♪ yousef: asia-pacific markets extend global gains as investors await jerome powell's first testimony, his language critical. mario draghi sticking with stimulus, telling european parliament that uncertainty remains and he is not ready to reduce support. , the shakeup continues kingdom replaces top military commanders and opens the door for women to enlist.

apple considers radical expansion plans for the iphone, three new devices with a big new tablet for mobile. ,:00 a.m. across the emirates 12:00 p.m. in hong kong. embraer of the global financial markets embraer i am yousef gamal el-din. over 3000 delegates expected at the global financial form. we have some big interviews throughout the day. as to to give you a tease who will be involved. we will speak to the ceo of one bankny and the central governor of the uae. the list is long. i want to shift to the real-time market action. an asian session that makes the

u.s. handoff a positive one, u.s. stocks at a four we cai. -- week high, so investors holding their breath. the nikkei is punching on come gains in terms of automakers and banks. quite a bit of pressure on chinese stocks, really the standout on the gmm. in the fx space, the bloomberg dollar index looking for direction. i want to show you other key asset classes. wti will be in focus. we will be looking ahead to u.s. inventories. an ongoingorecasting trend. we have u.s. 10 year yields holding below 2.9%, absolutely critical level. -dollar one of the key

trades. equities futures goes back to a lack of direction. let's check in on first word headlines from around the world. saudi arabia has replaced several top military commanders, including the chief of staff and ahead of ground and air forces. the news came late monday, but no reason given. the saudi military and its allies have been struggling against iran-backed forces in yemen and syria. the government also opened doors to let women in list for the first time. saudi arabia has extended foreign investment licenses for up to five years from one year. the government said the move is aimed at bolstering the kingdom's economic reform. the timeeps to reduce taken to issue licenses is said have already had an impact.

it comes as the crown prince tries to wean the economy off oil. china's economy remains robust. smaller businesses report a more optimistic outlook. arencial analysts increasingly upbeat, and sentiment in heavy industry is recovering. the holiday has seen some disruption. sales managers saw a downturn, indicatesite imagery manufacturing has increased. the man fired as south africa's finance minister is seen as making a comeback. he was sacked by jacob zuma in 2015. sources tell bloomberg he has the support of the new president. the president is to announce a cabinet reshuffle tuesday evening with the current finance minister seen going back to his former job as home affairs minister. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am debra mao.

this is bloomberg. the bank of korea left its key interest rate unchanged as investors wait for jerome powell's testimony tuesday. the aipac cio and head of emerging markets at deutsche asset management joins us for more. your expectations as to what we can get from jerome powell? a slightly more hawkish tone then? >> i think it will be pretty much the same message. it is interesting today that we have bernanke and yellen speaking at the same time, so it could be interesting the putting on what they are saying on the movement of asset prices. our view is this is ceremonial. i think the direction is pretty clear. rates are going up.

we have two rate hikes this year , more next year, but i don't think they will be anything really changing after this. the short decisions in u.s. 10 year is at a record high, and that shows you really how some of investors feel about this. where do you see that you would going and what does it mean for your strategy when it comes to some of the u.s. assets? >> we have a target of three from a level of 2.8 now. move in thea huge last three months, maybe that causes now and carries on its direction. we look at where we are in u.s. assets from helicopter view, look at the return profile over the last 15 years, and in

sovereigns we can't make anything like the returns in the past, like emerging market sovereign to get a high-yield, but in credit we can. we can make reasonable returns in u.s. investment grade, and in advising u.s.re coins to buy international equities. the last 15 your returns, we will only make a third of them in the u.s., but the rest of international markets will make reasonably good returns. remarkable how toh global markets are tied u.s. 10 year yields. i want to pick up on that specifically and the potential of an overzealous fed. he is most concerned

