>> you're watching the best of bloomberg middle east. healthy economic growth in 2021 and 2022 as more vaccines get rolled out around the world. economy minister is also optimistic. riftis the end it the gulf upon us? they say progress is being made to resolve the issue.

the egyptian finance minister is expecting healthy growth in 2021 and 2022 as more vaccines are rolled out around the world. also, a campaign to cut borrowing costs. he spoke to me in an exclusive interview. if things returned to normal, for a financial year 2021, we can be close to 4%, but it depends. however, we are expected to be 2.8% to 4%. that is by financial year 2021. the estimates for financial year , given things are coming

be betweenmal, is to 5.5% to 6.5%. countryminister, the has a standby arrangement with the imf. approachxpecting to the international monetary fund for a nonfinancial agreement to reassure investors when that expires? we are still in the current one. we have not finished yet. we have not looked at this year. with the imfhip .ill continue also, nothing is ruled out.

previous one,he solutions.t for aed the imf nonfinancial arrangement. this was before covid 19. adjusted.-19 came, we say we need to leave some and nothing is ruled out. yousef: the other issue is

around your reference to try to bring in more capital inflows. the last time we spoke you were trying to get your debt to become clear a bowl. what steps are outstanding and when will it finally get there? there were some , such asnts establishing a new company, make .dditional legal requirements requirements now, getting the company to manage it is clear. we are moving at a very good pace. our expectation is

for progress in 2021. yousef: what about getting listed in the jp morgan bond index? that has been an absolutely critical factor, the emerging markets index. could we see that in the first half of 2021? min. maait: we are working toward it. i think we have told them we have fulfilled from our point of view, most if not all requirements. to influenceg them. i would ask you to give this .ortion to them yousef: we will make sure to

relay that. the ministry has been working with instruments and new ways of issuing debt. is there more to come in the pipeline? run me through what you would like to do. continuing to are issue traditional instruments and new instruments. seen two weeks ago, green bonds, the first time for us. it might be one of two or so. we are looking for more. finished the draft note for the cabinet.

once it is approved by the parliament, we will do that. the other is variables. we are working on that to determine the mechanism to issue traditional bids on bonds. we hope it will be finishing soon so we can issue that. progressing over the last two years. egypt usually issues the euro bonds in november and february. of course, this year because of coronavirus, those plans got lost. could we see you come back to the market for the first quarter of 2021?

we have issued in november and may, but this is exceptional. the main reason is because we want to lead the whole region. is an important target in the capital market. but the reason was to lead the region. out.er, nothing is ruled we will coordinate with the bank of egypt. we will see when we go to the market. yousef: up next, is an end in

sight to the gulf rift that has left qatar isolated for year ♪his is bloomberg.

yousef: welcome back to "the best of bloomberg daybreak: middle east." has an end to the gulf rift finally arrived? speakers are talking about progress with this dispute after a visit from donald trump's son-in-law jared kushner made to the region.

here is what they had to say. that it isve important for the security of the region, for the stability of that region, and for the sake of that -- of the people. end, based needs to on mutual respect for all the people of the gulf. doha.: we got more from fromts of positive signs officials on all side of this, kuwaitiatari, and official saying things are going well. we have not seen an official announcement. far close to so being finalized between saudi arabia and qatar don't necessarily include other countries party to this rift, the uae, egypt and bahrain.

i was listening to the panel the qatari foreign minister gave over the weekend. he said things that might be crucial in figuring out whether or not this crisis gets resolved. he said anytime a resolution could be holistic, and qatar is not distinguishing between any country. he said we cannot predict if there will be a resolution imminently, or if it will resolve in one day. the question is whether or not qatar is going to demand a fuller resolution with all these countries, and whether the uae, egypt and bahrain can get on board, if that is the case. if not, could we see an agreement going forward that would mark a step in a positive direction in resolving the rift. yousef: stocks rally in saudi arabia and qatar. they said they made progress toward ending the rift.

