gdp. an enormous fiscal challenge. the government has a plan to address that. we think the deficit will be much lower this year, less than 10% of gdp. is risingment debt with the deterioration of us -- of oil prices. the outlook is now stable. does this cast more doubts on the reform agenda? cutting state subsidies, cutting state spending, or does that plan help improve the long-term? >> if the plans as we understand them were implemented in full, saudi arabia would be transformed considerably. there will be difficulty implementing them in full. there is going to be a

restructuring of the economy, probably not to the degree the government would like. an ambitious agenda. it is a medium to long-term agenda, not something that can be fixed in a year, two years. generate rabbit sector employment. >> is the fundamental still in place? your ratings along with movies's are a couple steps above s and p's. >> the government debt, even though it is rising, is still 20% of gdp. compare that to western europe where debts are very high. there is some room there to incur more debt. we think they will do it starting from a low base, that underpins the rating itself. >> does this undermined the reform agenda they have embarked on?

this sovereign wealth fund, is that something that includes it down the road? >> i think the agenda is to raise the profile of the private sector. that is part of the privatization. an initiative to encourage privatized employment. there are demographic issues of the m population. a large number of people in each year are no longer capable of providing all of those jobs. there need to be alternative sources of growth in the private sector. aboves a higher oil price $60 improve the outcome? >> absolutely. it helps public finances immediately. deficit closeng a to 8% of gdp. >> we spoke with the chief

investment strategist at chargers bank. show the breakdown in terms of how the stocks performed. you can see the energy stocks getting hit hard there. of course health care as well. the other thing to bear in mind is the execution, which is what this points to. concerned about the long-term and limitation of the program. how worried are you? situation challenging to try to rein in the fiscal deficit. from that perspective, it is going to be very difficult. we have been talking about the need to diversify the economy for 10 to 15 years and diversify different sources of income.

on the sea that has not gone as quickly as they would have liked. david: i just want to mention this as well, we have some breaking news. china mobile is out with some earnings. we are looking at that income of 109 billion women be -- redman remninbi.billion use of that i were talking before the show started. on one hand we were expecting them to tilt this way anyway. trying to meet these debt obligations, what should i do as an investor? should i trust the pboc can handle any unexpected fallout? >> i think in the short term the

answer is yes. they have managed it over the course of the last three to five years. people three of five months ago were very concerned about the economic scenarios and getting some fiscal spending as well. that is still very concerned with the rise in debt levels in china. particularly the non-financial sector. is still a challenge that needs managed. it is really unclear about how it will be resolved. up.ing growth picking nominal growth is ok. the other element of this story is the euro price.

the build in u.s. inventory, one trader said the data we are getting is really hard for anybody to be bullish. opec in blue. your u.s. crude supplies in blue and opec output in white. it is not working out for the cartel. ? we see prices going from here we have been bullish on the year. we are seeing short-term weakness partly due to what you are highlighting. also speculating the position very long on oil. we are not that far away from their now. is expectedicture to increase. onend picks up by about million, 1.5 million barrels per day over a 12 month period.

that should close x excess supply -- close excess supply. >> absolutely. i just want to pick up on that point. stick around. later on, we're going to be searching for a direction. a look at the remarkable volatility when it comes to bitcoin. ♪ stevewill be back with rise to discuss the view of the fed and those bond yields. bit this is bloomberg. ♪

>> this is bloomberg markets

middle east. i'm yousef gamal el-din in dubai. david: i'm in hong kong. we're back with steve brice. thanks for sticking around. let's talk about the fed. it is obviously one of the most overused topics in finance. have a look at my chart. i am genuinely confused, because as we make our through one hike last year, why has u.s. financial conditions actually loosened up? this speaks to the hawks here saying calling and ignore inflation, ignore all these other things. this makes the case stronger for the fed to hike three or four times this year. >> i think that is one of the reasons they hiked. bond yields rose but they have been very well behaved this

year. if you look at the dollar, that has not rallied. that is the biggest consensus call. a dollar that will rally strongly, not in line with our view. we think the dollar is in the paidss of peaking out here if the data keeps coming in strong, watch out for inflation data. >> to a start buying the dollar now? >> we are not that bullish. it is easy to focus on nominal interest rates. that would be dollar supportive. free think it is differentials that is really important here. from that perspective we are not bullish. we could see a bit of dollar gains. we doubt we will see significant new highs. that is significant looking around in terms of where you invest your money.

