manis: these are the major stories. it is data this week in the trade tensions dominate. speakers have defended globalization. the doj governor warns of implications. come together the head of the, qatar advancement authority says he is hopeful the coalition will solve the gcc crisis. aramco is gearing up for its first big national bond issue in preparation for takeover of the region's biggest logistics company.

first house its decision of 2019 this week. and for the first time in a decade, officials were facing a slowing economy without any plans to increase stimulus. policymakers are likely to confirm that monetary support had -- this white a deteriorating outlook. was to be a materialization of the risks we see on the horizon -- and this horizon is getting closer to what we had back in october -- that is the reason we slightly revise our growth forecast. >> we are seeing an economy that is slowing in terms of growth, but not stalling by any means. course, there was

synchronized euro for this time last year. now there is sigrid nest slowdown slow down, but it's not really synchronized. kicku have a growth they to high-level and is coming down a little bit. that makes people nervous. 2020 is about for 1.9 kamal of .8, something like that aired it is back down below that9, 1.8, something like . it is back below trend. manus: a thinly veiled rebuke to president trump's economic policies. >> barriers to investment and trade are increasing. unilateralism, protectionism, and populism are spreading in the world. all of these are posting serious challenges to the international order. shifting blame to others will not resolve the problems.

we are joined by our guest. >> we are looking at cyclically slower growth in china at the same time it is slowing structurally. it does make it difficult to get a really true read on what is happening. from our perspective, we expect growth to continue to slow, somewhere around the target of 6.3-ish. that will be helped along by policy support. receiver structure spending. we see tech support and fiscal policy support. this more space to do monetary policy support as well. this is slower growth, but i hardly any situation. every we have had variation on the theme of monetary policy. with the make of yesterday?

a low-profile rate cut. do you think we will see more of that or many outright cuts? if so, how much? >> the targeted monetary policy is the right way of thinking about this. i don't think we can expect blankets, heavy lifting monetary policy that we have seen in the past. that is not in china's medium-term interest. they're looking to deleverage their debt burden still. a medium-term risk. what we can expect this unfairly targeted, fairly specific monetary policy support, like the injections, some fairly targeted fiscal policy support. and also the infrastructure spending that will help to push that along over the next couple of years. >> i wanted to ask you about the market sentiment question. take a look at this chart.

aaii sentiment servant -- survey. we are already back to bearishness. how are you feeling about the market right now? >> there are lots of needs and concerns. brexit, the shutdown, all of these are worries. that's likely to persist at least in the near term. the other problem is there is actually medium-term uncertainty as well. slowing this year, we know it is slowing across the board around the globe. next few years, we expect it to be a recession. but that adds to the uncertainty in the near-term. that makes it difficult to make it outright bullish on the markets. nonetheless, we think there's growth for equities. that will get -- that will change as we get closer and

closer to the recession outlook. : where is the greatest proponent of your exposure if you believe equities will outperform? >> at the moment, i think the u.s. still looks quite good. growth this year is likely to be above trend. fedre starting to see the -- not just the fed, but most central banks around the world moving to be more patient, more cautious. we are not getting the core needed push to hike rates this late in the cycle, which is also a positive for u.s. equities in particular. manus: the risk of a no deal brexit seems to be receding after calls of a delayed split. one powerful backing in london and other eu capital. senior french and german -- say they would be up until -- would be open to extending the deadline.

>> this isn't a delay because we have a deal and lamenting. that would be one thing -- implementing. that would be one thing. and implementing by 19 march. those who want to delay it is because they don't want to exit to happen at all. >> we are preparing ourselves for all possible scenarios. a no deal avoid such scenario. treat the u.k. as a set country, it is hard to face, but we are getting [indiscernible] >> businesses say it is frankly fantasy economics to talk about a no deal runs it. it is simply not possible. >> once it happens, it will never be back. some of this will be a

historical decision, whether or not the u.k. will be part of europe are not. nus: our guest joins us from our studio in hong kong. >> we are moving ideal off the table. it does it the least move -- remove some of the uncertainty around brexit. this has been carrying on for a long time now and it has been a source of uncertainty for markets, not just in europe, not just in the u.k., but globally. at the very least, removing that does provide a little less uncertainty. but we are still left none the wiser about what will happen. i don't think there is a lot of agreement within the british parliament or within europe about exactly what will happen here. it is still an uncertain outlook. it will still be an impact for markets are some time to come. tracy: you're talking about improving sentiment around the brexit outcome.

