WEBVTT - Daybreak Weekend: Tech Earnings, Middle East and Africa Summit, Labubu Craze 0:00:00.240 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.560 --> 0:00:13.360 This is Bloomberg Daybreak Weekend, our global look at the 0:00:13.360 --> 0:00:16.040 top stories in the coming week from our Daybreak anchors 0:00:16.079 --> 0:00:18.840 all around the world. Straight ahead on the program will 0:00:18.840 --> 0:00:21.759 get you set for more corporate earnings in the tech sector. 0:00:21.960 --> 0:00:23.720 I'm Nathan Hager in Washington. 0:00:24.000 --> 0:00:26.880 I'm Caline Hetpet in London, where we're asking how Middle 0:00:26.920 --> 0:00:30.200 Eastern and African countries are focused on business in a 0:00:30.320 --> 0:00:31.640 changing world order. 0:00:31.800 --> 0:00:34.400 I'm Doug Krissner looking at whether the le boo boo 0:00:34.479 --> 0:00:37.560 craze is due for a Beeanie Baby style bust. 0:00:37.880 --> 0:00:41.880 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:41.920 --> 0:00:45.600 eleven three YEO New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.120 --> 0:00:51.239 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 0:00:51.400 --> 0:00:54.920 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.000 --> 0:00:57.200 dot Com and the Bloomberg Business App. 0:01:02.640 --> 0:01:05.399 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.440 --> 0:01:09.920 program with more corporate earnings in tech. Cybersecurity provider crowd 0:01:10.040 --> 0:01:13.240 Strike reports on Tuesday than we hear from software names 0:01:13.280 --> 0:01:17.240 Snowflake and Salesforce on Wednesday for more. We're joined by 0:01:17.280 --> 0:01:21.119 the analysts who cover these companies most closely, Bloomberg Intelligence 0:01:21.120 --> 0:01:24.160 Global head of Tech Research Mandeep Singh and On a 0:01:24.240 --> 0:01:27.360 rag Rana, tech analyst for Bloomberg Intelligence. It's great to 0:01:27.360 --> 0:01:29.520 have the both of you with us on this weekend program. 0:01:29.560 --> 0:01:31.720 Of course, we've heard from a lot of big tech 0:01:31.840 --> 0:01:34.800 names already. A lot of the hyper scalers have reported 0:01:34.880 --> 0:01:37.319 as well. Mandy, we'll start with you. Do the results 0:01:37.319 --> 0:01:39.880 that we've heard so far. Tell us anything about what 0:01:39.920 --> 0:01:42.399 we could hear from these software players this week. 0:01:42.920 --> 0:01:47.080 Yes, I think when you look at the hyperscale cloud numbers, 0:01:47.160 --> 0:01:51.880 especially Microsoft and Google, it's pretty clear that you know, 0:01:52.000 --> 0:01:56.880 we are seeing that lift from AI workloads for both 0:01:56.960 --> 0:02:01.880 Microsoft and Google, and that's why Microsoft is growing close 0:02:01.920 --> 0:02:05.640 to forty percent. Google was mid thirty percent, and they're 0:02:05.760 --> 0:02:10.680 ramping up kpex in anticipation of those numbers going even higher. 0:02:10.760 --> 0:02:14.440 So I expect that to trickle down to some of 0:02:14.480 --> 0:02:18.120 the software players like Snowflake, for example, is in the 0:02:18.160 --> 0:02:23.480 business of using enterprise data for deploying some of these 0:02:23.680 --> 0:02:27.919 agents that everyone is looking to add in terms of 0:02:27.960 --> 0:02:34.359 their enterprise functionality and snowflake data is to my mind critical, 0:02:34.440 --> 0:02:37.640 so they should see a similar lift to their top 0:02:37.680 --> 0:02:42.200 line from AI workloads and CrowdStrike. Being a cybersecurity provider, 0:02:42.800 --> 0:02:46.960 I think they are finding the tack surface when it 0:02:47.000 --> 0:02:51.560 comes to generative AI is far bigger than what anything 0:02:52.200 --> 0:02:55.280 you know, these security companies have dealts with and you 0:02:55.320 --> 0:02:59.400 could have prompt injunction attacks and some other types of 0:02:59.480 --> 0:03:02.239 new attack at that no one even conceived of before. 