04/01/2016 BBC Business Live


04/01/2016

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This is Business Live from the BBC with Sally Bundock and Ben Thompson.

:00:07.:00:11.

A new year and fresh fears about the slowdown in China and it's

:00:12.:00:14.

sending jitters through global markets.

:00:15.:00:20.

Live from London, that's our top story on Monday 4th January.

:00:21.:00:34.

Shares in Shanghai are suspended after a 7% plunge.

:00:35.:00:42.

A slowdown in manufacturing is one of the key reasons why.

:00:43.:00:47.

And also a change to share trading rules.

:00:48.:00:52.

We'll be live in Beijing to make sense of the mayhem.

:00:53.:00:54.

Also in the programme: Takata shares rise as Japanese car companies look

:00:55.:00:57.

set to support the troubled airbag maker.

:00:58.:00:59.

Our team in Singapore has the latest.

:01:00.:01:03.

And it's the first trading day of 2016 Europe, it's a sea of red.

:01:04.:01:11.

Would you pay to watch oerts play video games? One man thinks it is.

:01:12.:01:18.

And would you pay to watch others play video games?

:01:19.:01:21.

One man thinks you will and it's proving to be a huge success.

:01:22.:01:24.

We'll meet the boss of video gaming TV channel Ginx and get

:01:25.:01:27.

the inside track on the fastest growing entertainment sector

:01:28.:01:32.

We want to know what are your financial New Year's resolutions?

:01:33.:01:34.

What are you planning to do differently with

:01:35.:01:36.

Save more, invest more, or spend more?

:01:37.:01:39.

Let us know, use the hashtag BBC BizLive.

:01:40.:01:45.

We are already talking about serious volatility on China's stock market.

:01:46.:01:59.

index, the Shanghai Composite was suspended today after the market

:02:00.:02:02.

It's been blamed on another slowdown in the manufacturing sector

:02:03.:02:06.

which contracted for a fifth straight month in December.

:02:07.:02:10.

The data suggests the Government may have to step in with more aggressive

:02:11.:02:13.

stimulus measures if it wants to avoid a more dramatic

:02:14.:02:15.

One of the biggest risks this year is a sharp depreciation

:02:16.:02:29.

Experts also fear the number of corporate debt defaults

:02:30.:02:35.

Economic policy could create turbulence ahead from the removal

:02:36.:02:42.

of capital controls to efforts to rein in debt.

:02:43.:02:49.

Even as China tempts to steer away from growth driven by its factories

:02:50.:02:54.

With me now is Qian Liu, director of access China

:02:55.:03:03.

Welcome. Some issues there and responses we have had from the

:03:04.:03:13.

Chinese Government, now it's this newly launched circuit breaker plan,

:03:14.:03:17.

the plan that's stopped trade when they fell by 7% there. Just part of

:03:18.:03:21.

a raft of measures the Government have taken to ban things like short

:03:22.:03:27.

selling. Some people saying it's worked on this occasion and stops

:03:28.:03:30.

the market falling any more but it is symptomatic of a Government

:03:31.:03:35.

trying to influence the way the stock market moves. Exactly. Now

:03:36.:03:41.

this new idea of suspending the trading is really something that

:03:42.:03:46.

started to be effective, actually from today, now that was introduced

:03:47.:03:51.

after the stock market fallout in the summer of 2015. What

:03:52.:03:57.

us is above everything else stability is the key thing that

:03:58.:04:00.

holds China together. Now one key reason that led to the stock market

:04:01.:04:04.

fallout today is from the purchase managers index. Both the Government

:04:05.:04:08.

official number from last Friday and also the private one is both of them

:04:09.:04:13.

are telling us numbers are pointing to a contraction in the Chinese

:04:14.:04:19.

economy. What we are seeing today, part of that is

:04:20.:04:24.

lack of confidence over Chinese economy overall. Depending on who

:04:25.:04:27.

you believe and what you read, some say this is actually a good sign,

:04:28.:04:31.

maybe China is over the worst, we have seen all the headlines of the

:04:32.:04:33.

last six months where we saw a big fall in the value of the stock

:04:34.:04:41.

market, we saw that in the depreciation, maybe 2016 is the year

:04:42.:04:47.

things start to stabilise. Is that the optimistic view? Well, depends

:04:48.:04:51.

on which particular sector you refer to when you say the worst is over.

