Japan’s LDP Loses Upper House Majority; EU Retaliation | Horizons Middle East & Africa 07/21/2025

Japan’s LDP Loses Upper House Majority; EU Retaliation | Horizons Middle East & Africa 07/21/2025

>> GOOD MORNING.
THIS IS HORIZONS MIDDLE EAST & AFRICA.
STAYING PUT, JAPAN’S PRIME MINISTER IS VOWING TO STAY ON
THIS BY FAILING — SECURE A TRADE DEAL WITH PRESIDENT TRUMP.
FIGHTING BACK, E.U. AND VOICE ARE SET TO MEET TO
DRAFT AN RETALIATORY PLAN IN RESPONSE TO A POSSIBLE NO-DEAL
SCENARIO WITH THE U.S. ON TARIFFS.
ISRAEL WARNED IT WILL MOVE INTO THE HEART OF THE GAZA STRIP AS
IT ACCUSES HAMAS OF STALLING ON U.S. BROKERED CEASE-FIRE TALKS.
IT IS JUST GONE 8:00 A.M. ACROSS THE EMIRATES.
I AM JOUMANNA BERCETCHE IN DUBAI.
ANOTHER BIG WEEK IN TERMS OF EARNINGS.
TECH EARNINGS TO GET THROUGH. TESLA, ALPHABET.
THINGS ARE BEGINNING TO PICK UP MOMENTUM WITH MANY OF THE
EUROPEAN BANKS REPORTING TOWARDS THE END OF THE WEEK AND
THE ECB MEETING SO QUITE A LOT TO GET THROUGH.
THIS MORNING, WE ARE SEEING THE S&P FUTURES NOT TO DO A WHOLE
LOT, UP EIGHT BASIS POINTS. TAKING STOCK OF THE WEEK LAST
WEEK, LET’S NOT FORGET ON THURSDAY, WE SAW A NEW RECORD
HIGHS FOR BOTH THE S&P AND THE NASDAQ AS WE SPEAK ABOUT BETTER
U.S. BANK EARNINGS AND THE BETTER
MACRO BACKDROP OUT OF THE U.S. DATA THAT CAME OUT LAST WEEK.
RETAIL SALES FIGURES WERE VERY STRONG. EUROPEAN MARKETS DIPPING
SLIGHTLY HERE AS WE TALK ABOUT E.U. LEADERS COMING TOGETHER AND
THINKING OF SOME COUNTERMEASURES TO THOSE U.S.
TARIFFS SO WE ARE GOING TO GET A LOT MORE TARIFF DISCUSSION IN
THE COMING WEEKS AS WE GET TO THE AUGUST 1 DEADLINE AND
DOLLAR-YEN IN FOCUS TODAY. WE SPOKE ABOUT THIS AT LENGTH
IN THE RUN-UP TO THOSE UPPER HOUSE ELECTIONS THIS WEEKEND.
NOT THAT MUCH OF A SUPPLIES BECAUSE — SURPRISE BECAUSE —
YOU ARE SEEING THE END TRADE FURTHER VERSUS THE USD AT .2%
OR SO IN THE RUN-UP TO THESE ELECTIONS.
IT DIDN’T LOSE QUITE A BIT OF GROUND, DOWN 1.5 PERCENT, SO WE
HAVE RECUPERATED SOME OF THOSE LOSSES PERHAPS BECAUSE THE BIG
EVENT IS NOW OUT OF THE WAY SO WE WILL TALK ABOUT THAT ON THE
SHOW. THE ENERGY COMPLEX SITTING JUST
SHY OF $70, 60 NINE DOLLARS. ONE OF THE DEVELOPMENTS THAT
CAME OUT LATE ON FRIDAY WAS THAT THE E.U.
HAVE NOW APPROVED ANOTHER ROUND OF SANCTIONS ON RUSSIA
PETROLEUM PRODUCTS SO AGAIN, THAT COULD MAYBE LEAD TO A BIT
OF A TIGHTENING IN THAT MARKET BUT FOR THE WEEK AS A WHOLE, IT
TRADED IN THE NEGATIVE. LET’S CHECK IN ON HOW MARKETS
IN ASIA ARE FARING. AVRIL HONG IS IN OUR SINGAPORE
STUDIO. A LOT OF FOCUS ON JAPANESE
ELECTIONS OVER THE WEEKEND. AVRIL:
YEAH, AND THAT HISTORIC SETBACK FOR THE RULING COALITION
ULTIMATELY SEEN AS NOT GOOD NEWS FOR JAPANESE ASSETS.
WE MIGHT SEE A BIT OF PRESSURE COMING IN FOR EXPORT RELATED
STOCKS GIVEN HOW THE ELECTION RESULTS COULD INFORM TRADE
TALKS TO COME BUT THERE ARE ALSO INVESTORS THAT BELIEVE
THAT DOMESTIC ORIENTED STOCKS COULD SEE SUPPORT GIVEN IF WE
SEE ANY TRACTION AMONG OPPOSITION LAWMAKERS ABOUT TAX
CUTS. TODAY, STOCK MARKET IN JAPAN
ARE SHOT. FUTURES ARE EDGING LOWER.
YOU TALKED ABOUT THE YEN FIRMING UP A LITTLE.
ULTIMATELY, ANY GAINS EXPECTED TO BE SHORT-LIVED AND DON’T
FORGET THAT WHEN IT COMES TO THESE GAINS ON THE END, IT’S
ONLY PARTIALLY RECOVERING THE LOSSES THAT WE HAVE SEEN SINCE
EARLY JULY. THIS WEEK IN JAPAN, WE HAVE A
40 YEAR BOND AUCTION TO GET THROUGH.
JUST QUICKLY TALKING ABOUT SOME OF THE OTHER ASSETS WE ARE
SEEING IN ASIA INCLUDING THE HANG SENG THAT TODAY, BRIEFLY
TOPPED 25,000, THE HIGHEST SINCE EARLY 2022.
A LOT OF TECH OPTIMISM GOING ON BUT THAT FOCUS ON JAPAN FOR NOW.
JOUMANNA: THANK YOU SO MUCH. LET’S PICK UP THE DISCUSSION
ABOUT JAPAN. THE PRIME MINISTER SAYS HE WILL
STAY IN OFFICE DESPITE AN HK REPORTING HIS RULING COALITION
LOST ITS UPPER HOUSE MAJORITY IN SUNDAY’S ELECTION.
THIS MARKS THE FIRST TIME SINCE 19 55 THAT THE LIBERAL
DEMOCRATIC PARTY WILL GOVERN WITHOUT CONTROL OF BOTH
CHAMBERS . LET’S BRING IN OUR GOVERNMENT
EDITOR. SO I WAS SPEAKING ABOUT THIS AT
THE TOP OF THE SHOW. THE RESULTS ARE PRETTY MUCH IN
LINE WITH WHAT THE POLLS HAVE BEEN PREDICTING.
LDP HAVE LOST THE MAJORITY IN THE UPPER HOUSE.
THEY ARE CURRENTLY NOT FACING A MAJORITY IN EITHER THE UPPER
HOUSE OR THE LOWER HOUSE. CAN THE PRIME MINISTER ACTUALLY
STAY ON? WHAT DOES IT MEAN FOR HIS
FUTURE? YUKO: YES. HIS COALITION GOVERNMENT HAS
MISSED SECURING A MAJORITY. HE HAS LOST CONTROL OF BOTH THE
UPPER HOUSE AND THE LOWER HOUSE. HE HAS ALREADY SAID MULTIPLE
TIMES THAT HE WILL STAY ON DESPITE THE RESULT WHICH
SUGGESTS HE WILL HAVE TO COBBLE TOGETHER ENOUGH SUPPORT.
THAT MEANS HE WILL LIKELY HAVE TO MAKE CONCESSIONS TO THE
DEMANDS MEANING MORE FISCAL SPENDING IN SOME FORM IF HE
DOES MANAGE TO STAY ON BUT GIVEN THE HISTORIC NATURE OF
THE LOSS, IT SEEMS DIFFICULT TO SEE ISHIBA REMAINING IN POWER
FOR MUCH LONGER. THIS IS THE FIRST TIME THE
LEADER OF THE LDP HAS LOST CONTROL IN BOTH THE UPPER AND
LOWER HOUSE SINCE THE PARTY WAS STARTED IN 1955 AND ALL THREE
LDP PRIME MINISTERS WHO LOST THE MAJORITY HAVE BEEN LEFT.
