♪ >> it is noon here in hong kong. former south korean president has been arrested for corruption on the concern that she may destroy evidence. she is accused of pressuring businesses. she is being held along with her friend. a look at china. pmi's. pmi. manufacturing pmi coming in at 59.8. an improvement from february. nonmanufacturing pmi rose to a two-year high. came in higher than expected.

55.1. china has confirmed that the president will meet with president trump next week saying it will be a new starting point. the talks will be at the mar-a-lago resort. china has announced it is ready to advance talks. it wants washington to ease restrictions. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. this is bloomberg. a quick check right now of the markets. hang seng just entering the lunch break. 0.5% under weather. ♪ yousef: welcome to the best of bloomberg market: middle east.

deriving stories headlines this week. oil producers gathered in kuwait to ss the effect of their production herbs. bring the markets back into balance. saudi aramco enjoyed a boost of their fortunes ahead of next year's much anticipated ipo. it change in the tax bill has investors valuing aramco at more than $1 trillion. the south african president and the finance minister. the president put his presidency on the line when removing the foreign minister -- the finance minister. middle eastern investors are not phased by brexit. they plan to expand in the u.k. and is ready to play -- spend.

opportunities outweigh any political uncertainty. >> u.k. has always been an important market for us. already have more than 35 andion invested in the u.k. we are putting an additional 5 million pounds in the next three-five years. -- in the next 3-5 years. and our main focus is going to technology and some real estate sectors. >> you are making this announcement in the same week that the u.k. is going to trigger article 50 to start the process. is there any scenario, any kind of deal that britain might make with the eu that is not a deal before the two years is up that would make the u.k. less appealing? we look at our investment as

purely commercial. we did not invest in the u.k. or europe during the financial crisis. our investments are long-term. we are not looking at the short-term upside or downside. that is how we would like to carry on with our investments. >> there have been reports that you have been discussing a bilateral free trade deal to be activated when the u.k. does leave the eu. is this in the works and are you working on it to be ready? we work among the gcc community. is going to calm, it will be among the gcc. >> the locally as well, you have made a big commitment to the u.s. -- $35 million of investment by 2020.

his excellency has already said that 60% of those investments are underway. has the election of donald trump changed anything for you? i know you said you have not been impacted by politics but has that changed anything? we are following a course of 5-10 years and we are ahead of schedule. our investments, they are outperforming in the u.s. market has done extremely well especially postelection. --hink we will look at it as in terms of the economic policies of the u.s. >> it does look like a huge amount. whate way we look at it is character we have in the u.k. compared to other countries.

we have said that we have more than 35 billion investment in the u.k. and if you top this off with another five, that will make it 40 plus. u.k. will still look like a good market. muchsewhere globally, how do you expect to increase your investment? >> we have always been very active and we will look for opportunities. part of our mandate is to have a good diversification. we will not just focus in one country or one region. we have been very active globally. not just europe. but even far east. north america. even in some of the latin american countries, we are looking for opportunities. we keep our eyes open.

yousef: still to come on the program, oil producers gather in kuwait to discuss prolonging the opec cuts. this is bloomberg. ♪

yousef: thisyousef: is the best of bloomberg markets: middle east. kuwait's oil minister believes his country will be in good shape if prices can be maintained between $50-$60 per barrel this year. they hope to hold producers. a drop in gold -- in global stockpile will rebalance the market. >> we are not surprised right now that the price has fallen back. the price has fallen back not because there are not conformity but they have fallen back because the storage has not moved yet. earlier, there are reasons why the storage has remained as far -- as high as they are today.