:04:52.:04:55.

When we look at China as a whole I say at least the best part, the

:04:56.:05:01.

fastest growth is over, the good days of double digits and magic 8%

:05:02.:05:06.

is over. The Chinese President is targeting at no less than 6. 5% in

:05:07.:05:13.

the next five years and actually 2016 is the first year of the

:05:14.:05:20.

five-year plan. One thing we can be sure is that China is not going to

:05:21.:05:24.

have any next one or two years, there are many doubts over how much

:05:25.:05:29.

China can sustain current growth. What I can safely say is definitely

:05:30.:05:36.

not the next couple of years but there are more concerns over the

:05:37.:05:40.

medium term, that is the 3-five years down the road. There are many

:05:41.:05:46.

problems that can go wrong. For 2016 it's really managing the structural

:05:47.:05:50.

slowdown and if anything property market, export and and service

:05:51.:05:53.

sector are something that's worth paying attention and these are the

:05:54.:06:00.

three sectors that might bring us upwards pleasant surprises. Thank

:06:01.:06:04.

you for talking us through that. Remember full coverage of events in

:06:05.:06:11.

China and that suspension of shares is across the BBC.

:06:12.:06:16.

Despite China's economic slowdown, investment in the country's railways

:06:17.:06:18.

grew last year with a total of 126 billion dollars being spent

:06:19.:06:21.

A new high speed railway service in the southern Hainan province has

:06:22.:06:28.

become one of the latest to start operations.

:06:29.:06:30.

China now has 19,000km of high-speed track.

:06:31.:06:32.

More than a million private cars are being banned from Delhi's roads,

:06:33.:06:36.

as authorities begin testing drastic new measures to cut smog

:06:37.:06:39.

in the world's most polluted capital.

:06:40.:06:40.

For two weeks this month, private cars will be allowed

:06:41.:06:42.

on the roads only on alternate days depending on whether their license

:06:43.:06:46.

plates end in an even or an odd number.

:06:47.:06:53.

Facebook founder Mark Zuckerberg has said he plans to build an artificial

:06:54.:06:56.

intelligence machine to help him around the house and with his work.

:06:57.:06:58.

In a Facebook post, he said his personal challenge this

:06:59.:07:01.

year would be to build what he called "simple AI" and says

:07:02.:07:05.

he plans to share his progress over the course of the year.

:07:06.:07:18.

I would like one of those as well, frankly, Mark!

:07:19.:07:33.

Gold rising by 1% today. Christmas sales down, I am guessing! Maybe.

:07:34.:07:39.

Could be. But of course when stock markets around the world are

:07:40.:07:43.

volatile, things like gold that's perceived as a safe haven tends to

:07:44.:07:49.

creep up. Up another 1% this morning. Oil price spiking, as well.

:07:50.:07:53.

We talked about China, also concern about what's happening with

:07:54.:07:59.

Arabia and Iran, tensions in the Middle East. Possibly disrupting oil

:08:00.:08:02.

supplies, there is a knee-jerk reactions today with the oil price

:08:03.:08:07.

rising, up 3%. Full details there on the live page.

:08:08.:08:12.

There is much more there too as well as oil, but also more on that news

:08:13.:08:16.

that Chinese shares were suspended as we discussed as a result of that

:08:17.:08:20.

slowdown in manufacturing but all sorts of things affecting that

:08:21.:08:21.

trade. Mariko Oi is in our Asia business

:08:22.:08:37.

hub in Singapore with the details. Shares are rising as much as 17% at

:08:38.:08:51.

the moment, up by about 14%, the biggest rise in more than a year. I

:08:52.:08:57.

should emphasise shares fell some 56% last year. It's mainly because

:08:58.:09:03.

of a newspaper report by one newspaper that Japanese, the

:09:04.:09:09.