marketsmore on their with a portfolio manager. >> by and large, the recovery went through. more importantly, what i would like to highlight is, from a foreign investor perspective, it is always better to have unison. really drove four and to question the whole jcc construct and the middle east as a bloc as investable. it is a welcome step that removes the risk premium for foreign investors. this rally could help. yousef: in terms of what exactly is playing out in some of these key companies listed on the doha index, banks appear to be coming back for the fed. quality,at the credit

a good job done by the bloomberg intelligence team, i want to see how that rings for your team. -- ranks for your team. >> it remains a cornerstone of the economy. they weathered the storm very well. beenanking system had reliant on deposits coming from outside the region. particularly from the gcc. they were able to of the shock quite well and diversify funding sources. this should help ease some of those pressures and the economy in doha is expected to recover quite well. we have some construction projects that were coming to close for the world cup, but there is a significant expansion in gas infrastructure that should keep the economy boy aunt

and doha is trying to make itself the sports capital of the region. sporting events should help the hospitality sector. it is key to the economy. yousef: we had the election and kuwait and elections were nothing short of shocking. huge votes of pro-government forces for women and liberals. what are the longer-term implications for investors? >> kuwait has always been an interesting political system in the gcc and it remains so. it will be tough for the coming reforms needednt to get the economy back on track. difficultfacing a situation where they need to pass a law to fund their basic spending needs.

it will be interesting to watch what this new parliament structure and how the politics but it is not an option for kuwait. especially because we need to see some economic growth policies to be able to get the country moving. kuwait is one of the countries in the region that did not implement as much as the other countries in terms of policies to counteract the pandemic. it will be a case to watch. yousef: absolutely. on the oil fronts, which is huge for kuwait, huge for the gulf, we had the opec-plus decision in the last few days. is saying key voices

opec-plus did the right thing in light of the question of demand, given the winter virus conditions we still have ahead of any vaccine impact, suggesting they are on board with that decision that came out. what is your outlook for oil as we go into 2021? >> it was a welcome move. i think the press reflected that. clearly, the market is expecting to tighten and hopefully we throw down inventory. the other thing i am seeing, with the current dynamics around the latest opec-plus meeting, my fear is -- and because they need to remain in close ordination on a monthly basis, i think that

will introduce more volatility , and skirmishes that will happen. crosses the $50 iteshold and gets into $55, gets interesting. we have seen major rifts come about when oil was trading at these levels because shale gas was seeing a comeback. there were competing arguments within opec and opec plus about how to counteract extra supply. vocal,seeing india quite saying they would like to diversify their sources. astioning iran and venezuela their sources. supply,on top of libyan and will complicate matters. we think 2021 will be an interesting year for oil. competing next, forces a vaccine optimism and rising infection rates.

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yousef: welcome back to "the best of bloomberg daybreak: middle east." growing infection rates and fears of restrictions were weighing on stocks tuesday morning. the u.k. became the first western country to begin administering shots. that as a top infectious disease warned anthony fauci, the christmas season could be more dangerous than thanksgiving. dr. fauci: not only could new york, or any state or city facing similar problems without substantial mitigation, the middle of january could be a really dark time for us. yousef: meanwhile, congress looks to extend a stimulus bill billionk of a $908 relief plan brewing. >> i think we will have a deal

before year end. it will be very difficult. it looks like one of the sticky points. end we will work out something. yousef: how does that translate into what we might get on -- from the fed before december 31? do you expect them to step in before the yield reaches the 1% mark and keeps funding costs down? virginie: it is really important thinkingk into 2021, rates must stay low, but as markets and the economy normalize, they will anticipate normalization of policy. we had a very strong market and weak economy on the back of these support measures. point we021 at some

will have markets worrying as economies come back up over that normalization. what is important to understand, if you look at deficits in the u.s., we are at 16% of gdp on the fiscal side, a level we have not seen since 1945. that is at a very weak quarter. everything will be down to keep rates lower. one other thing that is interesting when you think about monetary policies and relative moves they will do, is china is in a spot. china has never put as much in as europef expansion and the u.s. it will have less to take back if you want to normalize. yousef: we will get to some of the china calls shortly. what about dividend paying stocks for our clients?