IT’S HARD TO SEE ISHIBA MANAGING. JOUMANNA: YEAH, CERTAINLY A LOT OF
PRESSURES ON HIM EVEN THOUGH HE IS INSISTING THAT HE IS GOING
TO STAY ON IN THE ROLE. HOW COULD OPPOSITION PARTIES
TAKE OVER? YUKO: TECHNICALLY, THEY COULD.
IT’S A POSSIBILITY SINCE THEY HOLD MORE SEATS THAN THE RULING
COALITION BUT IT SEEMS LIKE A VERY REMOTE POSSIBILITY AS IT
STANDS GIVEN THOSE SEATS ARE SPLIT BETWEEN A DOZEN OR SO
PARTIES AND IT’S VERY UNLIKELY THEY WILL BE ABLE TO COME
TOGETHER TO FORM A GOVERNMENT. IT WOULD PROBABLY MAKE MORE
SENSE FOR THE MARGINAL POSITION PARTIES TO TRY TO INFLUENCE
POLICY THROUGH THE LEVERAGE THEY HAVE OVER THE RULING
COALITION AS THE LDP STRUGGLES FOR NOW AND WAIT FOR THE NEXT
GENERAL ELECTION TO CONSOLIDATE MORE POWER. JOUMANNA: AUGUST 1 IS AN IMPORTANT
DEADLINE FOR COUNTRIES ALL AROUND THE WORLD.
THESE TRADE TALKS AND THE PRESSURES ON JAPAN TO SECURE A
TRADE DEAL WITH THE U.S. HOW DOES THE ELECTION RESULT
OVER THE WEEKEND IMPEDE OR ACTUALLY SERVE AS AN OBSTACLE
TO THE CONTINUATION OF THOSE STOCKS? YUKO:
THE TRADE TALKS, THAT’S SOMETHING THAT HAS BEEN HANGING
OVER THE ELECTIONS AS WELL. ESSENTIALLY, IT REMAINS
UNRESOLVED FOR JAPAN AS WELL. JAPAN IS SET TO RAISE ACROSS
THE BOARD TARIFFS BARRING A DEAL WITH THE U.S.
AND SO FAR, THERE HAS BEEN NOTHING REALLY CONCRETE TO SHOW
AFTER JAPAN’S CHIEF TRADE NEGOTIATOR HAS BEEN IN
WASHINGTON SEVEN TIMES ALREADY. HE IS SET TO APPLY AGAIN AS
WELL BUT NOW THE RULING COALITION, WE HAVE TO CONTINUE
NEGOTIATIONS FROM A WEAKER DOMESTIC POSITION WITH THE
DEADLINE FOR HIGHER TARIFFS COMING UP IN AROUND 10 DAYS NOW.
JOUMANNA: THANK YOU SO MUCH FOR GIVING US
AN OVERVIEW OF REALLY IMPORTANT ELECTION RESULTS.
BLOOMBERG’S NORTH ASIA ECONOMICS AND GOVERNMENT
EDITOR, YUKO TAKEO . GETTING YOU UP TO SPEED ON SOME
OF THE LATEST AIRLINES NEWS WE HAVE BREAKING NOW FROM ALASKA
AIR AND THE COMMENTARY THAT WE HAVE RIGHT NOW PER THE FAA IS
THAT ALASKA HAS REQUESTED A GROUND STOP FOR MAINLINE AND
HORIZON OPERATIONS. SO THIS IS INFORMATION THAT HAS
JUST COME TO LIGHT, JUST A COUPLE OF MINUTES AGO, WAITING
— AWAITING MORE INFORMATION AS TO THE REASONS WHY THEY HAVE
REQUESTED THIS GROUND STOP BUT THIS IS JUST BREAKING IN THE
LAST FEW MINUTES. LATER ON IN THE SHOW, WE WILL
HAVE DANNY LEE COMING ON TO TALK US THROUGH THIS AND A LOT
MORE THAT IS GOING ON IN THE SPACE AS WELL.
A BUSY WEEK AHEAD FOR MARKETS. THE EUROPEAN UNION ENVOYS ARE
SET TO MEET SOON TO SET A PLAN FOR HOW THEY WILL RESPOND AT
THE BLOCK CANNOT SECURE A U.S. TRADE DEAL BY PRESIDENT TRUMP’S
AUGUST 1 TARIFF DEADLINE. JOINING US IS THE FOUNDER AND
CEO OF ALGORITHM RESEARCH. AGAIN AS I WAS HIGHLIGHTING AT
THE TOP OF THE SHOW, WE ARE COMING UP TO ANOTHER QUITE
IMPORTANT WEEK FOR MARKETS. LET ME JUST START OFF BY ASKING
YOU WHY YOU THINK U.S. MARKETS HAVE BEEN SO RESILIENT
IN THE FACT THAT WE DID BRIEFLY ON THURSDAY GET TO NEW ALL-TIME
RECORD HIGHS FOR THE S&P AND NASDAQ. >> THE U.S.
MARKET HAS BEEN VERY RESILIENT BECAUSE OF THE RECENT
ANNOUNCEMENTS AND RECENT OTHER THINGS. WE ALREADY HAVE LIKE A FISCAL
STIMULUS TO THE U.S. ECONOMY SO THERE IS OBVIOUSLY A
GREATER DISPOSABLE INCOME IN THE HANDS OF CONSUMERS AND AS
YOU KNOW, THE U.S. IS A CONSUMER DRIVEN MARKET
LIKE MOST MARKETS. IT IS A CONSUMPTION LED GROWTH
SO THAT HAS PROVIDED POSITIVE SENTIMENT AND THE POSITIVE
IMPACT TO THE MARKETS. JOUMANNA: WE HAVE BIG TECH EARNINGS
COMING UP THIS WEEK. WE KNOW THE AI RELATED STOCKS
OR TECH STOCKS CONSTITUTE AROUND 30% OF THE OVERALL INDEX.
HOW IMPORTANT A WEEK DO YOU THINK THIS IS GOING TO BE FOR
THE CONTINUATION OF THIS BULLISH TRAJECTORY? KETAKI:
I THINK IT’S GOING TO BE REALLY IMPORTANT BUT WHAT WE SEE NOW
IS JUST LIKE THE TIP OF THE ICEBERG BECAUSE, YOU KNOW, WITH
INFLATION RISING, WHICH IT WILL RISE IN THE U.S., BECAUSE OF
TARIFFS, BECAUSE OF THIS FISCAL EXPANSIONARY POLICY, AND IF THE
RATE CUTS ACTUALLY COME INTO PLAY, THERE’S GOING TO BE
INFLATION FOR SURE. BUT THAT WILL EXPEDITE AI
ADOPTION BY SMALL BUSINESSES IN PARTICULAR, SO THIS IS GOING TO
BE A HUGE PLUS AND WE WILL ACTUALLY SEE A HUGE FILLER TO
PRODUCTIVITY AND THAT CAN ACTUALLY SAVE THE DAY FOR, YOU
KNOW, THE INFLATION TRAJECTORY GOING FORWARD. JOUMANNA:
ARE YOU SEEING SIGNS OF THAT? BECAUSE THE CPI DATA ON THE
SURFACE AT LEAST SURPRISED TO THE DOWNSIDE AND THAT IS THE
FIFTH CONSECUTIVE MONTH IN A ROW THAT THAT HAS HAPPENED IN
THE U.S. KETAKI: ABSOLUTELY. THAT IS THE HEADLINE NUMBER.
IF YOU LOOK AT THE DETAILS, YOU WOULD SEE THINGS SUCH AS
FURNITURE, APPAREL, THEY HAVE GONE UP SIGNIFICANTLY AND THIS
IS JUST THE BEGINNING. WE EXPECT THIS TREND TO UNFOLD
IN THE COMING MONTHS. JOUMANNA: WHAT DOES THIS MEAN FOR FED
POLICY? ARE THEY RIGHT TO BE IN WAIT
AND SEE MODE? KETAKI: ABSOLUTELY.
PERHAPS NO CUTS ARE NEEDED AT THIS STAGE BUT THERE ARE MORE
FACTORS AT PLAY. JOUMANNA: DEFINITELY MORE FACTORS AT PLAY.