Japanese car-makers might be putting together some financial aid for

:09:10.:09:11.

Takata, the last time they did something similar was in 2011 after

:09:12.:09:20.

that major stum and earthquawe -- time. The circumstances are

:09:21.:09:23.

different, the airbags have been linked to ten deaths and Honda has

:09:24.:09:30.

said that it's not going to investigate in Takata. It's still

:09:31.:09:33.

enough to push up share prices. Thank you. Let's look at markets in

:09:34.:09:38.

general. We talked about the fact it's not been a good start to a

:09:39.:09:45.

brand new trading year as it were. Japan closing down 3%. Hong Kong

:09:46.:09:49.

tracking, China also down. You can see the price of oil, now down

:09:50.:09:54.

actually but as we mentioned up earlier around about 2%, 3%. That's

:09:55.:09:58.

the euro. Look at how things are going in Europe today.

:09:59.:10:06.

As I mentioned, pretty torrid session. I can't get the graphics

:10:07.:10:10.

there. Earlier Germany was down, Paris down, London was also down.

:10:11.:10:16.

All down around about 2% or between 1% and 3%. At one point Germany was

:10:17.:10:21.

down over 3%. There you go. It's all there.

:10:22.:10:25.

As you can see, pretty bad start to a brand new trading year.

:10:26.:10:30.

China's a big issue but also concerns about what's happening in

:10:31.:10:31.

the Middle East. James Hughes, chief market

:10:32.:10:39.

analyst at GKFX, joins me. A new year, but the same old

:10:40.:10:48.

problems when you look at the numbers there. Germany down about

:10:49.:10:53.

3%, FTSE 100 in London down significantly. Is it just China or

:10:54.:10:57.

is it the dawning reality that everyone's back in the office, and

:10:58.:10:58.

there is nothing really excited about? Yeah, there is that

:10:59.:11:04.

kind of depression feeling in the markets when you come back on the

:11:05.:11:08.

first day but it is China, I think whenever China has any kind of blip

:11:09.:11:11.

and it doesn't have to be big these days, the rest of the markets do

:11:12.:11:16.

tend to get a little bit scared and freak out a little bit and that's

:11:17.:11:21.

exactly what we are seeing. First exactly what we are seeing. First

:11:22.:11:23.

day back, bad news out of China. Big falls on the down side. Interesting

:11:24.:11:29.

to see what happens later in the US to see if it snowballs. The US

:11:30.:11:34.

markets look low, as well, it could be across the board today that we do

:11:35.:11:39.

see a negative start to the year. New rules in China. If you put a

:11:40.:11:47.

trading, it goes down 7% and we stop trading, it goes down 7% and we stop

:11:48.:11:53.

trading. 5% they put in, this isn't just in China. We have this in the

:11:54.:11:56.

UK where if markets go down a little bit too much then shares get

:11:57.:12:00.

suspended. But you put this in and it does tend to happen. That's

:12:01.:12:02.

exactly what's happened. In China what we have in the next few weeks

:12:03.:12:06.

is a lot of other measures that were put in by the Chinese Government

:12:07.:12:09.

will be lifted so there is a worry will be lifted so there is a

:12:10.:12:15.

that as more and more policies get lifted that were put in to stop this

:12:16.:12:20.

slowdown that things could get uglier in China. We talked about a

:12:21.:12:25.

new normal of slower growth, still subtanks by European standards but

:12:26.:12:30.

nonetheless slower growth -- substantial. New lower oil price. Is

:12:31.:12:35.

it the case people say we start 2016 we have to reassess what we think is

:12:36.:12:39.