i have a chart that shows exactly that. function shows the pound rallying into the mice 29 brexit deadline date, which would suggest there is some believe that the deadline is probably going to get extended our people are not as worried about it as they once were. whether risk premiums on u.k. assets, now that we do have the sort of no deal worst-case scenario being slowly priced out of the market? >> yeah. can they compress back in and help that support equity markets and support the pound? i think there's scope for that in the near term, especially with the bank -- if the bank of england gets on board. like i was saying before, there's no rush to hike rates. forn leave rates unchanged some time, be cautious, and helps up our growth with a little bit more certainty. i think i can help bring in risk premiums and support equity and other asset prices. anus: yesterday, it was said

there is wishful thinking. that's excessive optimism a so-called hard will be avoided. who knows? what we do know is that the potential for assets moving out of the city of london. this is slightly more before the bone in terms of consequences, --ch is potentially major five major institutions moving seven half -- five major institutions moving 750 billion euros. this is generational stuff. this is the risk, real rest of the financial economy of this brexit. >> that's right. that ie a situation think the city of london will remain a very important financial center globally, but less important post brexit. that is with the chart is showing. that is likely to happen.

shift, asgenerational you say, a structural change in the way the financial markets will operate in the u.k. and in europe. that will be an interesting movement. exclusiveing up, our with the qatari foreign minister and the qua chairman. he spoke to us in davos. that's next. this is bloomberg. ♪

manus: welcome back. , who isforeign minister also the deputy prime minister and chairman of the qatar investor authority, spoke exclusive to bloomberg in davos. on the blockade of qatar now,

qatar remained open while --ckading states are still from time to time and they , even theany movement less gcc summit. we were expecting some breakthrough might happen. others are just carrying on with its own desk qatar is just carrying on with its own national agenda. >> can you initiate anything? >> normally, for any crisis resolution, you need both parties of the crisis to engage. to engage in good faith since the beginning of the blockade. unfortunately, the blockading states were not ready to act reasonably.

even they were not ready to engageeven they were not ready o engage positively with the mediators, which is the mayor of kuwait and other friendly nations. haslinda: given the circumstances, is it likely you will choose closer ties with the likes of iran and turkey? >> there is an alternative for the gcc. we believe gcc's strength. that is what qatar has believed since its founding of the gcc. countries,q, other iran as well, those are countries that are part of our region. we need to build a strong relationship and partnerships with other countries in the region. and we need to have a. positive and constructive relationship with those countries. they are not exquisitely done because of the gcc crisis. qatar'sthe part of strategy and maintaining friendly relationships with everybody.

we have disagreements with them in different policies in our region, and we talk about these disagreements but also iran is at neighbor. at the end of the day, we need to keep this engagement ongoing. we have shared borders together. we need to engage in border security together. and they opened their skies when the blockade close to the airspace to our people. all these countries in the region are important to engage with. with the remains open gcc crisis. and we hope that gcc, other members of the gcc, especially the blockading states, they go back to reason. then they start to engage with their own region and resolve these issues. if the embargo would

persist, might you consider closer relationship with the likes of iran, iraq, and turkey? what if it leaves you no choice? >> with turkey, we already have a close, strategic relationship. we stood next to each other through difficult times. when turkey went through a hard time, qatar was there. when qatar went through a hard time, turkey was there. it is part of our region. we welcome iraq back to the arab tryings a stable nation, to help in stabilizing this nation, and a closer relationship with iraq is a plus for qatar. as i told you earlier, where that the gcc isis remains our is -- crisis remains or is resolved them iran is part of our geography. iran is our neighbor.