we will see differences in the third quarter. or later in the second quarter. pressstated in our release today, conformity was very satisfactory for the committee. conformity overall is good. we are urging other countries to follow suit. to fulfill their requirement. and hopefully that will happen soon. yousef: when you talk about inventory levels, which once do you look at -- u.s.? oez? -- oec? what we were hoping at the beginning but -- that the u.s. inventories would slowly come down. however, because of the maintenance these days and the slow season of the first quarter, we have absorbed the fact that those inventories are

not going anywhere. on the other hand, they are increasing slowly a little bit. what we are looking for is the five-year average of the countries and that stance right now at about 285 above the five-year average. once the inventory starts to go down, hopefully, we will go toward the five-year average which we hope to reach at the end of the third quarter. yousef: you're not concerned about the rebound in u.s. shale? the inventory may come down but the production may come back online even more than it is now. that cuttinge said 1.8 million barrels per day -- if you calculated with that cutg 1.8 million regard to an increase of about 1.5 million daily, per day summit and increase in 2017, subtract

from that about 500,000 our expectation of an increase in countries, non-opec i think we are on the way of consuming that access in storage. yousef: where do you see prices going in 2017? what range do you expect them to move in? >> prices were averaging around $45 in 2015. they averaged lower 50's in 2016. and i think if we can retain $50-50 five dollars throughout 2000 and 17, i think we will be in good position. yousef: russia once to lead the charge from the non-opec french. 64% for non-opec.

no one is worried here. they are convinced they will get this up very soon. the other question becomes --do you extend the agreement? i sat down with alexander novak. here is what he had to say. possibility and i would like to remind you that in the declaration of cooperation signed in december, there is an option. .o extend the agreement for another six months. we will discuss this option. we have decided that in order to make any decisions -- any decision like this, there needs to be a ministerial meeting. we have asked the opec secretary to prepare materials on the current state of the market. that should be communicated to jmc members. we will have more data on conformity and how markets and

inventories are reacting. and what is the production in the u.s. and other non-opec countries. this will give us more information to base a decision on. -- at theadd in his ministerial meeting, a decision can be made. it is too early to draw conclusions on this today. not all participating countries were represented today. this topic needs more time. and more research done before a decision can be made. thisf: a note came out morning saying that if a deal is extended, you are looking at $60 a barrel higher this year. there is some complexity involved in the delay. i spoke with the all money oil viewter and here was his as to why the delays were happening. >> i think come spring, when online, and to move>>

the refinery turnaround is over, we will see some positive inventory reduction as we expect. for the extension of the disagreement, in my opinion it is highly likely it will happen and it is needed. >> the biggest names in u.s. oil have been gathering for the conference. she steele was there and was talking oil prices and the shale revolution with some of the country's top producers. >> the big question continues to opec-non-opec cut. appears to be here in new orleans, yes to a certain degree. i spoke with the ceo of pioneer natural resources. and how resilient he is to lower prices. >> our breakeven costs are exceptionally low.

you tack on interest and gna burdens, we are below $20 a barrel. >> the real-life price is a different story. the industry is still losing capitol at about $50 a barrel. confidential resources is concerned they are hedging into 2017. i asked at what a $40-40 five dollars price would mean to their plans. >> we would start rethinking the level of investment. we have so much option a la date with our assets. i told you about the uncompleted wells. ken --d continue with completing those. >> the tone at the conference has been more cautious. spending is moving higher in 2017 but countries are not that

exuberant yet. watching that price very carefully. opec's production cuts are heading towards a fourth month and some members are calling for an extension when the deal runs out in june. algeria has joined kuwait proposing that the curbs are maintained to stabilize the market. we spoke with ian bremmer who said saudi arabia is key to any decision. a fair amount of compliance from a lot of opec members. more than what people were expecting. at the end of the day, it is a saudi initiative. they are needing to focus on growth. and on the budget. which means that it is hard to imagine that this deal is going on that much longer. ultimately, what the saudi's need is not an opec agreement. they need the 2020 plan. toy desperately need diversify their economy and to