a gap has emerged. u.s. the worst year for dividend paying companies since the 1990's. what a decade that was. we are looking at a lag of 1.8%, the aristocrats index. is it too early to get to this trade? virginie: i think you have to go stock by stock. if it has a dividend support, not just for the dividend, but what it is doing. each has a stock you can classify as your long-term. stocksson you can find with dividends for long-term growth. i think it is worth looking at it. if you are looking at dividend players in an area of the market that continues to be under pressure, i would be careful, because rates will go up very

slowly, but they will go up. yousef: how are you telling investors to recalibrate, re--- refine their portfolio allocations? do you step out of the u.s. and go more into asia, the west pacific, emphasis on china? virginie: there are three major principles i see important for 2021. one is, rates will stay low, but they will move very slowly higher. the second is of course covid. execution,cess, but and which countries can reach the maximum number of people vaccinated the fastest. the economy in anticipation of normalization of monetary policy. if you look at that, portfolios should be incurred among two

major areas. one is around major drivers. there is still u.s. and asia tech, there is still mobility, smart cities, energy transformation. your shorter-term more tactical names you will pick up when either you see excesses -- an example, in the last two months, there have been regular financials and consumer names, but you have to be careful with those to sell them quicker. uae's: up next, the minister of economy is hopeful of vaccine will speed up the recovery in the first quarter of 2021. this is bloomberg. ♪ this is bloomberg. ♪

yousef: welcome back to the best of daybreak middle east. ministeriddle eastern of economy says lessons have been learned from covid-19, hopefully vaccine will speed up recovery in the first quarter of 2021. he looks ahead to the world expo that was rescheduled to next october because of the pandemic. we spoke -- he spoke exclusively to bloomberg. >> it's important to know the lesson learned from the covid-19, the global supply chain needs to be reviewed, not just with the brexit, but i think globally. i think it's important to look at, how can we review a

multilateralism approach with the fuel on the global supply chain for investors and traders, moving goods across global regions? and i think that's the opportunity at the moment, with the new nomination for the new wto secretary-general. and i think, as well as the outcome of the g20, new route for the wto is something of interest. using the pandemic as an opportunity to engineer the way of global trade and invest globally. this is an opportunity. be anvestors, 2021 will very interesting year, were discussions will take place -- where discussions will take place and things will not go back to pre-covid, for sure, and

investors will be at the heart of every nation, negotiation globally. >> how fast you think a rebound will be to pre-corona levels? >> i would rather not speculate on the output, but you know the risks we have heard the past couple of weeks. i think the news is the advancements in the vaccines is very encouraging. i hope this will help recovery for 2021, and more personalized hope in the first quarter of 2021. i'm realistic in the uae. the uae is well-prepared with fiscal response to the pandemic. uae, it's connected to the global economy and trade. asia, thateurope, uae because of the safety measures and policies. trade has recovered investor confidence. the abu dhabi market has reached

the point of pre-covid, which is a great sign to see the financial market picking up on the trading. i think this is something to take point on. >> your sort of take on the new administration? >> we have trade agreements with the u.s. i think that will not change. i think the importance of understanding that the economy and trade across the uae and united states, with bidens administration or trump administration, it's important to understand the history between the uae and the u.s. goes way long back, and it's important to understand the investors looking at a different together with a new global supply chain in mind with the wto, it's important to understand the agreement needs to happen, maybe trilateral,

where we can involve other countries and benefit from the opportunities that countries can really put forward. and i think going back to the israeli agreement, maybe, it's important as well to understand every nation can benefit, especially when it comes to investment. the consternation is to look at a new trade format of a trilateral agreement, or multilateral agreements, where countries can come together to understand there are trade concerns that can happen, but come together to solve solutions, provide solutions in many ways. >> what do you think the real focus will be? hopefully, the expectation that turn,n turn tur to -- in turn to economic upside. >> indeed. i think we're all waiting and

looking forward to the expo happening in october next year. i thinkd the expo site 10 days ago, the last two weeks. it's ready. the infrastructure is well in place. i was amazed. -- this isisiting it may be my third or fourth visit during construction. and i'm telling you that everyone is going to be glad. it's going to be an amazing experience. i know some parts of the expo will be open for the public in january. and that will really boost, as well, they experience for people visiting the uae. i think it's important to come and see what the uae has prepared. uaeef: let's stay with the and the purchasing managers

index remained unchanged. that is a second consecutive month of contraction. future output, that fell to the lowest rating in available data going back to april, 2012. we have more with the middle east managing director at credit suisse. >> i'm not really caught by surprise. the terms of things opening up in the emirates has only started just a few weeks ago. so if anything, that's reflected in the numbers. even if it started in november, you wouldn't see the real effect of tourism coming back, the t1ffic, in dubai, before next year. we're going to- see improvement going forward. yousef: how important is the weaker dollar? it gets through into the gulf, how significant is 5-10% weaker

durham for bringing in more people at this time in the emirates? >> it's definitely attractive. i wouldn't say it's the main thing. i think the key here is the emirates basically being one, open for business, and open for tourism. if you look at europe, the u.s., it's not open for tourism. there are few places, tourism from the gulf, you can visit. i think dubai is number one here in terms of attracting tourists. i think that's the important one, definitely the weaker dollar would help a bit, makes it a bit more attractive. yousef: let's get to the bellwether, the largest listed company, one of the biggest builders in the country. they indicated that they would stop building, or have stopped building the project. it could go one of two ways here for europe projections for the company.