ASSUMING POWELL STAYS THE LINE AND HOLD THE LINE AND DOES NOT
CUT INTEREST RATES, THE MARKETS ARE GOING TO START LOOKING
AHEAD TO WHO HIS SUCCESSOR IS AND IN ALL LIKELIHOOD, WE ARE
GOING TO GET SOMEONE MORE DOVISH THAN THE CURRENT FED
CHAIR. HOW DO YOU ACCOUNT FOR THAT IN
TERMS OF HOW YOU MARRY UP, YOU KNOW, THE MACRO OUTLOOK WITH
INFLATIONARY PRESSURES COMING IN AND THE REAL POSSIBILITY OF
A VERY DEAF’S CHAIR COMING IN IN 2026? KETAKI:
AT LEAST YOU ARE PUSHING THE CAN DOWN THE ROAD, NOT HAVING
IT RIGHT AWAY WHEN YOU ALREADY HAVE A FISCAL — EXPANSIONARY
FISCAL POLICY THAT HAS COME INTO PLAY AND THE TARIFFS THAT
HAVE COME INTO PLAY. SO IT BASICALLY MEANS MORE
MONEY CHASING PROBABLY FEWER GOODS SO THERE IS INFLATION
THAT IS GOING TO, YOU KNOW, COME UP.
AND WE DEFINITELY DO NOT NEED A RATE CUT AT THIS STAGE. JOUMANNA:
WHAT DOES THAT DO TO MARKETS? WOULD YOU STILL WANT TO BE
INVESTED IN EQUITIES HERE? WOULD YOU TOUCH FIXED INCOME? KETAKI: ABSOLUTELY.
I WOULD STILL LOOK AT EQUITIES. IT’S MOSTLY CONSUMER DRIVEN
GROWTH SO WE STILL THINK THAT, YOU KNOW, THAT IS STILL GOING
TO HELP OVER A PERIOD OF TIME IF THE RATE CUTS ACTUALLY
HAPPEN. THEN THERE IS A BIGGER BOOST TO
GDP FOR SURE HAPPENING. AND THEN THE MARKETS WILL
ACTUALLY SURPRISE ON THE UPSIDE. JOUMANNA:
WHAT ABOUT THE REST OF THE WORLD?
THERE WAS A PERIOD TOWARDS THE END OF APRIL WHERE PEOPLE WERE
SAYING THIS THEME OF U.S. EXCEPTIONALISM IS OVER.
I’M GOING TO START HUNTING FOR OTHER OPPORTUNITIES IN OTHER
MARKETS. DO YOU THINK THAT HAS SUBSIDED
OR IS THERE STILL A FEELING OF SELECTIVE OPPORTUNITIES IN
OTHER PARTS OF THE WORLD AS WELL? KETAKI:
EVERY TIME THERE IS A DOMESTIC STORY GOING ON, COUNTRIES THAT
HAVE HIGH DISPOSABLE INCOME ARE COUNTRIES THAT HAVE BIGGER
DOMESTIC DEMAND, BIGGER DOMESTIC POPULATION, THEY ARE
BOUND TO BENEFIT, ESPECIALLY THOSE WITH A CONTINUATION IN
POLICY. SO I THINK THERE ARE STORIES IN
EMERGING MARKETS AS WELL THAT NEED TO BE CLOSELY WATCHED.
JOUMANNA: THE OTHER THING THAT THIS SORT
OF — ALL OF THIS COMES TOGETHER IN ONE RELEASE VALVE
AND THAT IS THE UST AND FOR SO MUCH OF THIS YEAR, — THAT IS
THE USD, AND FOR SO MUCH OF THIS YEAR — IS THAT A
REFLECTION OF HOW WELL U.S. MARKETS HAVE DONE AND THE FACT
THAT PEOPLE ARE QUITE POSITIVE FOR THE SECOND HALF OF THE YEAR?
KETAKI: THANKS TO THE FISCAL POLICY
THAT HAS KIND OF LIKE ALREADY GIVEN THAT BOOST TO GDP, I
THINK THAT HAS GIVEN SOME HELP TO SUPPORT THE USD. JOUMANNA:
THANK YOU SO MUCH FOR COMING ON, KETAKI SHARMA, FOUNDER AND
CEO OF ALGORITHM RESEARCH. IN GEOPOLITICAL NEWS, ISRAEL IS
SET TO MAKE ITS FIRST PUSH INTO A CENTRAL TOWN IN GAZA AS IT
ACCUSES HAMAS OF STALLING A U.S. BROKERED CEASE-FIRE TALKS.
WE ARE IN JERUSALEM, NEXT. THIS IS BLOOMBERG. ♪ JOUMANNA:
WELCOME BACK TO HORIZONS MIDDLE EAST & AFRICA.
I AM JOUMANNA BERCETCHE IN DUBAI.
ISRAEL IS WARNING IT WILL MOVE INTO A TOWN AT THE HEART OF THE
GAZA STRIP AS IT ACCUSES HAMAS OF STALLING AT U.S.
BROKERED CEASE-FIRE WILL TALKS. THE ISRAELI DEFENSE FORCES TOLD
PALESTINIANS TO EVACUATE SOUTHWARDS TO A TENT CITY. U.S.
HOSTAGE ENVOY ADAM BULLER TOLD CNN THAT NEGOTIATIONS BETWEEN
ISRAEL AND HAMAS ARE CLOSER THAN EVER. >> HAMAS IS VERY HARDHEADED.
THEY HAVE BEEN OFFERED MANY THINGS THAT THEY SHOULD TAKE
AND IT’S TIME FOR HAMAS TO RELEASE THE HOSTAGES.
I AM MORE OPTIMISTIC THAN I WAS BECAUSE ALL OF THOSE FACTORS
ARE THERE. WE HAVE A TEAM NEGOTIATING IT.
WHAT I WANT TO SEE IS HAMAS TAKE ACTION AND IF THEY DON’T,
I WILL TELL YOU SOMETHING. ISRAEL IS GOING TO HAVE TO TAKE
SOME KINETIC ACTION. JOUMANNA: FOR MORE, LET’S GO TO JERUSALEM
NOW AND SPEAK TO BLOOMBERG’S DAN WILLIAMS. HOW SIGNIFICANT
IS IT THAT ISRAEL ARE PUSHING INTO THE AREA? DAN:
TO JUDGE FROM ADAM’S COMMENTS, KINETIC ACTION, WHICH IS CODE
FOR MILITARY STRIKES, IS IMMINENT IN THIS TOWN THAT
ISRAEL HAS SKIRTED PREVIOUSLY DURING THIS 21 MONTH OLD WAR.
THE REASON FOR THAT SKIRTING, WE ARE TOLD, IS ISRAELIS AND
SOME PALESTINIANS BELIEVE THAT IN THIS TOWN, DEIR AL BALAH,
WERE HELD A GROUP OF HOSTAGES, HOSTAGES ISRAEL WANTS TO GET
OUT ALIVE THROUGH NEGOTIATIONS OR POSSIBLY THROUGH MILITARY
RESCUE. IT NOW APPEARS THE ISRAELIS ARE
SIGNALING THEY ARE WILLING TO TAKE THIS TOWN IN ORDER TO
CONTINUE PRESSURE ON HAMAS, TO CONTINUE THE CONQUEST OF THE
GAZA STRIP, EVEN POTENTIALLY IF THERE IS A RISK TO THOSE
HOSTAGE. THE QUESTION IS WHETHER THIS
WILL BE BORNE OUT WITH ACTUAL TROOP ADVANCES OR WHETHER THIS
IS AN EFFORT TO GENERATE MORE PRESSURE ON HAMAS IN THOSE
TALKS BEING HOSTED BY QATAR TO CAPITULATE TO YIELDING THE
ISSUE OF HOSTAGES RATHER THAN SEE MORE DEATH AND DESTRUCTION
IN THE GAZA STRIP. JOUMANNA: WHAT ARE THE MAIN STICKING
POINTS THIS TIME AROUND? BECAUSE THERE WAS RENEWED HOPE
ESPECIALLY AFTER THE IRAN-ISRAEL 12 DAY WAR THAT
SOME PROGRESS COULD BE MADE AND INDEED, WE KNOW, AS YOU SAID,
THAT NEGOTIATORS WERE SENT TO CONTINUE ALONG WITH THOSE
CEASE-FIRE DISCUSSIONS. WHAT ARE THE STICKING POINTS
THIS TIME AROUND? DAN: THEY ARE STICKING POINTS WE
HAVE SEEN BEFORE EXCEPT RIGHT NOW, WE HAVE THE RUBBER HITTING
THE ROAD IN TERMS OF US REALLY BEING ON THE LAST BATCH OF
HOSTAGES. 50 HOSTAGES DOWN FROM THE 250
TAKEN BY HAMAS ON OCTOBER 7, 20 23. THAT ATTACK WHICH TRIGGERED
THIS ONGOING WAR. WHERE AS IN PREVIOUS CEASE-FIRE
TALKS, HAMAS MAY HAVE FELT IT COULD GIVE UP AND I AM PUTTING
THOSE” MARKS, FOR THE SHORT TERM GAINS
OF A CEASE-FIRE. NOW, THEY REALIZE THE TRUTH
TALKS ARE NOT JUST INSTRUMENTAL, THEY ARE
EXISTENTIAL FOR HAMAS. ISRAEL SAYS A TRUCE, IF IT
LEADS TO AN OPEN-ENDED END TO THE WAR MUST ALSO SEE THE END
OF HAMAS RULE AND THE END OF HAMAS’S ARSENAL IN THE GAZA
STRIP. HAMAS IS NOT WILLING TO ACCOMMODATE THAT SO THE
QUESTION IS WHETHER THE SIDES CAN PULL OFF ANOTHER CEASE-FIRE
WHICH WOULD NOT NECESSARILY LEAD TO AN END OF THE WAR WHEN
THEY REMAIN FAR APART ON WHAT AN END TO THE WAR WOULD LOOK
LIKE. THAT YET AGAIN IS KEEPING THE
SIDES APART DESPITE THE OPTIMISTIC REMARKS WE HEARD
FROM THE TRUMP ADMINISTRATION WHICH WOULD REALLY LIKE TO SEE
THIS WAR IN ITS REAR WINDOW. JOUMANNA:
BLOOMBERG’S DAN IN JERUSALEM. THANK YOU SO MUCH.