that means emerging markets and in particular asia and japan look really interesting. yousef:? what about donald trump that depends on the fiscal bonanza he is supposed to embark on. this comes down to possibly the health care reform he is trying to pass. how much anxiety is there? in terms of that not passing? what we are saying is there is a big focus on the fiscal stimulus coming from the states. the reflation was happening anyway. the economy was about to accelerate. it's not too bigger concern. what people are saying is it's going to be a push back in the future. the economy will do well without it. if you see the fiscal stimulus becoming too great, that could

bring forward a recession a cousin it could lead to the economy overheating more. we don't want to much. the prospect is a must more important than the fiscal stimulus. yousef: what are your terms of asset allocation? to a: clearly it leads preference for equities over bull markets. -- bond markets. we have a lot of medical risk. we need to wait for some volatility before the equities. we have just raised japan equities to overweight. that is an economic momentum story. david: ahead of all the political risk's we're going to get out of europe, we are also moving into spring.

if you look at the measures of implied volatility, we are still very low. is their case i just call you in june and get my money? guest: the way we look at the markets is it is really difficult time short-term paul back. comfortable looking for any short-term weakness. political calendar is going to be key. we got through the dutch elections unscathed. they key challenge will be french elections. our sense is we will see political risk decline over the next six to 12 months. it is likely to be a bumpy road. we should take the opportunity from any such volatility. yousef: i'm looking at the w crf function in you have the peso

performing in the returns, how do you trade that? guest: you start looking particularly out the south african rand, there is already a lot of bad news in the price. we prefer to be a bit more defensive. japan.ore at the ajax they have good stories. brazil more for us is a possible story with interest rates coming down. we are just big little more defensive at the moment. yousef: steve brice, thank you for coming on the program. good to have you in dubai for a change. you can watch the interview again on tv . watch previous interviews and dive into the bloomberg functions we talk about.

if you agree or disagree come you could just let us know. you can see some of the functions we have been using. all the key codes are in there. david: solid function. coming up, emirates tries to minimize the impact of laptop restrictions on passengers. this is bloomberg. ♪

>> airlines came under pressure from the travel orders are now reeling from new restrictions on mobile devices on fights to the u.s. and u.k. at airspacerofessor

and bob. let me start with the logic. public what a lot of the -- where's the logic in this latest decision in terms of the actual threat of having an ipad in the cabin versus the hold? it is easier to detonate the thing if it is in the cabin. we saw that in some malia about a year and a half ago when a computer which included explosives inside the device blew up in a hold in the aircraft. the aircraft was not far off the ground and was able to land successfully. we have the russian aircraft that went down in the mediterranean. there was an explosive device put into a soda can. that was big enough to destroy the aircraft entirely.

apparently both the united states and united kingdom have isisligence that suggest is moving in this direction and are developing the tech knowledge he to do it. it will be an enormous inconvenience especially for business people. security is important. it has to be taken seriously. david: in terms of the disruption what you mentioned, let's talk more about that. are we going to see perhaps a return or a renaissance of european hubs that's the gulf carriers are going to come under pressure and lose business and hauled status is going to becoming more to question? guest: i don't think the middle east airlines are in any danger of losing their hollow but -- hub status.

some of the larger european airlines complained bitterly .bout what they perceive they are geographically poised in terms of their aircraft orders to continue to grow at double-digit growth rates. i don't think this will -- this may slow that down slightly. i am wondering whether these are playing favor. can i both a plane with this? guest: i don't think so. mobile phone is quite small. we have had underwear bombers, people with bombs in their shoes. every time one of these things happen we have a restriction of some sort. you have to take your shoes off going through security and so forth. had to leave it

there, that is all we have time for. thank you for joining us. visiting professor and director emeritus at the institute of air and space law. more.be live to talk this is bloomberg. ♪

>> is 12:30 in hong kong. these are the first word headlines from around the world. has toldremier lawmakers his country wants peace and stability in the asia-pacific region to boost economic growth. it does not seek to dominate. they also have a state luncheon that states should stand together against protectionism. >> we need to continue to expand trade and that is the solution. we can't close our doors. that is not the solution. i am here to discuss how we can further aid our free trade area.

how we can particularly have investment in services. we want to continue to open up. we will also continue to import more from australia. reporter: the u.k. has stepped publishing its list which has information about sanctions. the lists relevance is diminishing as the international immunity reach engages with iran. it also says the government fully supports expanding the uk's trade relationship with iran. theof the companies at center of a scandal is said to be pushing ahead with plans to sell a stake in its halal food unit. in connection with the sale of tainted meat's. one foods prison desk one foods

produces how i'll check in. how all chick -- the company's hearing pitches for the role of advisor and the initial status of the much the next ages for the ipo including underwriting. goldman sachs and j.p. morgan are said to be among those pitching for the job. global news 24 hours a day by more than 2600 journalists and analysts in 120 countries. this is bloomberg. ♪ looks like the asian equities and is off to a start. let's get the latest. we always seem to play follow the leader. some cong coming through in the s&p 500. led by china. up for tents of 1%.