0:03:02.360 --> 0:03:07.320 So they should similarly benefit from enterprises looking to secure 0:03:07.400 --> 0:03:14.400 their you know, firewalls and their infrastructure. Given everyone is 0:03:14.400 --> 0:03:19.080 deploying AI, so I expect a crowd strike print should 0:03:19.120 --> 0:03:21.799 be strong as well. In terms of AI demand. 0:03:22.080 --> 0:03:24.520 Let's bring you into the conversation on a RAG as well. 0:03:24.520 --> 0:03:28.480 I know you cover salesforce pretty closely as well. What 0:03:28.520 --> 0:03:30.480 do the hyper scale numbers tell you about what we 0:03:30.520 --> 0:03:31.560 could get from salesforce? 0:03:32.120 --> 0:03:34.240 So salesforce is on the other side of the equation. 0:03:34.360 --> 0:03:37.440 They really, you know, are in a completely different business 0:03:37.480 --> 0:03:40.280 than some of the other vendors that when they've talked 0:03:40.280 --> 0:03:44.920 about In their case, the only product that hasn't overlapped 0:03:44.960 --> 0:03:47.880 is some of the data cloud that they started to 0:03:47.960 --> 0:03:50.960 sell in the last couple of years as part of 0:03:51.000 --> 0:03:53.920 their Jenny I offering. Now that product is a small 0:03:53.920 --> 0:03:57.840 portion of the overall portfolio, so even if they doubles, 0:03:57.880 --> 0:04:00.200 really it's not going to really move the needle for them. 0:04:00.640 --> 0:04:04.840 For them, they're on the receiving side of the lower 0:04:05.000 --> 0:04:08.600 end of it spending, which is as people are spending 0:04:08.640 --> 0:04:11.880 more and more money on AI related workloads and AI 0:04:11.920 --> 0:04:15.480 related infrastructure. You know, it's taking out from some of 0:04:15.480 --> 0:04:18.280 the stuff that Salesforce is selling. And in fact, one 0:04:18.320 --> 0:04:20.400 of the things that they are grappling with is the 0:04:20.880 --> 0:04:25.160 lack of seat count growth in their enterprises that they 0:04:25.200 --> 0:04:27.599 sell into. So it's I mean, you know, in our view, 0:04:27.640 --> 0:04:30.320 it's not going to be that exciting for them. They're 0:04:30.360 --> 0:04:33.400 running at at about ten percent Booking's growth rate number. 0:04:33.440 --> 0:04:36.480 That's a that's probably where it will see for them. 0:04:36.880 --> 0:04:38.680 The big question for them would be, you know, how 0:04:38.760 --> 0:04:41.599 much of the guidance they're going to go out and 0:04:41.680 --> 0:04:45.800 improve because of the closure of the Informatica deal which 0:04:45.880 --> 0:04:46.360 just happened. 0:04:46.560 --> 0:04:50.240 Let's dig into all these companies much more closely. Man, Deep, 0:04:50.279 --> 0:04:53.920 I know you cover CrowdStrike in particular, and I got 0:04:53.920 --> 0:04:56.200 to admit, whenever I think of CrowdStrike, I think of 0:04:56.480 --> 0:05:00.760 outage from last year, just because you know, full disclosure, 0:05:00.760 --> 0:05:03.720 it affected me personally, I think a lot of listeners 0:05:03.760 --> 0:05:06.440 can relate to that as well. Is that still an overhanger? 0:05:06.560 --> 0:05:08.680 Is it fair to still think about the outage when 0:05:08.680 --> 0:05:09.720 it comes to crowd strength? 0:05:10.240 --> 0:05:13.560 Well, so when I look at the new customers that 0:05:13.720 --> 0:05:17.640 CrowdStrike has at it since, then, clearly their pace of 0:05:17.760 --> 0:05:22.400 new customer ads have slowed because of what happened, and 0:05:23.080 --> 0:05:27.960 I feel they've come out of it relatively okay, even 0:05:28.000 --> 0:05:31.239 though there was a slowdown, but they managed to hold 0:05:31.279 --> 0:05:34.800 on to their existing customer base. And now we are 0:05:34.839 --> 0:05:39.680 at a point where because of generative AI deployments. I mean, 0:05:39.760 --> 0:05:43.159 there are three or four companies that probably our best 0:05:43.160 --> 0:05:46.800 position to benefit from, you know, the GENAI deployment. So 0:05:47.360 --> 0:05:51.800 I would put CrowdStrike amongst one of them. And clearly 0:05:52.320 --> 0:05:54.520 there is M and A going on with pallel to 0:05:54.880 --> 0:05:59.640 buying you know a Chronosphere and cyber Arc and Google 0:05:59.720 --> 0:06:03.599 