FOR A LOOK AT SOME OF THE OTHER STORIES WE’RE FOLLOWING TODAY,
IRANIAN MEDIA REPORTS SAY AGREEMENT HAS BEEN REACHED FOR
TALKS ON ITS NUCLEAR PROGRAM WITH THE U.K., FRANCE, AND
GERMANY. A STATE RUN AGENCY SAYS THE
TALKS WILL BE AT DEPUTY FOREIGN MINISTER LEVEL AND SAYS THE
DISCUSSIONS WILL BE SEPARATE FROM INDIRECT TALKS WITH THE
UNITED STATES WHICH HAVE STALLED SINCE ISRAEL LAUNCHED
ATTACKS ON IRAN IN JUNE. UKRAINE SAYS RUSSIA HAS
LAUNCHED A MASSIVE AIR ATTACK USING MISSILES AND DRONES.
AIR DEFENSE OFFICIALS SAY EXPLOSIONS HAVE BEEN HEARD
ACROSS THE COUNTRY INCLUDING IN WESTERN REGIONS AND THE
CAPITAL, KYIV. EARLIER, PRESIDENT VOLODYMYR
ZELENSKYY SAID HIS GOVERNMENT HAD PROPOSED A MEETING WITH
RUSSIA THIS WEEK MORE THAN ONE MONTH AFTER THE PREVIOUS ROUND
OF DIRECT TALKS. AND COMING UP, THE TSMC REACHES
A KEY MILESTONE AFTER POSTING A BULLISH SALES OUTLOOK FUELED BY
AI DEMANDS. WE WILL HAVE THE DETAILS, NEXT.
THIS IS BLOOMBERG. JOUMANNA:
WELCOME BACK TO HORIZONS MIDDLE EAST & AFRICA.
I AM JOUMANNA BERCETCHE IN DUBAI.
TSMC HAS CITED FX VOLATILITY AS A MAJOR SOURCE OF UNCERTAINTY
AFFECTING ITS PROFIT MARGINS. THAT IS AFTER THE TAIWANESE
DOLLAR SURGED NEARLY 11% THIS YEAR AGAINST THE U.S. CURRENCY.
A CFO TOLD US THE CHIPMAKER IS CONSTANTLY REVIEWING ITS
HEDGING STRATEGIES. >> WE DON’T PREDICT THE TAIWAN
DOLLAR. WE SIMPLY DESCRIBED THE POTENTIAL IMPACT TO US.
AND AS I SAID, THERE ARE SIX FACTORS AFFECTING THE
POSSIBILITIES. FOREIGN EXCHANGE RATE IS
SOMETHING THAT WE CANNOT CONTROL BUT THERE WERE SUCH
INSTANCES BEFORE WHERE THE FOREIGN EXCHANGE RATE WAS IN
OUR FAVOR BUT WE MANAGED OTHER FACTORS SO THAT WE ARE ABLE TO
KEEP OUR PROFITABILITY. >> DO YOU HAVE CONTINGENCY
PLANS IN PLACE FOR A MORE RAPID APPRECIATION OF THE DOLLAR?
WENDALL: IT GOES INTO WHAT IMPACTS OUR
POSSIBILITIES. SO THERE ARE — THE FACTORS
THAT WE ARE ABLE TO CONTROL, WE WILL DEFINITELY WORK HARD.
ON THOSE FACTORS TO MAINTAIN THE PROFITABILITY.
WE USE TO HEDGE ALTERNATIVES. THE FIRST ONE IS JUST SIMPLY
SELLING THE U.S. DOLLAR IN THE MARKET, SPOT
MARKET. AND WE ALSO USE CONTRACTS AND
WE ALSO MOVE PART OF THE CASH, THE U.S.
DOLLAR CASH TO AN OFFSHORE HOLDING COMPANY WHICH THE
FINANCIAL STATEMENTS ARE DENOMINATED IN U.S. DOLLARS.
SO THAT SAVES OUR HEDGING COSTS. >> WHICH TOOL IS YOUR PRIORITY? WENDALL: IT’S A COMBINATION.
AT THE SAME TIME, YOU WANT TO SELL THE SPOT WHICH IS THE
EASIEST ONE. BUT THERE IS MARKET APPETITE TO
CONSIDER. SO YOU GO TO FOUR CONTRACTS AND
THERE IS ALSO MARKET APPETITE AND COST AND HEDGING COST AND
THEN WE HAVE BEEN USING THIS CAPITAL INJECTION INTO THE
OFFSHORE COMPANY FOR YEARS SO THERE IS A COMBINATION AND WE
WILL USE THOSE COMBINATIONS. JOUMANNA:
THAT WAS THE TSMC CFO, WENDALL HUANG, SPEAKING EXCLUSIVELY
WITH ANNABELLE DROULERS. A LOT IN FOCUS THE NEXT WEEK.
WE HAVE MAJOR TECH EARNINGS COMING THROUGH OVER THE COURSE
OF THE NEXT FEW DAYS. ALPHABET, TESLA, APPLE, AMAZON
ALL REPORTING SO STATEMENT FOR THAT OUT OF THE U.S.
AND IN EUROPE, WE GET RESULTS OUT OF SOME OF THE BIG MAJORS
AS WELL INCLUDING RYANAIR TODAY. THAT IS AT THE END OF THIS HOUR
IN ADDITION TO EUROPEAN BANKS SO LOTS OF MICRO DATA TO GET
THROUGH AND OF COURSE, WE HAVE THE CENTRAL BANK MEETINGS AS
WELL TO WATCH OUT FOR. THE ECB ON THURSDAY.
S&P FUTURES AND NASDAQ LEANING TOWARDS THE GREEN.
THE EUROPEAN MARKET IS DOWN .3% AS WE ALSO TALK ABOUT THE WAYS
THAT E.U. ARE LOOKING TO RESPOND TO THE
TARIFF PROPOSALS OUT OF THE TRUMP ADMINISTRATION INTO THAT
AUGUST 1 DEADLINE. COMING UP, WE DISCUSS THE
DIVERGENCE IN EQUITY CAPITAL MARKETS BETWEEN THE UAE AND
SAUDI ARABIA. THAT IS NEXT AND THIS IS
BLOOMBERG. JOUMANNA: GOOD MORNING.
THIS IS HORIZONS MIDDLE EAST & AFRICA.
OUR TOP STORIES THIS MORNING. STAYING PUT, JAPAN’S PRIME
MINISTER IS VOWING TO STAY ON DESPITE FAILING TO CONVINCE
VOTERS HE CAN EASE A COST-OF-LIVING CRISIS AND
SECURE A TRADE DEAL WITH PRESIDENT. FIGHTING BACK. E.U. ENVOYS ARE SET TO MEET TO DRAFT
A RETALIATORY PLAN IN RESPONSE TO A POSSIBLE NO-DEAL SCENARIO
WITH THE U.S. ON TARIFFS. ISRAEL HAS WARNED IT WILL MOVE
INTO THE HEART OF THE GAZA STRIP AS IT ACCUSES HAMAS OF
STALLING ON U.S. BROKERED CEASE-FIRE TALKS.
IT IS A: 30 AM ACROSS THE EMIRATES.
I AM JO BONNER VERSACE GEARING UP FOR ANOTHER BIG WEEK FOR
MARKETS. ON THURSDAY LAST WEEK, BUT THE
S&P AND THE NASDAQ REACHED ANOTHER ALL-TIME RECORD HIGH.