also, some buying coming through on hong kong's hang seng. to come to going property looking good. it is higher by a third of 1%. the aussie dollar, the kiwi coming under pressure. 1.75% is a record low. have a look at this rebound in commodities. crude and brent oil tracking higher. .pi crude is up this after data showed a decline in u.s. for find you will inventories. that has eased concern over rising stockpiles. you can see some good moves coming through in hong kong and

sydney. the energy sector as a whole among the better performers. ahead ofoking brighter janet yellen's speech. david: thank you. let's head back to the oil forum. both china's version of hawaii. dubai aiming to become an expert region? how are regulators warming up to that? that is what we are to find out from our next guest. this is a one of the blowout for round -- boao forum. it is exciting sing globalization and trade from an asian perspective.

for those were not initiated, this is a financial regulator for the special economic zone in dubai, not the uae's regulator. guest: the dubai international financial center is a special state with our own laws and regulation. they tend to run their regional operations from the difc. growth in dubai is targeted at 3.1%. there is protectionism globally. what is the outlook? guest:

>> i know you have an accelerated program. you have a number of initiatives. where are you on the evolution chain? dubai has a smart city initiative that is well underway. the difc, there are highs which is an accelerator, not an incubator. for people who have already got some development and then use an accelerator program to help them. financial services are

concerned we are open for business. it is all about understanding when do you allow innovation and win do need to come in and regulate something? besteed to judge relate judge when is the right time to regulate. onorter: we just had a guest . there has been so much consolidation and rod as well in the chinese ecosystem. there has been ponzi schemes. what have you come across. schemeshings like ponzi in the general financial services, there will always be some of that. , theree are right now are two consultation papers for crowdfunding, both investment-based and loan based. if you look at the economies

over the past few years, the development in london has allowed money to enter the smg sector. business inlow the the difc. we also launched an innovation testing license. technology companies can come in to a protected environment, see what works, see what doesn't work and then where to go from there. we're very much open for business and as we always do, we will be looking at the risk and innovation balance. reporter: how do you monitor and regulate money laundering? guest: finance is an area where if you take it back a step, the purpose is to facilitate the real economy. a good examples

of that. trade finance is a good example of the financial economy facilitating the real economy. dubai engages in a lot of trade finance. say how thatk and is going. was the banks were conducting trade finance very well. we found that loan officers were up to the job there. here we thought they needed to do a bit better than identifying the other risks that trade finance can give rise to. there are always opportunities for my laundering. we want to say you are looking at the credit risk element very well. we want you to look more closely

at the potential for money laundering. we once them to be more aware of those risks and to have the compliance team looking at those risks. we were just discussing the threat of overregulation. are you looking at new regulations because if on for seen threat? or do you think you have the right rules in place? guest: if you look at the global standards in place over the past climates have been changing and we have been changing our rulebook to increment those and will continue to do that. wheree reached the point in response to the financial crisis, there has been enough new regulation coming out and i think the focus needs to be on proper communication. regulators around the world looking at risks presented in their economy.

proper implementation of roles. proper risk effects, i think that is where the focus should be rather than on new regulation. reporter: enjoy your time in china. sending it back to you. let's get you a preview was to come on the program. it has been a volatile month of the currency. probably not, maybe there is another angle. this is bloomberg. ♪

>> you're watching bloomberg. i'm in hong kong. a quick check of your business headlines. says it isucers

planning to invest $9 million over the next or years in the search for new oil and gas deposits. this is africa's biggest gas producer. they made more than half of the revenue last month. yousef: chevron will be bought for $900 million, the southern interests. it acquires a 75% stake in the business. sinopec became the preferred bidder. says it will retain the brand for the retail fuel stations for five to six years. david: your highness birds new mayor says he has a mission to clean up africa's richest city. her monument, took office and

said the office has been hijacked by criminality and he is ready to bring authority. they want the government to close out off does orders. >> it has been so intense and so deep it is not something you can win overnight. it is not just a question of putting people behind bars. we need to change the culture. big oil companies later in hong kong, hopefully the reserves all likely to be in focus. is our asiare editor ramsey. any big surprises we should be prepared for? seen threat have the evening, they will be the first big three oil company to

do their first year results. they have seen their own output falling for a second year. positive for engineering companies, positive for outlook. but everyone might not be keeping an eye on is how they are pricing assets in canada. they took a big/to buy a lot of canadian oil sands asset. those assets are being written off. billionk about 3.5 aerials off their book. shell recently sold out a bunch of stuff. they recorded the first ever loss on write-downs. we will see what they say tonight. maybe the bottom line number could be their first ever full-year loss. >> we are looking at 11 out of