buy with so there are other dynamics at play. But 0:06:03.760 --> 0:06:07.760 on an organic basis, I think crowd strike has done 0:06:07.839 --> 0:06:11.120 well and they have themselves made some tuck in, so 0:06:12.160 --> 0:06:16.600 I feel they have been able to at least stabilize 0:06:17.279 --> 0:06:23.120 the impact and second half for them would be faster 0:06:23.200 --> 0:06:27.200 growth compared to the first half of twenty twenty five. 0:06:27.240 --> 0:06:30.119 And so from that perspective, I mean, given there around 0:06:30.160 --> 0:06:34.520 twenty percent growth, I expect growth to improve going forward. 0:06:34.560 --> 0:06:37.880 It's interesting to think about the opportunities presented by artificial 0:06:37.880 --> 0:06:41.279 intelligence for the cybersecurity space. When it comes to CrowdStrike, 0:06:41.360 --> 0:06:42.520 are there challenges? 0:06:43.800 --> 0:06:48.000 So crowd Strike to me, you know, is still a 0:06:48.040 --> 0:06:52.799 company that is a category leader in the endpoint security space, 0:06:52.880 --> 0:06:57.960 and so the challenge is if everyone starts deploying security 0:06:58.160 --> 0:07:02.200 in a different way. So imagine, you know, we have 0:07:02.320 --> 0:07:06.360 a lot more agent take functionality out there, you don't 0:07:06.400 --> 0:07:10.200 need to secure as many human users, and so that 0:07:10.280 --> 0:07:14.480 could have an impact on crowd Strike going forward, and 0:07:15.200 --> 0:07:18.920 they clearly have to adapt to their business model in 0:07:19.040 --> 0:07:22.880 terms of the agentic functionality. But as I said, you know, 0:07:22.960 --> 0:07:26.800 I don't see any pure play AI security provider really 0:07:27.800 --> 0:07:29.560 challenging their position right now. 0:07:29.920 --> 0:07:33.360 And when it comes to artificial intelligence opportunities on a 0:07:33.440 --> 0:07:37.160 rog looking at sales forces upcoming earnings, we just heard 0:07:37.160 --> 0:07:40.000 from the CEO ahead of the report saying he's not 0:07:40.120 --> 0:07:45.240 going back to chat GPT after seeing what Google's Gemini offers. 0:07:45.280 --> 0:07:48.840 Now there's been a lot of attention on this new 0:07:48.920 --> 0:07:52.600 large language model coming from the alphabet unit. Where does 0:07:52.640 --> 0:07:54.920 that position salesforce hetting into earnings? 0:07:55.360 --> 0:07:58.000 Yeah, I think the Google THEO must thank him for 0:07:58.040 --> 0:08:01.520 a few billion in market capital over there, because that 0:08:01.640 --> 0:08:06.120 was a very big statement. Google works very closely with Salesforce. 0:08:06.160 --> 0:08:10.200 They provide cloud services to Salesforce, so it is a 0:08:10.320 --> 0:08:13.720 very good relationship between the two firms. And also remember 0:08:13.760 --> 0:08:16.640 that open ai is starting to get into the wheelhouse 0:08:16.680 --> 0:08:19.800 of a lot of these software providers by saying that 0:08:19.920 --> 0:08:24.240 you can run some of the software like functionalities through CHATGPT, 0:08:24.440 --> 0:08:26.200 so they could be a little bit of that. But 0:08:26.320 --> 0:08:30.640 frankly speaking, when it comes to Salesforce, the fundamentals are 0:08:31.000 --> 0:08:34.160 that non AI related it spending is weak, and it 0:08:34.240 --> 0:08:36.840 has been weak for some time in the last couple 0:08:36.880 --> 0:08:42.600 of years. As corporations are spending more on expanding their 0:08:42.760 --> 0:08:47.120 AI footprint or either an infrastructure or models, they are 0:08:47.200 --> 0:08:51.400 pulling back in areas such as traditional software spending where 0:08:51.440 --> 0:08:54.559 salesforce lies, or in consulting, which is impacting some of 0:08:54.600 --> 0:08:57.240 the consulting names. So that's the theme that we are 0:08:57.240 --> 0:09:00.280 seeing right now. Let's see if that reverses in twenty 0:09:00.360 --> 0:09:03.679 twenty six. But as of now, things you know, I 0:09:03.720 --> 0:09:05.640 would say from a macro point of view are not 0:09:05.760 --> 0:09:07.480 that rosy for Salesforce. 