about is you have a rate-hiking team going to aggressively. do you share that? >> not really, no. short-term, the market will worry about these things them but we have a strong economy in the u.s.. that is backed by better earnings growth than expected, and particularly earnings revisions this year showing that. 2019 and theisk is economy overheating if tax cuts capex spin., compared to china, the 10 year rates have gone up a lot. it has been policy driven, but the stock market has done well and the economy is doing well, so i don't think why the chain would happen -- change would happen in the u.s. the dollar has been weak this

ber and we expected to benign from now on, so that is a good environment for investors. if the tenure goes to 3.5% or above, then we would get a short-term correction in risky assets. hold that thought. we still have a lot to talk about. he is sticking on the program. let's get you a preview of what is coming. on this edition of "bloomberg markets: middle east." what a rate hike means in terms of lenders in this part of the world, the uae's largest bank the point that it could seriously boost its bottom line. we continue our discussion around central banks with more market strategy from deutsche asset management and the risk of geopolitics. this is bloomberg. ♪

yousef: this is "bloomberg

markets: middle east." we are live on bloomberg tv and radio. i am yousef gamal el-din in abu dhabi. a mixed picture, volumes on the regional gauge roughly in line with the three-month average. gfh standouts like financial. world. let's get a quick check of the business flash headlines, kicking off with apple. they are readying three new smartphones this year, the largest iphone ever, and withded 10, and the phone fewer key features. apple wants to attract consumers with multitasking abilities of the tablet and those who want affordable, top and iphones.

google has launched its latest android operating system aimed at budget smart phones. it is designed for emerging markets where most devices have less memory and slower connections. it appeared at the mobile world congress. google says it is a stripped back version and the android go app can launch 15% faster. selling at stake for $317 million, vodafone's local partner will buy the stake, 50% and cap said decade long string of losses that amounts to more than $1 billion. vodafone europe will continue to provide technical support for five years. aperture bloomberg business flash. let's get back to our main stories. mario draghi has told lawmakers that he is sticking to his stimulus plan and said he is not

ready to reduce support for the rea. old area -- euroa >> we are generally confident that inflation is proceeding towards our objective, but we also have to be persistent and patient because the underlying inflation has not shown any convincing sign of an upward tech. -- tick. yousef: the bank must continue to be accommodative. let's have a wider central-bank discussion. deutscheonsider with asset management's sean taylor. what were your key takeaways from what was an extensive speech from mr. draghi? >> it is interesting. we were talking about the u.s. earlier. with europeference

and what mario draghi is alluding to versus the u.s., europe is on the mend, but not coming through in earnings. we still need more help, whereas if you look at the levels of credit outstanding and bank loan growth in the u.s., it has gone above 2007 highs. in europe, we are still way below that and why we think europe is an interesting area in equities. as things go up again, you start to see more inflation, but we have to see the delivery of earnings for more people to get interested in the stock market come and we hope that will come through. -- market, and we hope that will come through. yousef: black rock disagrees with you and says if you're looking to make strong gains, you should be looking to the u.s. >> going back to the 15-your

argument of where returns have ---year -- 15-year argument of where returns have been. >> we like japan, where we have had earnings deliver, and europe is somewhere where we see earnings pick up, but if you look at how the u.s. has done come it has been earnings and driven. yousef: i am looking at some of the recent research in the last couple of hours from some heavyweights on what the boj is doing. you have morgan stanley pushing back the boj rate hike forecast to 2019 on the back of some recent market developments, what is happening in terms of the tenure bond yields. do you navigate the boj story and what does that do to your position? got a target roughly

for 10 years where they are now. we are expecting more qe. most disappointing is the wage growth is not coming through, but what is good and positive about japan is last year we had positive earnings upgrades. for an investors were sellers of the market for the first three .uarters of 2017 i don't think anyone from a global equity perspective can appreciate the balance sheets have improved. the corporate governance is improving and has been seen in the return of equity. more specific, there is lots of alpha we can generate in japan, of the market is a question quality. financials look interesting as rates go up generally. it is quite selective. yousef: right.