THE BACKDROP OF POSITIVE DATA, THOSE RETAIL SALES NUMBERS
COMING THROUGH, SURPRISING TO THE UPSIDE, STRONG BANK
EARNINGS LAST WEEK AND THEN THIS WEEK LOOKING AHEAD TO SOME
OF THE TECH EARNINGS THAT ARE COMING THROUGH AS WELL.
YOU COULD SAY THE BAR IS PRETTY HIGH FOR A BEAT THIS TIME
AROUND. EUROPEAN MARKETS DIPPING TOWARDS THE RED, DOWN ABOUT .3%
AS WE HEAD INTO THE OPEN AND THIS AS WE GEAR UP FOR A BIG
WEEK IN EUROPE, TOO. WE HAVE A BUNCH OF EUROPEAN
BANKS SUPPORTING THE ECB MEETING ON THURSDAY AND THEY
ARE NOT EXPECTED TO CHANGE THE INTEREST RATE BUT STILL, THE
LANGUAGE, THE GUIDANCE, THE COMMENTARY AROUND THE EVOLUTION
OF THE ECONOMY IS GOING TO BE KEY.
DOLLAR-YEN IN FOCUS AS HE WOULD IMAGINE AFTER THOSE UPPER HOUSE
ELECTIONS IN WHICH THE LBP DID SEE A DEFEAT.
THE PRIME MINISTER HAS SAID HE WANTS TO STAY ON.
YOU ARE SEEING A BIT OF STRENGTH TRANSPIRE IN THE YEN.
IN THE RUN-UP TO THESE ELECTIONS, IT LOST 1.5% AND WE
WILL SEE WHERE WE GO FROM HERE. IT IS A NATIONAL HOLIDAY IN
JAPAN TODAY SO JGB’S AND THE NIKKEI ARE CLOSED FOR TRADE.
LET’S SEE WHAT THEY DO TOMORROW. FLATLINING HERE.
THE BIG MEASURE THAT WAS ANNOUNCED ON FRIDAY WAS THAT
THE E.U. HAVE APPROVED ANOTHER ROUND OF
SANCTIONS AGAINST RUSSIAN PETROLEUM PRODUCTS SO THAT
COULD LEAD TO SOME TIGHTENING OF THE MARKET ALBEIT WITHOUT
THE U.S. PARTICIPATION SO THIS IS WHERE
WE ARE RIGHT NOW. ENERGY COMPLEX HANGING IN
AROUND $69. WE HAVE TALKED ABOUT JAPANESE
MARKETS. LET’S ALSO CHECK IN ON CHINA
MARKETS. AVRIL HONG IS AN HOUR’S SINGAPORE STUDIO AND I ALSO
MENTIONED THE ECB. WE ARE NOT CUTTING RATES THIS
THURSDAY AND WE DID NOT GET ANY CHANGED INTEREST RATE DECISION
OUT OF CHINA TODAY. >> THE LONE PRIME RATE LEFT
UNCHANGED BUT AS WE HAVE BEEN DISCUSSING EARLIER ON IN THE
PROGRAM, YOU ARE SEEING THE CHINA STOCK RALLY INCLUDING ON
THE HANG SENG TODAY BRIEFLY TOPPING 20 5000.
THERE IS A BIT OF TECH OPTIMISM PARTIALLY TO DO WITH — TOPPING
25,000. THERE IS A BIT OF TECH OPTIMISM.
YOU HAVE CHINESE AUTHORITIES ALSO LOOKING TO BE ADDRESSING
SOME OF THE INTENSE COMPETITION IN THE FOOD DELIVERY SECTOR BUT
ASIDE FROM THAT, THE CSI 300 IS ALSO PULLING AHEAD TODAY.
THERE IS OPTIMISM SURROUNDING THE CONFIRMATION THAT SOVEREIGN
WEALTH FUND ACTUALLY BROUGHT ETF’S IN THE FIRST HALF OF THIS
YEAR. AND THEN ADD TO THAT THE EXPANSION IN MONDAY’S SUPPLY
AND THAT LOOKS TO BE ACCELERATING IN CHINA.
THIS CHART FROM MARK CRANFIELD SHOWS YOU HOW IT IS LEADING THE
WAY FOR THE CSI 300 WHICH HAS BEEN REBOUNDING FROM THE APRIL
LOWS AND IT ALSO SUGGESTS THAT STIMULUS IS FEEDING THROUGH AND
THE RALLY THAT WE ARE SEEING SO FAR IN MAINLAND STOCKS HAS
LEGS, HAS ROOM TO RUN FURTHER. JOUMANNA: A VRIL, THANK YOU SO MUCH.
PLANNED DEALS ARE BUILDING ON THE SUCCESSFUL DEBUT OF A
RESIDENTIAL REAL ESTATE INVESTMENT TRUSTS WHICH HELPED
REVISE THE SENTIMENT AFTER SEVERAL DISAPPOINTING LISTINGS
LATE LAST YEAR. MEANWHILE, THE PICTURE IS
SOMEWHAT MUTED IN SAUDI ARABIA AS SHARE SALES PHASE INVESTOR
CAUTION OVER VALUATIONS TO DISCUSS — OVER VALUATIONS.
TO DISCUSS MORE, THE ADVISOR FOR MIDDLE EAST AND THE AT CITI.
GOOD TO HAVE YOU WITH US. WE WERE TALKING ABOUT THE
SUCCESS OF THE REAL ESTATE INVESTMENT TRUSTS AND OF
COURSE, CITI WERE ON THAT DEAL. WE SPOKE TO YOUR COLLEAGUE AT
LAUNCH. THE DEAL SEEM TO HAVE DONE
QUITE WELL AND I WOULD SAY DESPITE ALL THE ODDS, DESPITE
EVERYTHING THAT HAS HAPPENED GLOBALLY AND ALSO WITH
GEOPOLITICS AS WELL, THE WAR THAT KICKED OFF THROUGHOUT
JUNE, WHY DO YOU THINK THESE LOCAL MARKETS HAVE BEEN SO
RESILIENT TO SOME OF THE EXTERNAL SHOCKS? WENDALL: I THINK — >> I THINK THE
ECONOMY IS DOING WELL. IT IS NOT ALL ABOUT OIL.
IT’S ACTUALLY ABOUT MANY OTHER SECTORS. IF YOU REMEMBER, IT WAS
ACTUALLY ONE OF THE FIRST TRANSACTIONS AFTER THE
UNCERTAINTY AROUND LIBERATION DAY. I THINK IT WAS THE FIRST
TRANSACTION TO HIT THE MARKET AND THERE WAS REALLY ON THE
BACK OF STRONG LOCAL DEMAND, THERE IS A SIGNIFICANT AMOUNT
OF DEMAND LOCALLY THESE DAYS SO THE MIDDLE EAST IS REALLY
BECOMING AN OPTION FOR COMPANIES TO LIST. ON THE BACK
OF THAT, WE HAVE THE RIGHT LEVEL OF DEMAND, THE RIGHT
LEVEL OF PRICING. THE TRANSACTION IS DOING VERY
WELL IN THE AFTERMARKET SO I THINK IT IS A NICE TRANSACTION.
JOUMANNA: DO YOU THINK THAT GAVE
CONFIDENCE TO OTHER COMPANIES IN THE REGION, LOOKING AT HOW
WELL THE REIT DID? MIGUEL:
IN ABU DHABI, TWO ACCELERATED EQUITY OFFERINGS WENT VERY
WELL, VERY SIZABLE. WE ARE NOW SEEING SAUDI ALSO
DOING SOME TRANSACTIONS. THE IPO WAS GOOD AND WE ARE
WORKING ON A VERY BIG TRANSACTION IN SAUDI AND I
THINK THE MARKETS ARE BACK, DEFINITELY, AND DOING
REASONABLY WELL. JOUMANNA: HOW WOULD YOU SAY THE OUTLOOK
IS FOR THE SECOND HALF OF THIS YEAR? ARE YOU EQUALLY PUSH IT —
BULLISH FOR SAUDI ARABIA AND THE UAE? MIGUEL: YES.