0:09:07.720 --> 0:09:10.679 Interesting Why is that? Is it just because there's too 0:09:10.760 --> 0:09:13.320 much of a reliance on artificial intelligence right now? 0:09:13.760 --> 0:09:15.040 No, that's not that. 0:09:15.120 --> 0:09:17.000 You know, if you are a JP Morgan or a 0:09:17.040 --> 0:09:19.400 City Bank, I mean, you have to make sure that 0:09:19.440 --> 0:09:22.920 you invest aggressively in AI related aspects of it now. 0:09:23.240 --> 0:09:26.319 And these companies also don't have unlimited budgets. So if 0:09:26.360 --> 0:09:28.680 your overall budget is only going to grow up by seven, 0:09:28.720 --> 0:09:30.880 eight percent or nine percent, you know, and you are 0:09:30.880 --> 0:09:33.560 allocating a large portion of that into AI, you know, 0:09:33.880 --> 0:09:36.560 you have to find money from somewhere else, and that 0:09:36.679 --> 0:09:39.600 somewhere else is usually tapering down in some of the 0:09:39.679 --> 0:09:42.679 other areas, whether it's buying new hardware or you know, 0:09:42.679 --> 0:09:44.480 cutting your consulting spends, et cetera. 0:09:44.600 --> 0:09:47.800 And that's what's you know, impacting Salesforce. 0:09:47.600 --> 0:09:51.120 And Mandeep looking at Snowflakes earnings the same day as 0:09:51.360 --> 0:09:54.320 Salesforce on Wednesday, looks like there's a lot of focus 0:09:54.400 --> 0:09:58.079 on how they're navigating artificial intelligence as well. 0:09:58.600 --> 0:10:01.120 Yeah, I mean, look, I mean I come pair Snowflake 0:10:01.240 --> 0:10:05.960 to a company like Palenteer. Palenteer has seen, you know, 0:10:06.080 --> 0:10:11.080 remarkable acceleration on the commercial side, you know, by integrating 0:10:11.080 --> 0:10:16.400 their ontology product with these llms. And to me, the 0:10:16.480 --> 0:10:20.240 closest competitor for Snowflake is Palenteer and Data Breaks. So 0:10:20.679 --> 0:10:25.280 from that perspective, you know, Snowflake hasn't seen that kind 0:10:25.360 --> 0:10:29.320 of a bump that Palenteer has seen. That's partly to 0:10:29.400 --> 0:10:33.280 do with they didn't have as many llms on their platform, 0:10:34.120 --> 0:10:37.840 you know, to integrate with for agentic functionality. They've been 0:10:38.120 --> 0:10:42.959 trying to add more llms and that for me, is 0:10:43.000 --> 0:10:46.280 a catalyst for that top line acceleration. But there is 0:10:46.320 --> 0:10:48.880 no doubt that they are behind when it comes to 0:10:49.920 --> 0:10:53.320 some of the agentic functionality compared to Data Breaks and Talenteer. 0:10:53.400 --> 0:10:55.920 So when it comes to bringing in more of those 0:10:56.000 --> 0:10:58.720 large language models, does that add to some of its 0:10:58.800 --> 0:11:01.440 costs And could that have an effect on its margins? 0:11:02.000 --> 0:11:05.680 It certainly could, And that's our view as well that 0:11:05.800 --> 0:11:10.400 Snowflake may see some pressure on margins. And look, they 0:11:10.480 --> 0:11:15.760 use all these hyperscalers, Microsoft, Google and Amazon for deploying 0:11:16.679 --> 0:11:22.600 their products. So if Microsoft or Google have to raise prices, 0:11:22.760 --> 0:11:25.880 then they're going to pass it on to a Snowflake. 0:11:25.960 --> 0:11:29.880 So from that perspective, we do think with more AI 0:11:29.960 --> 0:11:33.440 workloads Snowflake, a company like Snowflake may see pressure on 0:11:33.520 --> 0:11:34.120 the margins. 0:11:34.320 --> 0:11:36.200 Of course, all these earnings are coming at a time 0:11:36.240 --> 0:11:42.040 where investors broadly are questioning artificial intelligence valuations on a 0:11:42.160 --> 0:11:44.760 rog How does that play into what we could get 0:11:44.760 --> 0:11:45.280 this week? 0:11:45.679 --> 0:11:47.480 Yeah, I mean you look at valuations mine. 0:11:47.520 --> 0:11:50.480 You know, Salesforce, as I said, is the completely opposite 0:11:50.600 --> 0:11:54.120 realm of all the AI infrastructure play that's out. Their 0:11:54.120 --> 0:11:58.040 evaluation is a lotless which has been historically. In fact 0:11:58.080 --> 0:12:00.640 SaaS trend that