year on that? Yeah, and we kind of year on that? Yeah, and

:12:40.:12:44.

go back a little bit with rates to that point, as well. We all have

:12:45.:12:47.

this obsession with moving interest rates higher but that's to take us

:12:48.:12:51.

back to the sense of what we thought was normality but that was normality

:12:52.:12:55.

pre-2008 and that world doesn't exist any more. There is a little

:12:56.:12:59.

bit of that. The oil prices aren't going too much higher in the near

:13:00.:13:04.

future, China is going to stay negative, as the last - the boom

:13:05.:13:06.

years have gone out of China are looking at a different world

:13:07.:13:12.

this time. What we are doing is creating the rules for that

:13:13.:13:15.

currently at the moment. In the next 12 months or so it's going to be

:13:16.:13:19.

interesting just to see how the landscape is at the end of this

:13:20.:13:22.

year, what rates are doing and where markets are going. We will watch

:13:23.:13:26.

closely. James, thank you very much. We will talk through the papers

:13:27.:13:30.

later. This is something James would day.

:13:31.:13:35.

He would pay to watch other people playing video games. He confessed

:13:36.:13:38.

that to us earlier. Would you do that? E-gaming is the fastest

:13:39.:13:50.

growing entertainment sector in the world.

:13:51.:13:55.

Now a look at some of the stories from around the UK.

:13:56.:13:58.

The UK economy finished 2015 with a burst of speed,

:13:59.:14:02.

It looks as if the CBI said overall the economy looked strong in the

:14:03.:14:14.

fourth quarter, business services did well. Those people exposed to

:14:15.:14:18.

consooner spending did well, that's the good. The bad, manufacturing

:14:19.:14:23.

shrank a little bit and the ugly is the fact that export performance was

:14:24.:14:29.

at a six-year low. Not the rebalancing that both the Government

:14:30.:14:32.

and business groups wanted to see. We won't get the official numbers

:14:33.:14:34.

until the end of looks like overall it's a good

:14:35.:14:40.

picture but not a balanced one. Simon, what about the fact that

:14:41.:14:44.

apparently this survey points to the UK companies backing EU membership

:14:45.:14:48.

has fallen a bit, is that significant or not? I think so.

:14:49.:14:52.

Deloitte, the big accountancy and consultancy firm do a survey of

:14:53.:14:56.

chief financial officers or finance directors and found back in June 74%

:14:57.:15:03.

supported Britain's membership of the EU, that's down to 62% so not a

:15:04.:15:06.

huge change but if that was an election poll which in a way it is,

:15:07.:15:10.

people would take notice. Only 6% say their companies would be bet

:15:11.:15:14.

iroff out of the European Union but that's up from 2%. A lot saying wait

:15:15.:15:18.

and see. The mood music out of Europe at the moment is pretty

:15:19.:15:23.

miserable. Assessments on growth conditions over there, the migrant

:15:24.:15:27.

shift but one that's going to make negative outlook. Not a massive

:15:28.:15:32.

shift but one that's going to make some people sit up and take notice.

:15:33.:15:32.

Thank you. The front page of today's Financial

:15:33.:15:42.

Times they had a survey of 100 economists they spoke to. Most of

:15:43.:15:46.

whom argue it is better for the UK economy to stay within the European

:15:47.:15:47.

Union. That debate is just going to Union. That debate is just going to

:15:48.:15:52.

go on and on. I have a feeling we go on and on. I have a feeling we

:15:53.:15:53.

will be talking about that a lot will be talking about that a lot

:15:54.:15:57.

this year! One story to bring you. Good news, we were talking about oil

:15:58.:16:02.

prices creeping back up. Diesel dropping to below ?1 a litre for the

:16:03.:16:08.

first time since 2009. Good news for Britain's 11 million diesel drivers.

:16:09.:16:17.

It says prices on the fore courts dropping all of this and the big

:16:18.:16:23.

supermarket chains are dropping prices. A drop in diesel.