BOTH WILL SEE TRANSACTIONS AND THE REST OF THE YEAR AND I
THINK SAUDI IS SEEING SOME MORE SORT OF A PAUSE IN TERMS OF NEW
TRANSACTIONS OTHER THAN THIS ONE THAT I HAVE JUST ALLUDED TO
WHICH IS A RIGHTS ISSUE FOR POWER. I THINK IT WILL BE A BUSY
SECOND HALF. IT WILL NOT BE SUPER BUSY BUT I
THINK VERY HEALTHY. VALUATIONS ARE HEALTHY AND THAT
IS VERY IMPORTANT. SAUDI WAS, YOU KNOW, A BIT, YOU
KNOW, OVER EXCITED AT SOME POINT BUT NOW, I THINK IT IS
VERY REASONABLE SO YES, I’M VERY POSITIVE. JOUMANNA: HOW IMPORTANT IS IT THAT THE
NEWLY LISTED SHARES PERFORMED WELL? THE REASON I ASK THIS IS BECAUSE IN SAUDI ARABIA, YOU
HAD SPECIALIZED MEDICAL. THOSE STOCKS DID NOT PERFORM
VERY WELL IN THE SECONDARY MARKET.
HAS THAT DENTED SENTIMENT OR ARE INVESTORS WILLING TO LOOK
PAST THAT? MIGUEL: IT ALWAYS IMPACTS BUT
SOMETIMES, IT’S LIKE A BIT OF A VACCINE.
IT SHOWS YOU THAT YOU NEED TO DO GOING FORWARD.
WE ARE TALKING OF DEVELOPING MARKETS.
THAT IS ONLY NATURAL THAT YOU HAVE SOME TRANSACTIONS GOING
WELL AND OTHERS NOT SO WELL. I THINK WE ARE SETTLING AT THE
LEVEL WHERE TRANSACTIONS ARE DOING REASONABLY WELL.
YOU KNOW, THE REIT IS 15% UP AND THAT IS LIKE SCIENTIFIC.
IT IS REALLY WHERE YOU WANT TO PRICE THINGS SO LESSONS LEARNED
I THINK. JOUMANNA: DO YOU THINK THE FOREIGN
INVESTOR COMMUNITY IS APPROACHING THE OPPORTUNITIES
DIFFERENTLY IN THE REGION? WHAT IS THE FEEDBACK THAT YOU
ARE GETTING FROM FOREIGNERS? YOU MENTIONED THAT LOCAL DEMAND
WAS STRONG AROUND THE TIME YOU LAUNCHED THE REIT SO WHAT ARE
FOREIGN INVESTORS ASKING FOR? MIGUEL:
THE MIDDLE EAST WAS STILL GOING. SO OBVIOUSLY, IT WAS, YOU KNOW,
THE MARKET. NOW, IPO’S ARE BACK ELSEWHERE
SO THE MIDDLE EAST IS JUST ANOTHER MARKET. NO ONE HAS TO BUY IT.
IT’S JUST NORMAL. I THINK WE ARE BACK TO
NORMALITY WHERE, YOU KNOW, EUROPE IS FIRING — THE U.S.
IS FIRING AND ASIA IS NOW BACK ON SO I THINK THAT IT’S VERY
HEALTHY. AND THAT IS WHAT WE SHOULD SEE
GOING FORWARD. JOUMANNA: IT’S NOT JUST ABOUT IPO’S AS
WELL. THERE’S BEEN SECONDARY LISTINGS, TOO.
HOW DOES THAT COMPLEMENT THE FULL ECOSYSTEM OF WHAT YOU HAVE
IN THE PIPELINE? IT HAS TO BE HAVE BEEN SPEAKING
MORE ABOUT HOW COMPANIES ARE LOOKING FOR DIFFERENT LIQUIDITY
OPPORTUNITIES. MIGUEL: SO PEOPLE ARE MAKING SURE —
THE UNCERTAINTY AROUND THE LAST SIX MONTHS GAVE US A LESSON
WHICH IS IF YOU CAN SET UP YOUR BALANCE SHEET PROPERLY FOR THE
FUTURE, FOR THE UNCERTAINTY, DO IT.
THIS IS TRUE ON EQUITY AND ON DEBT.
YOU DON’T DO AN IPO WHEN YOU NEED.
YOU DO AN IPO WHEN YOU CAN. AND SO YOU KNOW, PEOPLE ARE
MOVING FORWARD AND COME INTO THE MARKET, TAKING ADVANTAGE OF
THE WINDOWS. THE WINDOWS ARE SHORTER AND
SHORTER. SO IT TAKES A LOT OF PLANNING
BUT I THINK WE HAVE A LOT OF PLANS HERE IN THE REGION THAT
ARE GETTING READY. THAT DOESN’T MEAN THAT THEY
WILL PULL THE TRIGGER TOMORROW OR THE DAY AFTER.
BUT THERE IS A VERY HEALTHY PIPELINE OF BOTH GOVERNMENT AND
PRIVATELY OWNED COMPANIES. JOUMANNA: ANY SPECIFIC MIGUEL:
SECTORS? AS THE MARKET –ANY SPECIFIC
SECTORS? MIGUEL: AS THE MARKET DEVELOPS, YOU
WILL SEE IT FROM THE MAIN SECTORS IN THE ECONOMY.
IF YOU LOOK AT THE UAE, YOU HAVE REAL ESTATE, RETAIL,
HOSPITALITY, ALL THESE SECTORS SHOULD COME.
YOU ALSO HAVE INFRASTRUCTURE WHICH WE HAVE A FEW OF THEM,
TRANSPORTATION THAT IS ANOTHER SECTOR THAT HOPEFULLY WILL COME
TO THE MARKET. JOUMANNA: YOU ARE VERY BULLISH.
YOU HAVE A CRITICAL QUESTION. WHERE DO YOU THINK THE BIGGEST
DOWNSIDE RISK COULD COME FROM? WHAT COULD DERAIL THIS IPO
MOMENTUM AT THIS POINT? MIGUEL: FROM AN EXTERNAL STANDPOINT,
UNCERTAINTY AROUND THE WORLD AND SORT OF ANTI-GLOBALIZATION
SENTIMENT. FROM THE MARKET, COMPANIES
BEING TOO GREEDY IN TERMS OF VALUATIONS. JOUMANNA:
REALLY GOOD TO CHAT TO YOU. THANK YOU SO MUCH FOR COMING ON.
THAT WAS MIGUEL AZEVEDO, MANAGING DIRECTOR AND VICE
CHAIR FOR MIDDLE EAST AND AFRICA AT CITI.
FOR MORE OF THE STORIES LOOKING AT THE INTERSECTION OF WEALTH
AND POWER IN THE REGION, SIGN UP FOR OUR NEWSLETTER ON
BLOOMBERG.COM. NOW FOR A LOOK AT SOME OF THE
OTHER STORIES WE’RE FOLLOWING TODAY, UNITED ARAB EMIRATES
BASED RETAIL IS BUYING A MAJOR STAKE IN SAUDI ARABIA AND FIRMS
FOR 660 6 MILLION DOLLARS. ACCORDING TO A STATEMENT
RELEASED ON SUNDAY, THEY PLAN TO PURCHASE CLOSE TO 49% OF THE
STATE FROM SHAREHOLDERS INCLUDING SAUDI SIS HOLDING
COMPANY AND FAS REAL ESTATE COMPANY AT A PREMIUM OF ABOUT
33% TO LAST WEEK’S CLOSING PRICE. E.U.
MEMBER STATES HAVE APPROVED THE LAUNCH OF NEGOTIATIONS ON
STRATEGIC TIES WITH SIX GULF COUNTRIES AS THE BLOCK SEEKS TO
BROADEN ITS INTERNATIONAL PARTNERSHIPS AMID TARIFF
THREATS FROM DONALD TRUMP. TALKS ARE EXPECTED TO BEGIN AS
SOON AS POSSIBLE TO ADDRESS A BROAD SPECTRUM OF ISSUES
INCLUDING ENERGY AND SECURITY. THIS LATEST ADVANCE FOLLOWS A
RECENT DEAL BETWEEN THE E.U. AND UAE TO BEGIN TRADE
NEGOTIATIONS AIMED AT REMOVING BARRIERS AND FOSTERING ECONOMIC
INTEGRATION. COMING UP, THE DRC AND REBELS
SIGN AN AGREEMENT TO END FOUR YEARS OF FIGHTING.
MORE DETAILS, NEXT. THIS IS BLOOMBERG. ♪ JOUMANNA:
WELCOME BACK TO HORIZONS MIDDLE EAST & AFRICA.
I AM GIOVANNA BERCETCHE IN DUBAI — JOUMANNA BERCETCHE IN
DUBAI. THEY SIGNED A DECLARATION OF
PRINCIPLES AIMED AT ENDING NEARLY FOUR YEARS OF FIGHTING.