which ones are you looking at in terms of scenario? >> so, there are two things as you mentioned. one is the supply state. is this good for supply? the answer is yes. but it comes at the expense of cash flow here. buyers who bought properties, and those properties now are being delayed because the projects are on hold, that's going to negatively affect cash for. if anything, it's going to be at the expense of cash flow. however, it is positive from a market perspective. the key question is how long can they keep products on hold? and what does that mean? in my view, i do not think you will see it paying dividends. would that be a surprise to the market? it was a surprise the first time. to me, it's not, but it could be a negative surprise. if you look at the start, it priced in -- stock, it priced in the good news. yousef: we saw movement on

negotiations between qatar and -- on the riff that's been going on. markets have paid a price for these tensions. if they do come together and do reach a deal, especially saudi arabia in the first inning, and qatar, how positive can that be in terms of getting fed back into these markets? betweenet's separate the friendship between the economic state, with the impact on the economies, especially for qatar, and the rest for gcc and the market itself. if you look at the qe index, it has been holding pretty well. if anything, it's up here to date. it's been self sustainable in terms of that, and local investors have been holding the market well. i do not think there is much upside on the equity markets. you can see it. the markets will rally massively, especially now that

we have sally leading it. you've got relatively positive comments from uae. you can tell there's the right steps with the right coalition. they willot think have a massive positive effect. see somenteresting to of the risk indicators. substantially.d, the same goes for qatar. these are big moves that show an ease of concern. weather related to discussions or an incoming administration, joseph biden or something different, that is up for discussion. but in terms of oil prices as we get into 2021, and as you look at the opec-plus deal signed, are we range bound? where do you see that headed? >> i honestly think oil is going to be range bound. if anything, oil, we've seen now

in terms of new, it's more or less to keep us where we are rather than basically see an oil spike 20-30% from here. that said, stability in the oil market, coupled with what you mentioned in terms of the political situation of easing, will definitely have less risk in terms of people worried about it. but that always happens. it always comes up whenever oil prices are down, whenever there is political uncertainty. but i've always been confident it is here to say -- to stay. qatari andnext, saudi arabia bonds won't be getting any major boost from a resolution in the three-year risk. we look at why. this is bloomberg. ♪

yousef: welcome back.

qatari and saudi arabia and bonds are not likely to get any major boost from any resolution to the risk. the difficulty is they are both relatively expensive, having boosted almost 10% this year, compared to 4% for e.m. sovereign debt. we've got more from the capital center director for fixed income. >> their dispute has been there for some time. both sally and qatar economies managed to call the new normal. peers are froms broader geopolitical tension in the region and strong leveraging trend we are on. therefore, i think the risk might be positive for sentiment, but might not translate into spreads. especially given the strong performance. is it time to take profit? it's now around 20 basis points wider than what we were on

earlier this year. i don't think we will go back to the previous trend given the impact covid had. the upside is pretty limited. they are expected to come back to the market as early as q1 next year. yousef: where is there room to run on a high-yield basis? you're saying there's still juice in the train? >> absolutely. ,e've had a very strong rally both in the u.s. election and the vaccine rollout. both e.m. and gcc spread rallies improved to 70 basis points. high-yield didt outperform as expected, and we do think valuations are less attractive. but if you compare e.m.'s to high yields, there is improvement. given that will is expected to stabilize higher in 2021 and the vaccine rollout comes more effective.