unlock the economic potential of which iseir population nowhere in there a economy right now, and of course i'm talking about women. while we do have in mohammed a who wants to make a difference and feels the urgency, a are starting late and there is a lot of conservative push back within their government. a risky proposition. deputymentioned the crown prince. he did fly to washington earlier this month. is that more about building a good relationship with the u.s. or is it about the lineup is a political profile in his own country? >> at the online same time thate king has been traveling to asia with a retinue of over 1000, they are focused on money, in wantase of the u.s., they defense contracts and intelligence cooperation and for the relationship to be good. the saudi's were shocked by the passage of the legislation that allowed for the litigation

against the government if it was seen that there were citizens involved in the terrorist attack. you are empowering lawyers here which as we know in the u.s. is always a bad thing to do. when i think about the u.s.-saudi relationship, they has been deeply worried. they were unnerved by the obama administration. they like donald trump he does not talk about human rights so they will not get that criticism domestically. they like donald trump because he does not like iran. the balancing to the degree that happened under obama is something they do not have to worry about anymore. yousef: coming up on the best of bloomberg markets: middle east -- the potential 300% boost. we look at saudi aramco and what that means for its highly anticipated ipo. that is next. this is bloomberg. ♪

♪ yousef: you are watching the best of bloomberg markets: middle east. her and steam says saudi aramco's market value could be more than a trillion dollars when it goes public. having the government/it's tax rate from 85% to 50%. we discussed what is expected to be the world's biggest ever ipo. >> it is very significant. what it does is take the profitability of aramco from a low margin company to one that will have margins per barrel similar to what we have seen in international companies. what the saudi government is trying to do is to increase the by raising the value of the company significantly. as we move forward, the listing of the company next year -- the proceeds from that listing will be very important to the saudi

government especially given the deficits they are running at the moment. yousef: what does this latest move mean for market bulls and bears? the take away from both ends of the market. bulls, what it means is that we are moving closer to the ipo. i think the thinking is that saudi does not want to ipo its most valuable asset in a $40 a barrel environment. it once to make sure the oil high as possible moving into the ipo in 2018. in terms of what that means for policy, we will see price maximization emphasized over mark -- over market share maximization. end ofc meeting at the may, i expect saudi to push for an extension of the cuts we have seen. the way to look at it from the bearish perspective is that the

proceeds that come from the ipo which could be $50 billion-$100 billion could be important in terms of plugging saudi's finances if we stay in a lower than longer world. saudi is running a deficit. to keep gdp below 30%. if oil prices remain where they are, the proceeds from the ipo will be important in ensuring that saudi heads its financial markets. -- it is look at this reminiscent of what saudi is late 1990's, early 2000's to what beijing is doing. gearing up for these massive ipos. the investment banks were jostling for position. in a piece in that deal. what is the next structural adjustment? we have a path adjustment that

brought it in line with global standards. is there anything else we should be expecting saudi to do in terms of a remco -- of aramco? and you have a state owned enterprise that has a share price to worry about, it tends to drive efficiency. we sell that with the chinese oil companies and the russian oil companies. aramco willof saudi drive productivity improvements which should be beneficial to saudi. steps, we the next will have to wait until the end of the year, early next year before we see the financial results from 2017 and that will be critical for the valuation of the company. the next thing the market will be interested in is the reserve market. saudi sits on over 260 billion barrels of oil reserves.

there has been speculation of what those reserves are. i think the disclosure we will see as far as aramco's listing will be one of the most closely watched data points. david: where are we? >> our senses that there is nothing to worry about. doest feel is that saudi have the reserves and it will back up those numbers. if they came in significantly below what saudi was quoting, that would be very bullish. if it came in significantly larger, that would be a bearish signal. i think it will be one of the most important data points. yousef: what other risks could derail a smooth start to this ipo? >> the biggest risk is oil price. tradedid see oil prices down into the 40's, that could

mean that saudi will hold the -- will pull the ipo. that is probably one of the biggest risks to moving ahead at this stage. i think what you will see from opec is one in which we reinforce the production cuts that of already been made and we try to get crude prices back into the $60 range or possibly a bit higher where i think is where saudi wants that in advance of the ipo. next on the best of bloomberg markets: middle east, hear from the emirates ceo. that live-stream your favorite sport at the airport. binge dvr'd shows while painting your toes. on demand laughs during long bubble baths. tv everywhere is awesome. the all-new xfinity stream app.