22 analysts having a buy on the stock. goodare also sitting on a pile of cash. that is where the hide dividend yield is likely to be coming from. the massive dividend pads as well, what is the outlook for oil companies? it was quite a surprise earlier this week. they came out with a big dividend surprise. the share price went up 20%. these state owned enterprises are not known for their generous dividend payouts. year gave at the half what they called a special dividend that was quite small. necessarily have generally high dividends. , they soldwell pipelines. people want to know what they will do with proceeds from that.

of their reserves and production comes from china. the thing is those assets are been doing. they are very expensive, older fields, don't have aspects. we see this now in south asia where we saw sinopec buying refineries. you will see it in the mideast. they are pouring money into overseas assets. are they going to reward investors in the short-term? or will it be a long play for more resources? to see you. let's get you a little preview of what is to come. we will look at the big -- the bitcoin story after the massive decline we have seen over the past four weeks. some of the key calls of the world as you get ready for the final trading weekend. this is bloomberg. ♪

>> you're watching bloomberg. i'm yousef gamal el-din in dubai. david: as we count down to markets opening in the emirates in just over an hour, yousef, what are we watching? yousef: plenty to get through here. focus.ill be in remember the declines we saw on the back of lower oil prices before the announcement of the saudi government through the finance ministry. they maintain the downgrade was anticipated. some analysts have described this as a surprise. the other thing i am watching is holdings. it is a company in turkey. they offer services. the question is what don't they

do? they downgraded the recommendation on the country -- the company to sell from neutral. the target is 11% below the consensus. your to date, gains of over 40%. lastfinally waiting for a batch of earnings. egypt will be coming out with numbers, and abu dhabi national energy as well. a tremendous downside pressure. a lot of struggles and challenges. david: absolutely. let's shift our attention to bitcoin. prices have been on a roller coaster ride. crashing to $1000. we are at $1034 now. the currency is known for its volatility. it recently suffered a new setback.

on a spatmerged within the development community that may lead to a split in the currency. to talk more about this and how the community restores confidence, we are joined by marcus, the ceo of a bitcoin startup founded in south africa. first things first, there are so many headlines on the currency, which is why i guess it has been whipped all over the place. what is important here? guest: i think -- things for that -- i think that is a very important thing. a lot of misinformation, a lot of hype. even within the community there is a lot of misinformation. they need to sit back and look at the fundamentals. we are looking at the commodity. we are dealing with a technology that is new.

this comes with growing pains. there is still a lot to work with. people jump to conclusions. part of the matter is there is an underlying lack of confidence. when you look at how the price gets thrown all over the place, it comes down to that. would you be supportive of having one central regulatory body that oversees the entire acid space and have -- asset space? like a vault of reserve so to speak. guest: coming back to your point about the currency's performance, one has to look on a relative basis. the past couple days, you may see wild fluctuations. the 30 day price change, it is up. if you look at the last two

years it is up 350%. are longle we know only. the long-term fundamentals are really good. that is the starting point. in terms of regulation we're dealing with two kinds of regulation -- traditional regulation of financial services looking after a coin that is independent of people who are building the protocol. i think that is highly unlikely. we are very pro-regulation within certain countries when people convert existing currency to bitcoin. we work with many regulators on policies like that. in terms of industry itself, i think it is a government issue. we would like to see one central group of people that are responsible and make the right decision.

there are different schools of thought. to figure out the baseline. david: that is the -- yousef: that explains the extreme volatility which does not describe the ups and downs in the currency. this showcases that. you can see all of the metrics there in the virtual currency space. now to that 20% slide. where does the currency go from here in the absence of that unified global structure? think there was a lot of upside pricing for the eta that people thought were going to be allowed of the new york stock exchange. it is not necessarily because of the governance issue of a because it never materialized. there will be one if not in new

york and another market. we will see upward price movement as well. you are right in that some of these government issues are not results. there could be an artificial cap on the price. i'm not sure exactly how it will go. run, we have seen it so many times. people get together, they sorted out. we are very competent in the long term it will be overcome. yousef: we will leave it there. marcus s indfall -- wanepoel. i looking at commodity markets. still seeing gains with brent. recuperating some of those losses here it u.s. equity futures currently mixed. david: absolutely.

this one market is australia, looking good. all the top stories and more at the top of this hour. bloomberg tech is next. ♪

>> and is 1:00 p.m. in hong kong. here is an update. the china premier has told australia that his country wants patients stability. to eat -- boost economic growth. not seek to dominate. there are two countries that should stand together against protectionism. 7.3%, of toshiba jumped, up as much as 9%. new u.s.ing its itlear unit suggesting that is an option.