yep. i want to run one more thing by you. the market has not had the possibility to digest the removal of the two-term limit for president xi jinping in china. they say perhaps most worrisome to createbe inclined external threats to maintain his unpopularity. you have some thoughts. what are your concerns? >> when he first came in, that , particularlyar with tensions with japan and vietnam. a thirdhe will have term. it will be positive. what he has done on a reform basis, consolidate power in november, is positive. for the next term, that is positive. we have seen situations where people stay for longer, as in

russia or turkey, so the situation has to be different, but at the moment come the equity market would find that positive. his new focus on squeezing out liquidity in the bond market and the financial world deleveraging is positive. inot of the market reforms terms of the hong kong bond connect has been seen as positive. in asia, we are quite excited about that from a markets point of view. let's see how it goes year by year. ah, we have tome leave it there. sean taylor joining us from deutsche asset management. we are just getting warmed up. abu dhabi bank is saying a fed rate hike will boost its bottom line, and they are giving us specific numbers. our exclusive interview with bank management is coming up.

this is bloomberg. ♪

bank expects abi fed rate hike to boost its bottom line because the eu is likely to follow. >> there should be some consideration in the market. there was two things in common. so when iterlap, happened it gradually disappeared. both institutions were complementing each other locally and internationally, as well as products. we think the synergies really happening. 2016-2017, synergies occurred and revenues happen. renminbi how does that propel you forward -- yousef: how does that propel you for 2018? >> the world is going more and more into make a size. size.ake a size -- mega

it is important to propel the country into the future. yousef: how will that affect lenders profit, like abu dhabi bank. have suffered us globally from lower interest rates for the past 9-10 years. as a combined group, we have large amounts of cash and checking accounts and savings accounts. we have 20% of our liabilities in cash. interest rates means higher income, so every bank would like to have higher interest rates. the key is to ensure our clients are not exposed. renminbi what you think it

yousef: what do you think it can add to your bottom line? have you done something like that? likeu can imagine a bank us does this analysis all the time. it is very important for us. it is like 250 million dirhams to our bottom line. yousef: in terms of u.s. bond yields, there has been discussion about where they will .o volatility toal the continue? >> there is one prediction i would focus on, the fact that volatility will return. there are three central banks that have added a tremendous amount of liquidity to the banking industry, the fed come at the ecb, and boj. we have the fed talking about

capping the balance sheet and gradually reducing it. to me that is the phenomenon we have to focus on, and that will bring volatility in q4. what you have seen this year is that the volatility we are talking about. we're talking about normality in volatility and going back to the historical norms. yousef: you just got an international banking license and are excited about what is possible. what else are you going to do and saudi arabia? all that ther to economies are interlinked, the uae and the saudi economy, and they are co-related a certain extent. they add value to each other. if you need to have a country that is prosperous, you need a sound financial sector. bank will be in saudi arabia trying to add value to the saudi

markets, as well as the saudi market will add value to the uae markets. we want to make sure both economies are doing well. yousef: international expansion has been an important component of uae bank strategy the last couple of years. where seeing the emirates looking at assets in turkey. are you considering acquisitions to spearhead opportunities? >> the bank is focusing on what we have. the bank is present in 19 countries. are internationalizing are present, refocusing our customer base, so going forward the bank has ae uae and the west lot of value. we are just now in a position to capture those values. yousef: acquisitions are not

current -- >> not currently. yousef: the pressures have moderated from a year ago when there was significant pressures and now have abated somewhat. what is your forecast for some of the interest rates and some of the loan pricing as well? tightening,re credit spreads are tightening come levels are at levels we have not seen since 2007-2008. , but we arehere yet at 2007 levels. things have improved. people watching the volatility in the bond market and when tenure treasuries rake three point 5% come are we entering a bear market in bonds and what does that mean? to our space -- mean to our space? >> we still offer relative die -- relative to

value compared to other institutions. spreadsk at our credit , they willmparable have 35. ♪

yousef: it is 8:30 a.m. in abu dhabi. the breaking lines from standard chartered. key line is fiscal year adjusted pretax, $3.01 billion versus an estimate of $3.14 billion, adjusted pretax auction of this -- origin of the statement is one. the other is they say they are restoring the dividend after a two-year suspension. you are looking at a full-year $.11end of 11 since per -- per share.