have seen a decline in the last 0:12:00.800 --> 0:12:04.199 twelve for twenty four months because of the seatcout pressure 0:12:04.320 --> 0:12:06.800 that we talked about, and even for them, you know, 0:12:06.840 --> 0:12:08.640 when you look at margins, you're not going to get 0:12:08.679 --> 0:12:11.360 the same lift in margins that we have seen in 0:12:11.400 --> 0:12:14.600 the last two to three years of Salesforce under the 0:12:14.600 --> 0:12:18.760 attack of some activist investor really went out and gave 0:12:19.040 --> 0:12:22.559 margin back to the investors. But I think right now 0:12:22.600 --> 0:12:25.760 with their Agent Force product, they really are investing heavily 0:12:25.840 --> 0:12:28.560 into sales and marketing, and I think a lot of 0:12:28.600 --> 0:12:31.960 that will you know, show up in this quarter's earnings. 0:12:32.400 --> 0:12:35.240 Again, we hear from a crowd strike on Tuesday and 0:12:35.280 --> 0:12:39.280 then Snowflake and Salesforce on Wednesday. Thanks to both of 0:12:39.280 --> 0:12:41.640 you for being with us. That's man Deep Singh and 0:12:41.640 --> 0:12:45.200 on a rag rana of Bloomberg Intelligence and coming up 0:12:45.240 --> 0:12:47.720 on Bloomberg day Break weekend, we'll look at how Middle 0:12:47.760 --> 0:12:51.000 Eastern and African countries are focused on business in a 0:12:51.080 --> 0:12:55.280 changing world order. I'm Nathan Hager, and this is Bloomberg. 0:13:06.559 --> 0:13:09.560 This is Bloomberg Daybreak Weekend, our global look ahead at 0:13:09.600 --> 0:13:11.920 the top stories for investors in the coming week. I'm 0:13:12.000 --> 0:13:14.960 Nathan Hager in Washington. Up later in the program, we'll 0:13:14.960 --> 0:13:17.960 look ahead to the holiday shopping season, as those trendy 0:13:18.120 --> 0:13:20.480 La Boo Boo dolls are expected to be a hot 0:13:20.480 --> 0:13:25.079 item in Asia. But first in the coming days, industry leaders, investors, 0:13:25.080 --> 0:13:28.400 and government officials descend on the UAE for the seventh 0:13:28.440 --> 0:13:32.240 Milkin Institute Middle East and Africa Summit. This year's edition 0:13:32.360 --> 0:13:35.719 is taking place at a time when shifting geopolitical landscapes 0:13:35.760 --> 0:13:40.320 and technological advances are dramatically altering the world order. Attendees 0:13:40.360 --> 0:13:43.000 will seek to understand where the Middle East and Africa 0:13:43.040 --> 0:13:46.120 fit in the new hierarchy. For more, let's go to 0:13:46.160 --> 0:13:50.400 London and bring in Bloomberg Daybreak Europe anchor Caroline hepger Nathan. 0:13:50.480 --> 0:13:53.040 The Middle East and Africa have the advantage of young 0:13:53.080 --> 0:13:57.240 demographics and strategic location. They could well be poised to 0:13:57.320 --> 0:14:01.880 take advantage of the next frontier in global devaslopment this year. Already, 0:14:02.240 --> 0:14:06.080 Middle Eastern states, including Kuttar have played a pivotal role 0:14:06.200 --> 0:14:09.280 in the signing of the Gaza Peace Plan, with President 0:14:09.320 --> 0:14:12.720 Donald Trump thanking Arab and Muslim nations in advance for 0:14:12.800 --> 0:14:18.079 pledging money to rebuild the devastated Palestinian territory. Questions, do 0:14:18.080 --> 0:14:20.840 you remain over the extent to which these nations in 0:14:20.880 --> 0:14:24.240 the region, including Saudi Arabia and the UAE, will help 0:14:24.320 --> 0:14:28.920 fund the reconstruction. While several deep pocketed and energy rich 0:14:29.040 --> 0:14:33.160 countries in the area worked on and enthusiastically endorsed the 0:14:33.200 --> 0:14:38.480 peace Plan, almost all have specific reservations. Meanwhile, countries in 0:14:38.520 --> 0:14:42.880 Africa are grappling with a complex relationship with the US President. 