we hope that the gcc starts to engage together with iran in a positive and constructive dialogue to resolve these outstanding issues of our region security. $10inda: qatar has invested million -- $500 million. qatar has invested $500 million in lebanon's bonds. what is the thinking behind that? can we expect more to come? all, lebanon's stability is our stability as well. it is important for qatar. qatar has been an active player in the region in stabilizing different countries. lebanon is just one among them. he attended the arab league summit for economic the relevant and he had a discussion with the

president of lebanon. they explained to us their , buyingn, that any help the government bonds would help to stabilize the economy. we took our decision both based on our assessment to stabilize the country, but also as an investment decision. this is a good investment. but the sustainability of its debt burden. >> they never defaulted in the repayment of their interest. record that any default might happen. we will work out together with them and we have trusted confidence in their economy and , that ite of lebanon will stand again, flourish

again. ours: coming up in interview, the company is gearing up to raise money for the acquisition of the chemical giant sabic. he spoke to us in davos. that's next. this is bloomberg. ♪

manus: welcome back. aramco president and ceo has been talking about a company's first foray into the international bond market as the oil company prepares for a takeover of the region's biggest listed company, the petrol company sabic. >> we are in discussion currently about the acquisition of 70% of the shares of sabic. we are in discussion with regards to the price at this stage. >> do we have a ballpark figure on what the price will be? >> not yet.

i will not comment on the price. verynderstand, this is to keep at this stage silent about the negotiation that is ongoing. the energy minister has not been silent about the financing of this acquisition. he is looking at a potential bond issuance coming up and consent -- in the second quarter. can you comment on the financing of the acquisition? >> we are exploring. we have significant capital program to sustain that program and the potential acquisition of 70% of the stake in savitt -- of sabic. we are looking at all funding. one is bond issuance. jonathan: how much could potentially come to the market? >> at this stage, we are

evaluating. we will decide soon exactly how much we would like to take from the bond market. it is not decided yet in terms of how much we would like to. jonathan: you know what your position is with the other 30%? >> the other 30% of sabic? company.ublicly listed 30% is listed in the market. manus: the ceo of kingdom holdings says he is ready to spin off sovereign real estate investments next year. that he is currently focused on developing new projects. he discussed kingdom holdings performance in the business confidence in saudi arabia with bloomberg and davos. >> when the prince is absent temporarily, the company performed well. like it always does.

scarlet: who are you targeting in terms of investors? what is the attraction for a foreign investment -- investor to get into saudi arabia right now? >> there is no week that passes without feeling a call on investments with foreign banks and regional and international firms. francine: is this mainly from asia? >> know, europe and the united states. francine: what is they mainly ask you? >> are you ok. we will be spending a lot of money in the next six months into saudi arabia. francine: what is your second question and having you reassure them with the political server -- political situation the last couple of months? >> we talk about the opportunity it's all, how we feel about it, how much we are committed to put into it. francine: you still plan to spin off the real estate business. when will that be? have you appointed advisers?

>> we have not. we have too many real estate business categories. we have the commercial ones. we have the hospitality ones. like housing and the like. so we are not yet into the spinning mode. francine: when will you be ready for the spinning off mode? >> probably in one year, parts of it, not all. and then we had the biggest theect of hours, which has tallest tower in the world. francine: what is the catalyst? does it need a more stable come a moreical system -- stable political system and saudi arabia? are you planning to complete that $1 billion loan you haven't talking about to banks? >> we have signed terms sheets already with two banks and four foreign banks.

>> what is the one thing you worry about when it comes to some of your investments? is it the pace of technology? is it that you may be too slow and keeping up with that? >> i think economy growth, we would like to see better economic growth. saudi arabia has the largest budget ever, $1.1 trillion saudi arabia and. we hope that will help the economy locally to ignite it and support it. i think we will do well in 2019. francine. : what is the price of oil outside of saudi arabia? >> i prefer to leave it to the experts. anything north of $70 would be fine. francine: when you talk about technology and the sharing economy, are you support of talks between kareem and uber? >>. absolutely. -- >> absolutely. we are not part of the discussions. but if it ever happens, i think we are in support of it -- in

support of it, yes. this is bloomberg. ♪

manus: the national bank of kuwait reported net income for the fourth quarter that be to the highest of the analyst estimates. the bank cited income from higher interest to financing. groupke with the deputy ceo from kuwait city. >> fourth quarter is basically a continuation of the strong 2018.mance of full during the quarter, we reported net profit of $324 million.