you're seeing regulatory costs rising 15%. they are looking ahead to a wider growth story in 2018. ubs pointed out that any return of the dividend would be a sign of confidence. i'm looking at how unless were positioned ahead of the announcement. buys.d 8 let's head out to debra mao for first word headlines from around the world. saudi arabia has extended foreign investment licenses for renewable period of five years from one year. , theding to the government move is aimed at bolstering the andtry's economic reform reduce the time taken to issue business licenses, which iparty had an impact. -- which have already had an impact.

u.k. opposition leader jeremy andyn has raised his stakes brexit by confirming labour party support that a come brands of deal with the customs union. it opens a clear divide with theresa may. it wants the u.k. to be outside any agreement. would seek a final deal that gives full access to european markets and maintains the benefits of a single market and the customs union as david davis promised in the house of commons with note new impediments to trade and a reduction of rights, standards, and protections. europeanmerica's allies are taking him against any move by the trump administration to avoid the iran nuclear deal. said,al is working, they in denying iran access to nuclear weapons.

president trump vowed to withdraw from what he has called -- worst deal ever invested deal unless it can be resolved by may. softbank aims to empower users. the venture capital community is concerned that the fund is muscling in on potential deals and is pushing valuations too high. >> we believe we are in a secular trend where technology will not only bring access to one billion more consumers around the globe to the internet , but also to existing consumers , giving them better services and products. debra: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am debra mao. this is bloomberg.

now for all of today's market action let's get over to sophie kamaruddin. , the rallytocks continuing in asia, but chinese on short equities are the clear outlier come a falling over 1% as markets consider what direction policy will take. there are reports china is planning to reduce its budget deficit target for the first time since 2012 just below 3%. in korea, stock gains on the kospi east after the central bank held on rates. space, we waiting are jerome powell's first public comments. switching head out to check on currencies. i want to highlight new zealand, the kiwi dollar sliding .4% after a surprise widening of the

trade deficit. elsewhere, the onshore renminbi set for the longest streak of gains in a month. in the commodities space, fairly mixed, but more pressure with ore islining, and iron retreating. when it comes to equity movers, alps rising in tokyo as its board is to discuss the merger with alpine. aia climbing after reporting a .8% rise for 2017 one cold air producer have surged with other producers -- has surgedproducer with other producers in the region, but felt over 5%. wenzhou bank dropping 7%.

-- put a job at 7%. banknational dropping 7%. yousef: let's get to our next guest live on the line. withw, i want to start out a late-night decree from the real court, which usually has major implications. this time around it affects the military. what does that mean for what has power rapidly shifting position in the kingdom? >> there are always late-night decrees. i don't think i've ever had an early morning decree when it comes to saudi arabia. mbs likes to work late through the night. in this case, another overhaul of the traditional power bases in saudi arabia. he likes to shake things up.

the reasons were given for these changes. we have seen sweeping changes in the military, some changes in civilian postings. it could he part of his drive to make saudi arabia meritocracy and bring in young leadership and people close to him. it could because of the war in lemon -- yemen is not going well. ,hey are hitting a wall there facing a lot of heat come so maybe a reboot. it could be to bring in people he trusts them a people who are close to him as he tries to push through this vision 2030, or maybe a bit of all of those things, but once again he has come in and made sweeping changes across the board, rebooting saudi arabia. extent is thist a reflection of the failure or setbacks the kingdom has