xfinity. the future of awesome. the biggest week wow, watchathon has netflix? hey, drop a beat... [ beatboxing throughout ] show me orange is the new black. wait, no bloodline. how about bojack? luke cage. oh, dj tanner. maybe show me lilyhammer. mmm, show me last chance u. on second thought, maybe pompidou. narcos, fearless, cooked, the crown. marco polo, lost & found. grace and frankie, hemlock grove. season one of... show me house of cards. xfinity watchathon week starts april 3. get unlimited access to all of netflix and more, free with xfinity on demand.

david: it is 12:30 here in hong kong. looking at earnings, reporting the largest combined profit in five years. speaking exclusively to bloomberg, the air china cfo said the carrier expects to reduce exposure to u.s. dollar debt this year. >> we management hope that by the end of 2017, we can reach 35% or there about. 35% is our target that structure. -- debt structure of the rate at the end of the first quarter, we improved dollar debt ratio. i estimate it will be around 45%. david: the japanese finance minister has criticized toshiba. he said toshiba needs to sort itself out. the loss at the westinghouse unit could be more than $6 billion. to south africa. the currency is extending its with president jacob zuma having fired his finance minister. ofa accused gordon undermining his authority. he warned him to come home from investor roadshows in the u.k. news 24 hours a day, powered by journalists in more than 120 countries. let's get an update on the

markets. an ok day so far across asia. juliette: we are seeing the regional index, holding on to those gains. terrifichat has been a three months for asian investors. for chinang through -- good buying in that index. also, good movement in the new zealand market, higher 0.4%. aswitch out in malaysia, little bit of a switch out from some of the hong kong stocks as well. helping the regional index as well. let's look at some of the commodities. brentext crude oil -- crude down 0.5%.

the best weekly gain in the oil market so far this year. we are counting down to the reopen in hong kong and china at the top of the hour. this is bloomberg. this is the best of "bloomberg markets: middle east ." the world's biggest long-haul carrier says it will adjust strategy in accordance with the u.s. laptop andy reid he is hoping some creative thinking may mitigate the fallout, at least from the laptop been. -- laptop ban. > >> there are issues dealing with travel and we are dealing with those. the executive orders dealing with travel. more recently, the laptop ban. the situation is we will be

the situation in cities we fly to in the u.s. very carefully. we have had upgrades in the visa requirements for those passengers traveling to the u.s. outside the visa waiver areas. taken together, a number of things we are, as i have said, looking at almost twice a day to make sure there is no diminishing and demand in the premium cabins, a economy cabins, etc.. there is a degree of adjustment going on. i cannot tell you whether that is of great significance till probably the middle of next month when people are making plans to visit united states during the course of the summer months. all of this doesn't help, i have to say, but we will have to wait and see. thisf: i will put reasonably delicately. do you think this is more than just a security issue? the reason i ask this, u.s.

carriers have been lobbying against gulf carriers. find it interesting there is not complete overlap between the u.s. and u.k.. uae off has left the its list. >> i think it he former question, the first question, the first state to cross over to startmmercial world and taking sides on these particular issues makes no sense to me. i hope that has not been the case. i believe the united states had a clear and present threat presented to them and they have acted accordingly. if it is as they suggest it is an there is a concern, it should be applied to the airline industry universally. in other words, if there is concerns about activities

with terrorist groups using laptops, these can be carried on any aircraft, anywhere. that really needs to be looked at very carefully. the notion they should be confined indefinitely to these countries prescribed by the nine states is a work but -- prescribed by the united states is a worry. more universalde and its applications, as indeed the liquids and gels were, the shoes. as the united kingdom is concerned, they have their own judgment. they make their own call with regard to what procedures they are requiring the dubai government security offices to do. and there are some upgrades of surveillance and let's say detection on both hand baggage and hold checked baggage -- w