that is 17% growth compared to the fourth quarter of 2017. the context of the full year, which i mentioned earlier, so performance. our profit reached $1.2 billion. this is record level. that balance sheet as well. grew by 5.4%. overotal is $90 billion, billion. and loan and advances declines increased by 6.9%, which is $51 billion. 4.1% --deposit as well, >> we see all those numbers on the press release. we want to know where the biggest growth momentum is for you and where you see that coming? how is saudi arabia coming? we will circle back to kuwait numbers in a moment. talk about growth and the other markets. >> basically, the driving factors for the growth and for stability is basically our

diversification and corey committees. activities.- core 9.4%.come grew by 29%rnational accounted for in 2018. and our islamic bank contributed by 9%. key factors of the contribution , ourr stability growth operation in the domestic market remains the backbone of our bottom line. we continue to leverage our leadership position in kuwait. of course, the growth and volume in lending. manus: allow may just a flesh out that key point in terms of opportunities.

are you looking at potential mergers and acquisitions in the new year? you have seen what is happening. it has been a big scene. nbk taking in bk -- part in that more? in our growths within the existing markets. we don't have any mergers or acquisitions on our table. but the fla, the growth in our butets is key for our -- definitely, the growth in our markets is key for a future. the main to markets, egypt and saudi arabia, achieved enormous performance in egypt. consolidate and still aen growth, promising market, serving the largest arab population. saudi arabia, the highest data

the strongest economy in the , it openedas well great opportunities for us in growth. we have another two licenses is saudi arabia, in addition to the existing license, so we have three licenses. for growth, what any wealth management company, a cma license. regional expansion and islamic ranking. manus: you talk a lot about saudi arabia. banking landscape in saudi arabia going to look like? is this a good thing, this consolidation in the saudi banking platforms? is that good news for the markets? >> i believe it is good news for the markets. our focus about nbk,

will be basically the digital banking. the group digital transformation is going on. we are investing hugely in the technology. if you do not focus on digitization, you will be done a sorry -- you will be dinosauring. we believe the future is in technology. it's not just on retail banking. it is also on west -- wealth management. this is the focus. yes, i agree that ksa is a huge market. elephants. our core competences will help us a lot in penetrating this market. let me bring in one other important angle, which is

the oil price. that is the other elephant in the room. the volatility has been nothing shocking. oil plays a big role when it comes to confidence in lending in terms of your outlook for the rest of the year. where do you think oil will range in the coming months? how critical is it? that it stays above a certain level for you to make money? >> we believe our -- our that the believes level of oil prices will be in $60.ange of $50 to it has as you know, solid sovereign wealth fund. this will not impact the fiscal policy. theriday, smt affirmed kuwait rating at aa. on the mega projects the

government is pushing to the market. january, we have 17 projects from the beginning of the year, 17 projects totaling almost 300 million denal. this shows the level of projects in kuwait. and physicians to lead and finances a huge project. last year totaled projects reached almost $7 billion. projects are too many that will be awarded this year and closing 2018. i believe that low oil prices won't impact the fiscal policy in the government is pushing more projects of the market. the focus of the government currently is basically to finance their projects of the tpp or through backs.

manus: kuwait unveiled its budget proposal that forecasted 2.1% following the deficit this year. that is despite an increase in spending. the finance minister says the government remains committed to economic -- has largely failed to materialize. they are expecting -- they are very conservative. they are basing everything on a $55 oil price, which is five dollars more than they did for the current year. areeven with that, they removing about 10% of all the revenue that comes, including oil revenue coming to future generation funds and try to focus on spending and growing hispanic to try to have economic growth in the country. so far, they are being very realistic about what the oil price is expected to be in the next year. a lot more realistic than saudi arabia. we saw the budget last month. >> it's good to see you this

morning. i want to ask you about the fiscal reform efforts in kuwait. we all remember when the government cut fuel subsidies two years ago, how much of a domestic outcry there was over that issue. was the situation like now? what is the -- situation like now? is they are answer implementing the big part of their fiscal reserve arms -- reforms. if you look at the budget for the year, would start in april, they are allocating about 71% of the funding that goes in the budget to salaries. they are paying for the wage bill of the government employees and also subsidies. that is about 2% below the current year, which is good in a way. but at the same time, it shows you the challenge their facing. they are unable to tinker with the social contract that forces the government to take care marvin's population. population.ts