suffered in places like yemen, almost three years on the front lines, and in the region one could argue that the crown prince has not made that kind of progress he wants to be doing, and that is why he has made some of those statements -- changes. >> they have not given us any reasons, but it is nearly impossible to find somebody who says the war in yemen is going well. you have an outbreak of cholera. ,ou have malnourishment children starving and a geopolitical mess on your hands. it would seem likely in some ways it is related to that, but i would add we did see changes in civilian postings as well, the first female deputy minister come in. this is part of the crown prince's plan to reboot saudi

arabia to drive economic growth. it is impossible to do that if you don't have women in the labor force. we saw them come in with plans to allow women to drive, to get them into the workforce, and this fort saudi arabia is a r saudi arabia is a preview of things to come on that front. yousef: let's talk about -- the other big story. the leading asset management firm in the region is looking to invest $100 million this year. let's take a closer look and see where they will be investing that money. welcome back to the program. funds, fresh muscle, what do you plan to do with it? >> we think it offers a lot of opportunity. we are providers of growth

capital. we look for good management and good company's growing fast. we have seen those in the gulf and egypt, north africa. funds and we are here to back businesses. yousef: would you say you are most bullish on egypt in the spectrum of your regional agreement? >> i think egypt is getting it right. they are taking the hard measures. they are attracting foreign investors. we are impressed with what is happening in egypt. i think it will be the outperform are in 2018. we are actively scouting for opportunities in egypt. yousef: one of your prized assets, there's been quite a lot of, well, scenarios that have been drawn out in terms of what will be happening in terms of an exit. can you run us through what you're planning to do?

it is the leading delivery company for casual restaurants, growing across the gcc. we have added products and geographies. when the company matures, we will consider a sale. as a private equity business, we are in the business of buying and selling companies. valuation?t about how much will the sale generate? >> it will be a very profitable deal. equitya textbook private project, and it will be a profitable exit. yousef: so you will not give us a number? >> not yet. yousef: in terms of how the uae is holding up, you have your

finger on the pulse in terms of retail. what is the latest? what you hearing? environment is coming back. we are very encouraged by the .ncrease 2017 was a soft year, but we feel 2018 will be a rebound on the retail side. yousef: when it comes to saudi arabia, what you planning to do there? are you deploying additional resources and funds? looking at saudi arabian are positive about the launch of new products. industries that were not there a couple of years back, we think saudi arabia will offer new investment opportunities. yousef: what would you say is your biggest risk of the moment? you have quite a bouquet to choose from. the economiesgcc,

are soft and we hope the growth will come back so we can attract global investors to the region, they are taking the hard measures to restructure the subsidies,reducing privatizing, attracting investors, so i think we will get back in growth mode over the next few years. yousef: always a pleasure having you on the program. we will continue our coverage abu dhabi as we speak to more decision-makers. plenty more ahead. this is bloomberg. ♪

yousef: this is "bloomberg markets: middle east." we are live on bloomberg tv and radio. i am yousef gamal el-din in dubai. the new york state comptroller says the board of wynn resorts

did nothing to stop the alleged ,exual misconduct of steve wynn setting a tone that permitted him to wield his power unchecked. the state claims the board was aware of the allegations since 2016. struggling noble group under attack from one of its leading shareholders. goldilocks investment said expected losses are "shocking" and will erode whatever cash the company has left. goldilocks says shareholders are unwilling to accept the restructuring deal. noble group reports earnings on wednesday. sell and leaseay back its european headquarters in london in a deal worth $1.5 billion. sources also say no final decision has been made.

strong demand from overseas investors has led companies to sell and lease back there london headquarters in the past year. that was your bloomberg business flash. let's get back to the story from abu dhabi. it is the regulated re largest public relisted by assetspliant reit and market capitalization. thank you for your time this morning. you have had quite a year. how much can you achieve in 2018? what are some of your big plans? >> we have had a lot of changes in 2017. it was a big year for us. .e need to grow the lifecycle of a reit has been maturing. we have four big things we have seen in the past year.