0:14:43.200 --> 0:14:46.800 Bloomberg opinion columnist Andrea's Kluth has written about how Donald 0:14:46.800 --> 0:14:51.680 Trump's claims that South Africa is facing government sponsored race 0:14:51.760 --> 0:14:56.880 based discrimination and that in Nigeria quote, they're killing Christians 0:14:57.480 --> 0:15:01.280 are evidence of the current administration's u use of African 0:15:01.440 --> 0:15:06.280 policy to promote an America First agenda. The position of 0:15:06.320 --> 0:15:11.760 African countries, therefore, in a world increasingly dominated by US rhetoric, 0:15:11.920 --> 0:15:16.920 does face challenges, and it's something that was discussed widely 0:15:17.080 --> 0:15:21.680 at the recent Bloomberg Africa Business Summit. During the event, 0:15:21.800 --> 0:15:26.800 South Africa's Minister of Finance, Ino Godongwana told Bloomberg Jennifer's 0:15:26.840 --> 0:15:31.200 Abasaja that talks between the United States and South Africa 0:15:31.680 --> 0:15:32.760 are ongoing. 0:15:33.520 --> 0:15:36.840 The and negotiations taking place between ourself and the USA. 0:15:37.600 --> 0:15:41.400 Accept that we can be through the media through what 0:15:41.600 --> 0:15:44.440 details of this agament when we're not negotiating with them 0:15:44.760 --> 0:15:45.360 in the media. 0:15:46.200 --> 0:15:48.560 What would you say the current state of relations are 0:15:48.720 --> 0:15:50.640 between South Africa and the US. 0:15:51.000 --> 0:15:55.600 Absolutely non problem. Accept that now and again we hear 0:15:55.680 --> 0:15:59.720 what the the USA says about general side and all 0:15:59.760 --> 0:16:00.000 of them. 0:16:00.880 --> 0:16:03.600 Do you think it is putting a dent on potential 0:16:03.720 --> 0:16:05.560 investment into the country. 0:16:05.760 --> 0:16:10.280 Yes, the US is powerful and to that extent it 0:16:10.440 --> 0:16:14.840 influenced the attitude of Inversta community to South Plus, I 0:16:14.920 --> 0:16:15.160 love you. 0:16:15.920 --> 0:16:19.960 That was South Africa's Enoch Godongwana speaking there to Bloomberg's 0:16:20.000 --> 0:16:23.960 Jennifer Zaba Saja on the sidelines of the Bloomberg Africa 0:16:24.080 --> 0:16:29.480 Business Summit. This ahead of the Milkan Institute Middle East 0:16:29.520 --> 0:16:33.880 and Africa Summit in the coming days. So I've been 0:16:33.920 --> 0:16:38.200 getting some information about what is to come from Bloomberg's 0:16:38.280 --> 0:16:42.280 UK and Middle East Finance editor Jenny Seraine and our 0:16:42.360 --> 0:16:46.960 Chief Africa correspondent Jennifer Zabasaja. Welcome to both of you. 0:16:47.440 --> 0:16:49.600 Thank you for speaking to me in terms of the 0:16:49.680 --> 0:16:54.400 Milkan Institute this particular event. Jenny, give us a sense 0:16:54.440 --> 0:16:56.720 of how big a deal the gathering is, who the 0:16:56.840 --> 0:17:00.280 main players are going to be attending, because there is 0:17:00.360 --> 0:17:03.880 increasingly a focus on the Middle East and it's connections 0:17:03.960 --> 0:17:04.639 around the world. 0:17:05.640 --> 0:17:11.159 What we've seen increasingly is, especially as the US, you know, 0:17:11.400 --> 0:17:13.520 maybe has pulled back in a lot of ways from 0:17:13.600 --> 0:17:17.040 some of these big global summit type things, you've seen 0:17:17.080 --> 0:17:19.480 a real big emphasis on some of these midiest players 0:17:19.560 --> 0:17:21.320 that can kind of step in and fill the void. 0:17:21.480 --> 0:17:24.719 So this is a region that just has vast amounts 0:17:24.720 --> 0:17:28.959 of capital You've got entities and specific investors that are 0:17:29.000 --> 0:17:30.879 looking to put that capital to work in new and 0:17:31.000 --> 0:17:33.960 interesting ways, and so that's why you see so many 0:17:34.080 --> 0:17:37.560 Wall Street names and sovereign names from around the world 0:17:37.960 --> 0:17:40.360 kind of flocking to these events and looking to get 0:17:40.400 --> 0:17:41.480 in touch with these investors. 0:17:41.720 --> 0:17:45.040 How do you think those Middle East and countries the 0:17:45.119 --> 0:17:50.800 GCC are balancing the bizarre for investment and also their 0:17:50.880 --> 0:17:51.800 domestic issues. 