it is the employer of first resort. have been unable to implement an excise tax because of opposition in the government. yousef: we have qatar investing $500 million into the country. hours later, just in the last couple of hours, movies cutting the country deeper into junk. >>'s shows you the complexity of the situation in lebanon. even an investment the same day cannot really help much because of how deep is the hole that the lebanese economy is in. gdp.ebt is about 141% of basically, all analysts expect come up while $500 million is great, it will not make much difference in terms of fixing the economy that needs serious structural reform. in the absence of government, no one knows where that it will come from -- that will come from.

tracy: some people would see $500 million a bond buying as an instance of debt diplomacy by qatar. 's us about politics in the ision or is qatar madeley -- qatar may be attracted to lebanese debt? guess.s anyone's but a lot of people expect in the region basically that was -- qatar was one of very few heads into the to make it arab summit economic meeting in beirut, which was shunned by most of the others. there was talk in the media that qatar would actually come in about 100 -- about $1 billion to there. investment was about $500 million, which was below that. people around the region think it is probably some diplomacy. and qatar trying to basically become -- show that it is still an important partner in the region. manus: coming up, saudi arabia joinour other gulf nations

emerging markets bond indexes. this is bloomberg. ♪

back. welcome saudi arabia and for other gulf nations will join the emerging-market bond index this month. the move will potentially pave the way for billions of dollars of inflows into securities. the index has notes from 15 eligible issuers at a face value of $119 billion. matthew martin joined us with the details. seeing saudi being the biggest constituent in the index. is,e see, with oil where it we will have the need for the governments of the region to be going out and raising debt more and more often.

that will continue to be a trend of the next few years. the fact that there is increased liquidity and focus on the sovereign issuers, it will only make it easier for them overtime, as they go out and raise my paper. you said: bank of america merrill lynch -- yousef: bank of america merrill lynch put the set of inflows. >> the saudi last issue a couple of ago, they want us to get 27 billion dollars of orders even in the midst of all the shoggi.ersy over kha the biggest beneficiary will probably be something like bahrain. a bit of extra appetite, possibly the difference between being able to print and not print, and given their more strained fiscal position, that is a better one for bahrain as the others.

and insights on the ef index inclusions on the water markets. take this in the context of the middle east region more broadly becoming more and more mainstream. you see that inequities, for the equity markets are joining the ftse, the msci emerging market index. what this means fundamentally is that it allows the gulf governments to finance them selves more easily. it does address funding issues. what it does not address is the challenge of growth. are growth challenges that most acute for equity investors in this region. manus: we start davos, we start our coverage from dallas this week. last week, week -- from davos this week. effecttrickle-down already in our markets in terms of concern about growth? because we are in fiscal stimulus growth here. >> last year was an interesting

test case. last year, what the gulf offered was an oasis of protection from dollar strength. this year, that may not be so highly in demand. growth we begin to see pick up again, particularly and parts of asia, if we see a normalization of financing conditions and parts of latin america and the most stress emerging markets, that defensive quality of the gcc may be less attractive. and where there is a pickup in growth or normalization of asia,, particularly in and you were talking earlier about the u.s.-china negotiations perhaps sending in a more positive direction, investors and the margin my look at parts of asia where you have expert story. yousef: you make the point that you are getting a little bit of fatigue when it comes to all of the bullish and overweight calls from the lenders, especially in saudi arabia.