BOTH PARTIES CAME TO AN AGREEMENT IN DELHI WHICH
INCLUDES FINDING A PATHWAY TO RESOLVE THEIR DISPUTES BY
PEACEFUL MEANS AND START NEGOTIATING A PEACE AGREEMENT
BY NO LATER THAN AUGUST 8. FOR MORE, BLOOMBERG’S REPORTED
JOINS US NOW. IT COULD BE A MAJOR
BREAKTHROUGH BUT I SHOULD JUST REITERATE THAT IT IS A
DECLARATION OF PRINCIPLES. WHAT DOES THAT MEAN EXACTLY?
WHAT DO WE KNOW ABOUT WHAT THEY AGREED TO? ONDIRO: THIS IS A WORKING DRAFT OF THE
PCL THEY WILL BE SIGNING. THERE ARE A COUPLE OF KEY
ISSUES THAT WILL BE DISCUSSED LEADING TO THAT DATE AND SOME
OF THEM INCLUDE AN EXCHANGE OF PRISONERS AND RELEASE OF SOME
HOSTAGES. THEY SAY THAT SOME OF THEIR
MEMBERS HAVE BEEN PROSECUTED BY THE GOVERNMENT AND SOME OF THEM
ARE FACING THE DEATH PENALTY AND THAT LENIENCY IS A SHOULD
OF — A SHOW OF GOODWILL AND GOOD FAITH AND RELEASE OF SOME
OF THESE HOSTAGES AND EXCHANGE OF PRISONERS IN SOME CASES.
THE BIG ELEPHANT IN THE ROOM IS TERRITORIAL AND SOVEREIGN
INTEGRITY. THIS DEAL IS CALLING FOR THE
RETURN OF GOVERNMENT AUTHORITY ACROSS ALL PARTS OF THE COUNTRY
INCLUDING AREAS WHICH M 23 IS CONTROLLING AND THAT IS WHERE
THE BIG QUESTION COMES. THE DEAL DOES NOT CATEGORICALLY
CALL FOR THE WITHDRAWAL OF AND 23 IN THE TWO CITIES THEY
CONTROL, IT IS LEADING TO OPEN INTERPRETATION FOR BOTH PARTIES.
YOU HAVE AND 23 SPOKESPERSON ON TWITTER SAYING THAT THIS IS NOT
A QUESTION OF WITHDRAWAL BUT RATHER ENABLING THE GOVERNMENT
TO COME — ASSUMING ITS OBLIGATIONS ACROSS ALL PARTS OF
THE COUNTRY AND THEY SAY THAT THEY ARE WITH THE PEOPLE AND
THEY ARE NOT GOING TO GET OUT. ON THE OTHER HAND, YOU HAVE THE
GOVERNMENT SPOKESPERSON SAYING THAT WHEN IT COMES TO THIS
DEAL, THERE IS NONNEGOTIABLE WITHDRAWAL WHICH WILL BE
FOLLOWED BY A DEPLOYMENT OF MILITARY AND GOVERNMENT FORCES
AND THERE IS ALSO ANOTHER LAYER TO THIS WHICH IS THE READ —
WITHDRAWAL OF TROOPS ACROSS THE BORDER AND RWANDA HAS
MAINTAINED THAT FOR AS LONG AS IT IS NEUTRALIZED, THAT IS THE ONLY WAY THEY WILL HAVE THE
DEFENSIVE MECHANISM. THIS DEAL IS EXPECTED TO HAVE A
RETURN OF REFUGEES INTO THE COUNTRY BUT IT HAS NOT BEEN
RECEIVED WITH THE WARMTH YOU WOULD EXPECT.
MORE CAUTION THAN OPTIMISM WITH PEOPLE SAYING THE DEAL IS AN
EXERCISE IN FUTILITY. JOUMANNA: BUT STILL SIGNIFICANT PERHAPS
BECAUSE IT DOES TAKE THE DRC ONE STEP CLOSER TO PEACE?
ONDIRO: ABSOLUTELY AND IT BUILDS UP TO
THE PEACE PROCESS THAT THE U.S. HAS BEEN WORKING ON. THE U.S.
HAS BEEN ABLE TO GET RWANDA AND THE DEMOCRATIC REPUBLIC OF
CONGO TO SIGN A PEACE DEAL AND NOW THAT CONVERSATIONS ARE
ONGOING AND THEY ARE EDGING CLOSER TO A PEACE DEAL BETWEEN
M 23 AND DRC, IT SETS THE STAGE FOR MEETINGS OF HEADS OF STATE
BETWEEN RWANDA, DRC, AND PRESIDENT DONALD TRUMP IN THE
WHITE HOUSE. THE PRESIDENT HAS MAINTAINED
THAT UNTIL THE INTERNAL ISSUES IN THE DRC ARE RESOLVED, THE
EXTERNAL ISSUES ARE — THAT IS UP FOR DEBATE.
IT ALSO WILL FACE A COUPLE OF CHALLENGES, PARTICULARLY DUE TO
THE FACT THAT PEACE DEALS ARE NOTHING — EVERY TWO TO THREE
YEARS, WE SEE THE SAME CYCLE REPEATING ITSELF.
QATAR WILL HAVE TO THROW IN AN INSURANCE PACKAGE TO ENSURE
THAT THIS DEAL IS AS AIRTIGHT AS POSSIBLE JUST THE WAY THE
U.S. DID WITH THEIR ECONOMIC PACT
BETWEEN RWANDA AND THE DRC BUT UNTIL THEN, FIGHTING IS STILL
ONGOING IN THE COUNTRY. MILLIONS OF PEOPLE DISPLACED,
HUNDREDS LOST THEIR LIVES, AND HUMANITARIAN AGENCIES ARE
CRYING BECAUSE THEY ARE UNABLE TO RAISE ENOUGH MONEY TO DEAL
WITH THE CATASTROPHE THAT IS HAPPENING IN THE EASTERN PART
OF THE DRC WHICH IS JUST EXACERBATING HUMAN SUFFERING.
JOUMANNA: BLOOMBERG’S ONDIRO OGANGA,
THANK YOU SO MUCH FOR THE REPORTING.
NOW FOR A LOOK AT SOME OF THE OTHER STORIES WE ARE FOLLOWING
TODAY, EGYPT PLANS TO ISSUE $4 BILLION OF INTERNATIONAL BONDS
OVER THE NEXT 12 MONTHS. AUTHORITIES ARE MULLING
INSTRUMENTS INCLUDING EURO AND DOLLAR-DENOMINATED SECURITIES
AND SUSTAINABILITY BONDS TO COVER ABOUT 40% OF EGYPT’S
EXTERNAL FUNDING NEEDS FOR THE CURRENT FISCAL YEAR.
THE NATION IS SEEKING TO DIVERSIFY ITS FINANCING SOURCES
WHILE OVERHAULING THE ECONOMY AFTER THE WORST CRISIS IN A
GENERATION. SENEGAL REACHED A NEW AGREEMENT
WITH SAUDI ARABIA HAS AQUA POWER TO PROCEED WITH A
DESALINATION PLANT AFTER A COST REVIEW.
THE PRESIDENT CANCELED THE $800 MILLION CONTRACT LAST YEAR OVER
COST CONCERNS. BLOOMBERG UNDERSTANDS THAT THE
NEW PACT LOWERS THE PRICE OF WATER, REDUCES THE GOVERNMENT’S
ANNUAL RENTAL FEE, AND DOUBLES THE PROJECT’S SOLAR ENERGY
CAPACITY TO 300 MEGAWATTS. AND COMING UP, ELON MUSK FEUDS
AND WILD BATS ARE HAVING AN IMPACT ON THE BILLIONAIRE
BUSINESSES. WE WILL LOOK AT THE DETAILS IN
TODAY’S BIG TAKE, NEXT. THIS IS BLOOMBERG. ♪ JOUMANNA:
WELCOME BACK TO HORIZONS MIDDLE EAST & AFRICA.
I AM GIOVANNA BERCETCHE IN DUBAI.
PRESIDENT AND XI JINPING ARE SET TO MEET AT THE END OF
OCTOBER IN SOUTH KOREA. THE SOUTH CHINA MORNING POST ASIDES — SAYING TOM COULD MAKE
— THE SOUTH CHINA MORNING POST SAYING TRUMP COULD MEET THERE.
THEY HAVE HOPES OF SECURING A SUMMIT.
CHINA IS TIGHTENING CONTROLS ON CRITICAL MINERAL EXPORTS,
PLEDGING ZERO TOLERANCE FOR SMUGGLING AND ILLEGAL SHIPMENTS.