0:17:52.119 --> 0:17:54.520 Yeah, it's interesting. I do think we're starting to see 0:17:55.160 --> 0:17:58.200 more of a divergence between the different countries themselves. So 0:17:58.440 --> 0:18:01.800 over the years, Abudabi's relying on oil, it has lessened 0:18:01.840 --> 0:18:03.680 to some degree, and a large part of that is 0:18:03.720 --> 0:18:06.119 because they've been able to go and invest so heavily 0:18:06.200 --> 0:18:08.960 in these new and different areas. Saudi, on the other hand, 0:18:09.040 --> 0:18:11.440 is still heavily reliant on oil, and so you kind 0:18:11.480 --> 0:18:14.480 of see that and how their different budget dynamics play out. 0:18:14.600 --> 0:18:17.000 But you see, I think across the board a desire 0:18:17.119 --> 0:18:20.119 to move beyond oil. That's why you see them rushing 0:18:20.160 --> 0:18:24.240 to invest in all these new economy up and coming area. 0:18:25.240 --> 0:18:28.639 Jennifer, You've just come through a very busy time in 0:18:28.880 --> 0:18:31.800 the past few days in Africa, talking to a lot 0:18:31.880 --> 0:18:35.040 of African leaders. We heard a little snippet of one 0:18:35.160 --> 0:18:38.480 finance minister who you spoke to, just tell us first 0:18:38.760 --> 0:18:42.240 some of the complexities that are facing African nations, of 0:18:42.359 --> 0:18:46.080 which there are so many right now as this sort 0:18:46.119 --> 0:18:48.680 of new world order is establishing itself. 0:18:49.240 --> 0:18:52.200 You know, it was the first Group of twenty summer, 0:18:52.240 --> 0:18:55.040 and of course that was on the African continent, that 0:18:55.160 --> 0:18:58.560 was held on the African continent, which was significant for 0:18:59.280 --> 0:19:02.480 many countries outside of just South Africa, which is really 0:19:02.600 --> 0:19:06.000 the only sovereign nation that's a part of the G twenty, 0:19:06.080 --> 0:19:10.159 but also the African Union was also a part of 0:19:10.280 --> 0:19:12.480 the Group of twenty, and so we saw a number 0:19:12.520 --> 0:19:16.879 of leaders that use this opportunity, and even South African 0:19:16.920 --> 0:19:20.280 President Zero Ramaposa, who has held the G twenty presidency 0:19:20.560 --> 0:19:25.000 for the past year, used this, you know, opportunity to 0:19:25.880 --> 0:19:29.840 amplify a lot of the challenges that these countries are 0:19:29.880 --> 0:19:34.360 facing that even pre date a lot of the shifting alliances, 0:19:34.720 --> 0:19:37.240 if it were, that we've seen in the past few months. 0:19:37.560 --> 0:19:41.280 And so of course one of the major you know, 0:19:41.320 --> 0:19:43.520 and probably one of the top concerns that many of 0:19:43.600 --> 0:19:46.919 them have told us is this issue of debt sustainability. 0:19:47.760 --> 0:19:50.639 This is of course, you know, really came to light 0:19:50.760 --> 0:19:54.800 even more so after the pandemic when we saw a 0:19:54.960 --> 0:19:59.560 number of African countries actually you know, fall into to 0:19:59.800 --> 0:20:02.119 debt and they were not able to pay back some 0:20:02.240 --> 0:20:06.200 of the debt that they had borrowed. We saw that 0:20:06.320 --> 0:20:11.440 from from Zambia. We've also seen that from Ethiopia, and 0:20:11.600 --> 0:20:16.520 so the concern really was how do these African countries 0:20:16.680 --> 0:20:22.359 develop and industrialize when most of the revenues and the 0:20:22.480 --> 0:20:25.239 payments and you know, their their cash flow that they 0:20:25.320 --> 0:20:30.200 have domestically is going to servicing debt more so than 0:20:30.320 --> 0:20:32.639 you know, many of our reports indicate more so than 0:20:33.119 --> 0:20:36.600 sectors like education and health. And so we heard from 0:20:36.680 --> 0:20:40.320 a number of ministers wanting to at least find some 0:20:41.119 --> 0:20:44.439 ways in which they are able to maybe look at 0:20:44.920 --> 0:20:48.320 various ways of financing. And so it's not just you know, 0:20:48.480 --> 0:20:51.840 getting services from the IMF or the World Bank, but 0:20:51.960 --> 0:20:54.240 it's also from from new investors. 