we did put together some of the best-performing sectors in the kingdom. that is over a one-month time horizon. it is nothing short of surprising and that you have some of the key names that are leading the key sectors. where else outside of the banks are you finding opportunity for great returns? >> if you think that the banks, the most important fundamental driver of tax was meant to be the rising u.s. rate environment. the language around u.s. rates has changed markedly in the last three months, from a clear progression of increases to some debate as to whether we get those, to what degree we get those. that suggests that leadership from a sector point of view and saudi may change this year, not driven some us by the banks, but more by the consumer companies, maybe even the construction companies in an environment where the saudi government is putting his foot on the pedal of public spending. and in the last pocket, the structural and strongest stories, those are the plays into reform, stocks into health

care, insurance growth, into the inclusion of more women in the workforce in the consumer base, whether that is in fitness, whether that is in consumer retail. manus: behind the political headlines, the growth story remains. aramark it dubai -- was probably the most battered and bruised last year for a sayety of reasons -- you there's good value. areou believe that we putting in a basin terms of our market here? >> i would have to say, hand on heart, it's the first. it is very cheap. what distinguishes them from other parts of dubai is the likes of aramex have already built of their assets. they have already fully funded them. they are generating cash flow. unlike the other listed price of the dubai index, which are more reliant on the continuing growth of divine. that is a month -- growth of dubai. that is a much riskier growth.

using as at are you basis for your technicians when it comes to the oil prices? it is quite hard to pin that down to a particular number. at what range are you expecting for 2019? >> our view is that oil remains in the range of $60 to $80. yousef: that is a very wide range. >> i'm in good company. the reason i specify that range, in that range, we neither have stress for government balance sheets in the gulf nor on era of plenty. is when you get above $80 that you're talking about much faster acceleration in government spending. when you talk significantly below $60, you question whether we need another round of acidity --s and you question the round of austerity cuts and you question the weaker countries in the area.

i see we you're saying economically on the consumer side and on the banks rnf. end.e banks' the level of instability that is chilling, are you worried about political backlash? or is this bellicose rhetoric from the u.s.? >> it is a fair question. number one, as long as u.s. geopolitical strategy remains a same in the middle east region, which means essentially very close to israel but to keep iran at a maximum distance, that necessarily means that you politically the strategic overlap between the u.s. and saudi arabia will remain. the second part is the financial impact of the scandals, these foreign policy missteps, has capitalt probably the to fund diversification in saudi

and growth will again, for a while, have to come from the government. that will take saudi where it has been for the past decade. that means transition to form best to foreign direct investment, a lot of capital funding -- that means transition to foreign direct investment, a lot of capital funding. up, advocating for transformation for women in the gulf. this is bloomberg. ♪

manus: welcome back. pushing for societal transformation and qatar and across the gulf. foundation, her is the public face of an effort to provide women with better education and career opportunities. the royal highness spoke exclusively to bloomberg in london. >> there are plenty of projects

coming up one that is very close to my heart,. it is what we call a progressive school. august.open in the idea is to really push the boundaries when we talk about education for young children. we are taking three to six-year-old children, sitting them in a community where we got want to think about grades. it's more about personalized learning. howre about understanding can i support a child so they can have a future impact in the world? >> i also want to talk more about women. globally, they are paid less than men. . but in qatar, some other gcc countries, women also don't get a lot more of the perks or subsidies from the government. on top of that. , if theymen in qatar husbandforeigner, the or their children will become a qatari citizen. women, not think

just education, but society, will become on an equal footing with men and unlock their potential? >> i believe what we are doing in qatar is truly providing opportunities for all women. in terms of any gender segregation, we don't necessarily see it that we are treating women any less than men. if anything, if you look at the numbers, women are much more active in the workplace today than they were 20 years ago. it really is, once you get the women involved in the conversation, you will see a societal impact and societal change. i am foreseeing, in the next coming 10 years, things will change. that is not to say that we are place.a good i think today we have accomplished quite a lot when it comes to women's involvement in society. but again, there's always more that we can do, and it's always

-- iding an opportunity mean, we have done a great job so far with education and we can just emulate that. >> expand? , across not just our country, but across the region. dollarsrovided million -- millions of dollars for universities like western and georgetown and cornell. how does the foundation pay for these universities? >> we are a private, nonprofit organization. we get support from the government. but they don't necessarily tell us where to put our money. we have been 100% supported by the government. not just investment the foundation, but if you look at what the government has done for more than 20 years, it is a true investment in education across the whole country.

manus: you have been watching "the best of daybreak middle east." you can watch it every thursday morning right here on bloomberg television. that is 8:00 a.m. join us then. this is bloomberg. ♪

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