check -- hold checked baggage. there is some concern in this part of the world. its own.e will do we noticed the germans don't seem to be too concerned about it. others are on the fence. we are waiting to see how that works. but i wouldn't believe if it becomes a universal concern, a global concern, all airlines will be faced with the same kind of restrictions and those carriers in our region are facing today. yousef: that officials have repeatedly said they see two more rate hikes this year. but now, if the boston president has his way, it will be more than that. he said the benchmark may need to be raised to four times in 2017. >> four is more gradual than what we did. less than what we did in the

we were coming out of a recession. we were raising it every single meeting. relative to that, this is much more gradual even if we did it every other meeting. i view four over the course of this year as being gradual. i would say we have been gradual up till now, so once a year in december is a gradual pace. as we get to full employment, close to the 2% inflation target, we don't need to make up much more ground and that would indicate we need to raise rates a little bit more quickly. yousef: coming up on the best of "bloomberg markets: middle east ," with citizens working across the gulf, the philippines has deep ties to the region. the finance minister tells us how it plans to attract more middle eastern money. this is bloomberg. ♪

yousef: this is the best of "bloomberg markets: middle east ." the philippines finance secretary says his country is keen to draw investments from the middle east. he said the government is interested in deepening its ties with the gulf. >> this is our middle east show. i want to talk about the roadshow you had at the end of the year, investment roadshow. various places there. also, the president has long been scheduled to go to the region. what is the priority? what sort of deal do you want to come back with? >> essentially, the president is going there because we have a lot of foreign workers in the middle east. the contribute a lot to philippines and he won by an elming margin among the

4fw's.'s -- we welcome the middle east capital to come to us. >> you want to set up a bank in the middle east. of the landchairman bank of the philippines. we have been mandated by the president to establish a banking presence in the middle east for ease of transactions with our osw's there. our people have been surveying the areas and they have looked at dubai and bahrain. a couple, or 10 days ago, i had a meeting with the chairman of the bahraini chamber of commerce. he was saying it would be very

good for us to establish a bank there. >> and you think a decision would be made? -- when do you think a decision would be made? >> by august or september of this year, we will have a banking presence. perhapsrd you are trying to attract will refinery in the philippines by middle east companies? >> we are looking at improving their investments in the philippines and certainly a refineryobably an oil would be perfect. >> help out brexit? -- how about brexit? u.k.00 filipinos in the remitting $1.4 billion. what is going to be the direct impact from brexit? >> the philippines, we get yeard 2 $29 million a

that way. every dollar counts. we are worried about the pound, and of course the filipinos there, but i believe our countrymen are very resilient and i am sure they will continue to support their families and the philippines, although probably at a lesser amount because of the severe changes in the value of the currency. the filipinos there are either in the health care business, health care jobs like nurses. when prince philip was in hospital, he had a bunch of filipino nurses taking care of him. as the hotel industry. they earn pretty good money. i think they will continue supporting their families in the

philippines. >> on the domestic front, tax reform. how confident are you it can happen this year or be approved this year? stuck in the house. what is the biggest push and priority? our billsry confident will pass both the senate and the house this year. probably around october. we will get our first package of our tax bills passed. lowering involve the of the tax rates for to 15%.als, from 32% the amount of are countrymen of.ur countrymen can avail pesos will not00 be taxed.