one is more acquisitions, so growing the reit. we have restructured our debt, which means we have a healthier balance sheet and way of managing the whole portfolio. so it hasabilized increased and stabilized. that in turn has given us something that is healthy. greatit is mature and a proposition. yousef: i hear acquisitions and get very interested. i want to know more. will there be further acquisitions later this year? >> we are always looking for opportunities. that is what a reit does and what it was meant to do. it is meant to grow and look for opportunities to enhance the portfolio. we have talked about the uae property market on the

program quite a few times in the last few weeks. the reality is that it is a market still under pressure with supply and demand out of whack. talk to me about what you are seeing in the market and when this might turn perhaps? . >> the property market is evolving. ,here are pockets we are seeing the behavior of the residential market is different from the commercial market. it is different from the logistics market. generalize't really the property market as a whole. yousef: let's break it down, the leaders and laggards, give me some specific calls. which one is performing, and which one is a bit of an issue? >> you were not get a leader and .aggard

last year and this year or soft years. we will see a transformation in the next year or so, but mower importantly, how do you take advantage of these? -- but more importantly, how do take advantage of these? that's why we are setting up a hospitality read. -- reit. investors are looking for exposure to different sectors. yousef: if somebody were to be looking for property in uae, dubai residential or abu dhabi commercial? to answer trying not you, but it depends on the capital. the residential market is soft. if an investor has a good appetite for risk, they could come in now at the low, wait for another year, then recoup the benefits later.

if you don't have that, you can go into the commercial properties now that are yielding . little bit better yousef: one key theme in abu dhabi has been the change in global environment's and about how rising rates might help some of the heavyweight lenders in certain pockets around the planet, but when it comes to property him is not necessarily a good thing is it? is not.t it never is. that is one of the reasons why $400 million in december to mitigate the interest rate environment. there are ways to mitigate that risk. one is to get into a reit that has an interest rate that is stable. yousef: any exposure to your

product space great is what we are getting at? >> if you are a sophisticated investor, this is what we do. helpsare a vehicle that you get into the real estate market. if the interest rates will be d, then it will grow as you expected to. yousef: a lovely conversation. story on those reits. let's get a preview of what is to come in some of the big names coming on bloomberg tv. ray dalio speaking exclusively to tom mackenzie in beijing. make sure not to miss that. the ongoing coverage live from abu dhabi, this is bloomberg. ♪

yousef: we promise to get you a preview of our rolling coverage here. manus cranny is with me on the set. a hell of a date lined up. >> the standard chartered story, if you tie that back to the head of markets you spoke to and the deputy ceo -- yousef: a key interview, right? >> very important. they talk about the reality of rates on the bottom line. with a bank that is one of the top rated in the world. the dividends story at standard chartered will be pervasive, and that is the story with barclays, the miners, the oil companies come all about dividends. it comes to the

wider story, the other interviews we have. that will feature highly in daybreak. what else are we looking at? we will extend programming through the day. we have a couple of big interviews. the uae central bank governor joins me later on at 10:00 p.m. that will be fascinating. any sovereign wealth fund, you can see the readership spike. what are they doing, how did they see the volatility, are they more bullish on the bond as opposed to that death spiral? yousef: makes for some of the best conversations come absolutely something you have to tune in to, manus cranny throughout the day here in abu dhabi. some other key themes ahead of the open, vodafone europe to

sell its stake in a joint venture. and oh must decade-long string of losses. foundation will own 50% of vodafone. also in terms of the wider picture, looking ahead to key earnings. again come on the economic front, spain's february inflation data and euro area economic confidence. of course the big testimony from jay powell that will set the tone for market action. that's all we have for this edition of "bloomberg markets: middle east." a mixed picture, volumes

lighter. we have all the top stories from around the world coming up. "bloomberg technology" is next. this is bloomberg. ♪

thed: equity markets in asia-pacific continue to build on the rule of rally. policymakers -- index of stocks has recouped all of its -- almost all of its losses. restoring its dividend after a two-year gap. suggesting hollenback. payout.ased