plus, the technical support has given money in the economy. we turn more into the stories where we like the fundamentals. for example, we like egypt versus 30 given that valuation levels are attractive. yousef: i was going to follow up on that because i was speaking with the finance minister a couple days ago and he basically laid out the country's plan to get the bond to become clear to make it more attractive to investors to keep coming into the government, that it is the second-best performing currency in the world. at the same time, it's had a significant rally. you see it maintain exposure to egypt? >> egypt was hit significantly by covid. but at the same time, the government was securing additional funding from the imf, citing multilateral lending. this led to a reversal in the

sentiment. perform relatively well. rightis doing all the steps to attract investors in local balance sheets and inclusion andting therefore attracting demand from past response. story and we the are still on the bonds. yousef: what is the key risk for egypt? >> the key risk for egypt comes mainly from anything that goes wrong with the vaccine. that's first. second is any thing in the global market picture being yields moving, being fiscal stimulus, any market that can impact the sentiment of the market. yousef: your other call relates to turkey. wow. what a few weeks it's been in terms of the shuffling and key

voices in important positions of .conomic and fiscal strategy is this a time to perhaps carefully get a little bit into that? or are you still standing back, waiting to see how this plays out? after the rally that we've had, i think it's stretched, given the latest inflation figures that we saw a few days ago, that tell us the economy is going to be. so, after a complete loss of credit ability in the central bank an increase with the list of countries, yes, they did go .ack to orthodox policy they said the right words in order to counter this crisis. economy -- wee are still cautious on turkish bonds. fromf: up next, we hear the state bank of india of how

the nation's largest lender has weathered the pandemic. this is bloomberg. ♪

yousef: welcome back to the best of daybreak middle east. india's largest lender has weathered the pandemic so far and is banking on driving business as the economy recovers. it has set aside fewer provisions for loans, at the same time posting better than expected profit. to get more with the chairman. the way the economy is evolving, we are in a position to contend the risk well. that is something that has been demonstrated in terms of oil reserves for the banks. protections -- going by those numbers, may in the third quarter of this

financial year, which will end in march, we'll probably have at least a small positive number in terms of growth. overall for the year, there is likely to be compression in the economy. but i think that's something that is very positive. what is happened is that -- what has happened is the banks were expecting worse. results see much better at the beginning of the pandemic. yousef: much of the loan growth has been driven by retail borrowers. how sustainable is that? risk of thehink the increase and improvement in our retail book is concerned, and we have seen almost about 14% growth to the second quarter, ending september. current quarter

weo, it may -- a bit, but have very robust growth, which we expect from the retail book. what about the role as the country's largest lender in terms of reviving the economy? what kind of responsibility do you see on that front? >> no, i think we are quite overall goal for reviving the economy and we are making all possible efforts. that is something you have seen which when it comes to giving support in the country, we have that in the forefront and given all the support. we are extending those guarantees and or ever

restructuring is visualized, we are at the forefront to encourage to come forward. haveld like to say we insured enough liquidity in the system. i think when it comes to liquidity, when it comes to affect quality maintenance and improving the quality, we are open to give all the support to smes in these trying times. and also, the corporate's, we have the support of any liquidity demands. yousef: sure. there's a working paper circulating where the rba is contemplating allowing companies to own banks. i'd like to get you to weigh in on that for me. what's your view? explored, think it's it's given recommendations. but i think it makes sense,

considering the fact the economy is essentially driven by commercial banking. and the leverage is around the major companies. but the economy growing, there would be potential and room for many more banks. come up with various recommendations in the recent path. they came out of sme banks. the sme banks are also finding a place in the economy. they came out of the lessons on tap. so, i think the most important part in this particular initiative would be to take care of the requirement, etc., so that when it comes to budget productions, they should be covered through the legislation. and we have seen that in the

past, also the private sector banks have come. the most important aspect would be the corporate governance, how other corporate governments is. placerying to put in necessary enabling clauses. they can go along way in terms of supporting this initiative. you said in the past you would like to monetize you know. what you make of the $40 billion evaluations that's been assessed by them? from withintroduced the bank when it comes -- it was actually in sync with our ambition of retaliation and the digital [indiscernible] this is something during the course of when we started it, we have seen we have almost

mobilized support, $900 million --e odd, and when it comes almost $400 million. when it comes to profitability of this particular book, it turned out to be something $150 million. i think these are some of the numbers we would have liked to make a difference in the passing. maybe some states will consider this suspect. [indiscernible] maybe we will share our plans in this selection. yousef: remember that you can catch daybreak middle east every sunday through thursday morning right here on bloomberg television, 8:00 a.m. dubai time. join us next.

this is bloomberg. ♪

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