THE STATE BROADCASTER CCTV SAYS BEIJING’S EXPORT CONTROL OFFICE
FLAG TO RECENT CASES INVOLVING FALSE DECLARATIONS AND
SHIPMENTS TO THIRD COUNTRIES. CHINA IS ENFORCING STRICTER
LICENSING FOR ALL RARE EARTH SHIPMENTS AMID ONGOING TRADE
TENSIONS WITH THE U.S. ELON MUSK STARTED — AS CLOSE
TO THE TOP OF THE WORLD AS ANY SENTI BILLIONAIRE CAN BE. HE APPOINTED HIMSELF HEAD OF
DOGE. THE COST-CUTTING EFFORTS — HIS
ENTHUSIASM PLEASE PRESIDENT TRUMP BUT MUSK’S GRANDSTANDING
HAS COST HIM DEARLY. LET’S GO TO HONG KONG AND SPEAK
TO DANNY LEE. THIS IS THE SUBJECT OF TODAY’S
BIG TAKE ON THE TERMINAL AND IT IS HIGHLY RECOMMENDED TO ANYONE
IF THEY HAVE A FEW MINUTES TO READ THE DEEP DIVE.
LET’S TALK ABOUT THE UPSIDE OF ALL OF THIS.
A SPECTACULAR FALL OUT A COUPLE OF MONTHS AGO.
WAS IT A MONTH AGO BETWEEN ELON MUSK AND TRUMP?
WHAT IS THIS –WHAT HAS THIS MIX OF BUSINESS AND POLITICS
MEANT FOR TRUMP AS A PERSON AND A BUSINESSMAN? >> THIS IS VERY MUCH A
CAUTIONARY TALE OF WHAT IT MEANS TO DO BUSINESS BETWEEN
TWO OF THE MOST POWERFUL PEOPLE IN THE WORLD, ESPECIALLY FOR
INVESTORS COUNTING THE COSTS NOW OF THIS KIND OF
RELATIONSHIP WHICH HAS FRACTURED SO SPECTACULARLY A
BET LET’S TAKE YOU BACK TO WHERE IT ALL BEGAN AND THE FACT
THAT ELON MUSK PUT ALL OF HIS BACKING INTO DONALD TRUMP TO
GET HIM BACK INTO THE WHITE HOUSE AT THE COST OF 300
MILLION U.S. DOLLARS SO THAT HAS PAID OFF TO
AN EXTENT WHERE YOU HAVE THE LIKES OF DONALD TRUMP PUTTING
HIS FULL BACKING BEHIND THE LIKES OF TESLA, ENCOURAGING
TESLA SALES AND YOU HAVE THE LIKES OF OTHER PARTS OF ELON
MUSK’S BUSINESSES AS WELL SUCH AS SPACEX BENEFITING FROM THE
RELATIONSHIP FROM GOVERNMENT CONTRACTS AND IT WILL BE SEEN
AS A GO TO OPERATOR FOR SPACE AND SO VERY MUCH THE VALUATION,
THE FACT THAT ELON MUSK’S VALUE — HIS NET WORTH HAS SOARED AS
A RESULT BUT THEN IT ALL STARTED TO TURN AROUND QUITE
QUICKLY. WE HAVE SEEN TESLA’S SHARE
PRICE FALL SOME 30% FROM THE HIGH.
THIS RELATIONSHIP OF SEEING ELON MUSK PARADING HIMSELF OVER
MANY MONTHS ONLY — IN RECENT MONTHS, ONLY TO START BEING
DISILLUSIONED WITH THE LIKES OF TRUMP AND THEN BEING VERY
CRITICAL SO THEREFORE NOW YOU SEE THE LIKES OF ELON MUSK
EXILED SO HIS BUSINESSES SEEM TO FACE A MORE EXISTENTIAL RISK
MORE THAN EVER GIVEN THE RECENT HISTORY IT HAS BEEN THROUGH.
JOUMANNA: LET’S TALK ABOUT HIS BUSINESSES.
IF WE GET TESLA EARNINGS THIS WEEK AND I WAS LOOKING AT WHAT
ANALYSTS HAVE BEEN ESTIMATING. I MEAN, THE CONSENSUS ESTIMATE
FOR THE SECOND QUARTER EARNINGS-PER-SHARE HAS BEEN ON
A DOWNTREND. THEIR SALES HAVE BEEN
STRUGGLING PARTICULARLY IN EUROPE. WHAT ARE WE EXPECTING?
COULD THERE BE AN UPSIDE SURPRISE THIS WEEK? DANNY:
I THINK THE NEGATIVITY AROUND TESLA STOCK AS WE GET EARNINGS
ON THURSDAY IS ALL VERY MUCH BAKED IN AND FOR TERMINAL
SUBSCRIBERS, WHEN YOU LOOK AT THE FUNCTION, YOU SEE JUST HOW
MUCH THE FALLING SALES OVER THE PAST QUARTER, 14% ROUGHLY, AND
YOU SEE THE KIND OF CUTS ANALYSTS HAVE BEEN MAKING TO
THE ADJUSTED EPS AND TO THE REVENUE ALL ON A DOWNWARD SLIDE.
I THINK WE WILL SEE EPS OF AROUND $.44 PER SHARE.
WE ARE GOING TO SEE REVENUE COMING IN JUST UNDER 23 BILLION
U.S. DOLLARS FOR THE QUARTER SO IT’S
NOT A GREAT, YOU KNOW, SITUATION TO BE IN PARTICULARLY
WITH THE GLOBAL FALLING SALES BUT AS ELON MUSK HAS MOVED
HIMSELF AWAY FROM THE POLITICS BACK TO TAKE CONTROL OF TESLA
AND THE VARIOUS BUSINESSES AS KEY EXECUTIVES LEAVE, THIS
MEANS THAT THERE CAN BE A BIT MORE OF A CLEAN SLATE
PARTICULARLY WHERE WE HAVE SEEN ALL THE NEGATIVITY AND
HOPEFULLY FROM HERE ON IN FOR ELON MUSK, HE CAN BE JUDGED ON
TRYING TO TURN AROUND TESLA WHICH IS GOING TO BE EVER
CRITICAL FOR INVESTORS WHO ARE GOING TO BE WATCHING AND
WAITING FOR HIS WORDS TURNING INTO ACTIONS. JOUMANNA: YES.
A LOT AT STAKE FOR TESLA AND OF COURSE, THE OTHER COMPANIES AS
WELL UNDER HIS STEWARDSHIP. DANNY LEE, THANK YOU SO MUCH.
A REMINDER THAT THAT BIG TAKE ON ELON MUSK’S ON THE TERMINAL
TODAY IF YOU WANT TO TAKE A LOOK AT IT.
A QUICK LOOK AT FUTURES AS WE HEAD OUT.
THINGS ARE LEADING TOWARD THE GREEN FOR U.S.
MARKETS AND TOWARDS THE RED FOR EUROPEAN.
WE WILL TALK MORE ABOUT THAT ON THE NEXT SHOW BUT THAT WAS IT
FOR HORIZONS MIDDLE EAST & AFRICA.
I AM GIOVANNA BERCETCHE IN DUBAI. THIS IS BLOOMBERG.

Japan’s Prime Minister, Shigeru Ishiba, says he will stay in office, despite NHK reporting his ruling coalition lost its upper house majority. Also on the show: Israel is warning it will move into a town in the heart of the Gaza Strip as ceasefire talks with Hamas stall; the UAE is seeing renewed momentum in equity capital markets; the Democratic Republic of Congo and Rwanda-backed M23 rebel movement have signed a declaration of principles aimed at ending fighting; Elon Musk’s struggling to deal with the fallout from his feud with Trump. Guests include: Ketaki Sharma, Algorithm Research, Founder & CEO; Miguel Azevedo, Citi, Managing Director & Investment Banking Vice-Chair for Middle East & Africa.

Horizons Middle East & Africa is your daily spotlight on one of the world’s fastest-growing regions. Live from Dubai, we bring you the latest global markets and analysis, plus news-making interviews, with a special focus on MEA. All that and more, as you head to the office in the Gulf, pause for lunch in Hong Kong, or start your day in London or Johannesburg.

Chapters:
00:00:00 – Introduction
00:04:16 – Japan’s LDP loses upper house majority
00:08:53 – Ketaki Sharma, Algorithm Research, Founder & CEO
00:14:44 – Israel poised to assault last Gaza town
00:19:38 – TSMC CFO cites FX volatility as a major source of uncertainty
00:27:21 – Miguel Azevedo, Citi, Managing Director & Investment Banking Vice-Chair for Middle East & Africa
00:35:19 – DRC, Rwanda-backed M23 agree to principles to end fighting
00:42:18 – Tesla, SpaceX and xAI struggling with Trump-Musk feud
——–
More on Bloomberg Television and Markets

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