the last big tax reform the philippines went through was in 1998. we have to update our tax stables since they have been overtaken by inflation. we are also part of the package. by updating that the taxes from fuel. 1998.el taxes were set in also, attacks on automobiles. we need the funds because we are going on a big infrastructure push. the only way to really finance on a responsible basis is to improve our tax collections. aside from the tax bills we have pushed, we are pushing very hard on tax collections. as you know, we have gone after

a very big -- gone after very big tax invaders. -- evaders. our tax teams are very successful in gathering the evidence of tax evasion. >> we don't know who the next central bank governor is going to be. usually by now, we would know. intow you have a say the next central bank governor is going to be. can you give us some insight right here on bloomberg television? >> if you listen to my first choice, which i announced last october, you will come to the conclusion whom i second and third choices are. there going to make sure president has all the information to make the proper choice and it will be a responsible choice and the

choice of a person who is eminently qualified to fill the shoes which are very large of current person. yousef: coming up next, south african president jacob zuma stokes turmoil on the markets. will have reactions ahead. ♪

yousef: welcome back to the best of "bloomberg markets: middle east." the feud between south african president jacob zuma and his finance minister continues to roil markets. afterms took a dive expectations he would be fired. economic implications and market reactions. >> as this dispute has erected rupted again,

where do we go? he attended the funeral of an anti-apartheid campaigner. you get the sense that the battle lines have been drawn even more starkly than in past episodes. yes, it looks like it is reaching some kind of conclusion. the market won't like that. after that, it depends where things go. >> this is us that we have been covering for a few months. how does this go to the next level? is there parliament involved? or can he out rightly dismisses finance minister. >> he can do pretty much whatever he wants. the danger is, some other cabinet members or part of the civil service will decide to throw in their hat and create a

split in the anc, heading toward the december conference. that is going to upset investors and creates a background of uncertainty. at a time when south africa actually has been doing pretty well. you look at inflation, the inflation rate has been falling. that is why some people have been positioning for a rate cut. up until this whole thing blew up again. now that has been taken off the table. >> you are sticking around. let's cross over to another emerging market, turkey. the state owned bank saw a record plunge after a senior executive was arrested and accused of helping iran beat u.s. sanctions. tell us more about what happened here. is on tuesday,d it emerged the deputy ceo of

this company, the biggest state run lender on the istanbul stuck in strange -- stock exchange, he was detained at jfk on accusations of helping others of aid iranian stations -- others evade iranian sanctions. a gold trader was arrested in the u.s., part of the same case. he is accused of running the gold ring. he was supposedly cheney lean -- kenneling funds through this bank. they arrest brings us back home. >> everybody loves a good surprise but not of this sort. cut up why everyone was by this, looking at the stock price. >> the reason why it plunged 19% yesterday, the most on record, the reason people are so cold

called out, he had in some capacity had rudy giuliani. his role is not clear, but perhaps to intercede. giuliani was meeting president erdogan. the other reason this was such a wasrise, this executive never named in the original corruption allegations. e were very wide-ranging corruption allegations. he was not one of those people. he was in new york for a , a capital raising exercise. this was not a man on the run. you, great reporting career joining us live from

istanbul. let's get more on the story. withn kerrigan is still us. we are looking ahead to an april 16 referendum. this latest stock specific story element of the greater turkey story. battle lines are being drawn between the presidency and the central bank. stark asnot quite as we were seen in south africa, but there has historically or at least over the past 12-18 months been a kind of division in views about how to manage borrowing costs in turkey amid an unpleasant economic backdrop. this story is all about the lira and inflation. as we go to this referendum april 16, president erdogan is desperate to keep the lira under control so there is not a sense among voters that inflation is running out of control. he wants to keep that stable.

so that is really the key thing to watch as we head toward the boat. ofsef: from the perspective lower oil prices, they come at a good time for the turkish economy. when they were higher, there was a vulnerability in emerging markets face. it couldn't really have come at a worse time because turkey does not have a lot going for it at the moment. it has this political situation. ties with the eu are weakening. it has the syria issue to deal with. athas terrorism incidents home to deal with. the background is, it is not good. as i say, it is the economy that erdogan is looking at because he wants those votes. yousef: we have a busy week ahead i. we will be talking to the

managing director at capricorn funds. we will be here for the start of the trading weekend. do join me then. this is

>> good and gone. south african president jacob zuma has fired his finance minister and eight others. the rand plunges. and more momentum for china. official factory thee climbed for highest level in five years.