0:20:54.520 --> 0:20:59.040 Jen, where do you think the focuses then, what do 0:20:59.119 --> 0:21:01.920 you think that as African nations are thinking about in 0:21:02.080 --> 0:21:06.040 terms of their ties to the Middle East. As you say, 0:21:06.119 --> 0:21:08.440 you know, there's a lot of focus on the Trump 0:21:08.440 --> 0:21:12.159 administration and the US relationship with these countries. What are 0:21:12.200 --> 0:21:15.200 those ties between African countries and the Middle East. 0:21:15.800 --> 0:21:19.240 What's been interesting is that, you know, the Trump administration 0:21:19.359 --> 0:21:23.240 and the US sort of scaling back in their aid, 0:21:23.920 --> 0:21:27.359 you know, going from aid to trade or transactions to 0:21:27.440 --> 0:21:30.040 a certain extent, has sort of come at the same 0:21:30.119 --> 0:21:32.320 time in which a number of African countries have been 0:21:32.359 --> 0:21:36.520 able to stabilize many of their economies, so much so 0:21:36.640 --> 0:21:39.480 that there's some of the fastest growing economies in the world. 0:21:39.600 --> 0:21:44.040 And so while of course the shock of usaid was 0:21:44.920 --> 0:21:48.560 very relevant and focused for a number of countries, it's 0:21:48.600 --> 0:21:52.879 also come when there's a lot of new investors that 0:21:53.000 --> 0:21:55.760 are looking for capital to deploy. And you know, we 0:21:55.880 --> 0:21:59.840 were actually speaking to the Barclays head of South Africa, 0:22:00.160 --> 0:22:04.360 and he's also head of the private banking across the continent, 0:22:04.680 --> 0:22:08.200 and he was just saying just how much capital there 0:22:08.320 --> 0:22:11.280 is in some of these Gulf nations and how you know, 0:22:11.400 --> 0:22:15.200 the extent of the money and where it's coming from, 0:22:15.600 --> 0:22:18.600 and the opportunities are or more so than he's seen 0:22:19.040 --> 0:22:20.560 in the past few years. 0:22:20.800 --> 0:22:24.600 Okay, So that's an interesting point, Jenny. I'm also thinking, 0:22:25.080 --> 0:22:27.640 i mean, maybe some of this turns on the military, 0:22:27.800 --> 0:22:30.520 but also a lot of it turns on soft power 0:22:30.600 --> 0:22:34.520 as well. How does soft power, not just hard power, 0:22:34.600 --> 0:22:37.920 play into the mindset of the Middle East? 0:22:38.040 --> 0:22:38.159 Now? 0:22:38.400 --> 0:22:43.800 Huge investment in lots of other things to project, you know, 0:22:44.280 --> 0:22:47.520 whatever image it is that those leaders want to, maybe 0:22:47.640 --> 0:22:51.080 in sports or in other ventures. How do you think 0:22:51.119 --> 0:22:53.200 about soft power now in the Middle East? 0:22:54.000 --> 0:22:57.200 I think it's definitely still top of mind for these governments, 0:22:57.359 --> 0:23:00.080 and so that's why you see a lot of the 0:23:00.119 --> 0:23:04.040 different entities, whether it's sovereign wealth funds or other alternative 0:23:04.200 --> 0:23:08.680 asset managers that they've set up, going after these kind 0:23:08.720 --> 0:23:10.919 of more unique assets that are on the market. I mean, 0:23:10.960 --> 0:23:13.680 I think you saw it with the piffs decision to 0:23:14.240 --> 0:23:17.280 you know, go and take electronic arts private and kind 0:23:17.320 --> 0:23:19.320 of the big take private deal of the year. That 0:23:19.520 --> 0:23:22.560 was a huge display of the kind of wealth and 0:23:22.640 --> 0:23:25.639 then the kind of ambitions that they have, and that 0:23:25.880 --> 0:23:27.840 was all tied to, you know, their desire to be 0:23:28.560 --> 0:23:31.680 the leader of the gaming industry and have this huge, 0:23:32.960 --> 0:23:35.919 you know, footprint in a space that's obviously fast growing 0:23:36.000 --> 0:23:39.240 but also kind of captures the minds and imaginations of 0:23:39.280 --> 0:23:42.000 a lot of consumers around the world and so I think, yeah, 0:23:42.080 --> 0:23:44.920 we'll definitely continue to see these players, you know, look 0:23:45.000 --> 0:23:46.720 for ways that they can make that kind of mark 0:23:46.800 --> 0:23:49.399 and kind of these key industries, and I think sports 0:23:49.480 --> 0:23:52.280 is a great one. As you mentioned, you see them 0:23:52.320 --> 0:23:55.280