:16:24.:16:31.

Our top story, shares in Shanghai are suspended as traders eye a sharp

:16:32.:16:35.

Stocks fell by 7% before trade was halted.

:16:36.:16:45.

Part of new rule to stop big losses on one of the most influential stock

:16:46.:16:52.

markets. The repercussions is being felt around the world.

:16:53.:16:55.

E-gaming is one of the world's fastest growing entertainment

:16:56.:16:57.

Professional players earn multi-million dollar prizes.

:16:58.:17:03.

A staggering 344 million people watched the championships

:17:04.:17:03.

for the video game League of Legends last year and there are even TV

:17:04.:17:05.

Ginx is one of them, with subscribers in Europe,

:17:06.:17:12.

It's Chief Executive Michiel Bakker knows all about running

:17:13.:17:19.

He was one of the founders of MTV Europe.

:17:20.:17:22.

Michiel spent 20 years building what is now

:17:23.:17:25.

Viacom International Media Networks, and has been Chairman

:17:26.:17:30.

After leaving MTV, he took time off to travel and learn to sail yachts.

:17:31.:17:37.

At the helm of Ginx, he has overseen its latest

:17:38.:17:40.

round of financing, via crowd funding, to meet their target

:17:41.:17:43.

Welcome to Business Live. Let's of Ginx TV, is here.

:17:44.:17:59.

Welcome to Business Live. Let's start with this concept of people

:18:00.:18:02.

paying or subscribing to watch other people play video games. It is

:18:03.:18:05.

fascinating because if you are a gamer, you will know all too well

:18:06.:18:08.

about this and we were discussing this earlier, people do this, they

:18:09.:18:12.

look for tactics and strategy and how you might do better at these

:18:13.:18:15.

will not have a clue that something will not have a clue that something

:18:16.:18:19.

like your channel exists. It really like your channel exists. It really

:18:20.:18:20.

is a big growth area, isn't it? It is. You focussed a lot on e-sports

:18:21.:18:31.

in your package there. Ginx is about all video gaming and console gaming

:18:32.:18:34.

and what happened to video gaming, it moved from the preserve of the

:18:35.:18:39.

15-year-old boy in their bedroom playing games to a more massively

:18:40.:18:45.

mainstream activity. So you see all over the world stadium packed with

:18:46.:18:52.

being played between teams and it is being played between teams and it is

:18:53.:18:55.

the excitement, it is not dissimilar than watching Chelsea v Manchester

:18:56.:18:58.

United in more traditional sports if you will and that's and you say it

:18:59.:19:04.

doesn't appeal to non gamers, but in fact what I see happening is that

:19:05.:19:10.

just the dynamic environment and the tension and the commentary is

:19:11.:19:14.

drawing people that are not considering themselves to be core

:19:15.:19:17.

gamers into this excitement. A lot of it is the content, isn't

:19:18.:19:21.

it, as with any television channel, you have got to have the right thing

:19:22.:19:26.

on the channel for people to subscribe, pay to watch. How do you

:19:27.:19:31.

find content for Ginx? Where do you go? Well, we have a luxury, of

:19:32.:19:35.

course, of a flow of content coming out of the gaming publishers every

:19:36.:19:40.

year. There are thousands of games being developed. How do you find the

:19:41.:19:43.

right content? The people that content, that it is a must watch for

:19:44.:19:51.

the exclusive environment of trying the exclusive environment of trying

:19:52.:19:53.

to get a game that you can only see on Ginx or that's one way to go.

:19:54.:19:58.

Exclusivity is not a natural way to attract people. The other is to

:19:59.:20:02.

highlight games in a way that is not done usually. The video gaming world

:20:03.:20:06.

has grown up in a silo on the left and TV is in a silo on the right and

:20:07.:20:12.

Ginx it is in between. We treat video games very much

:20:13.:20:18.

entertainment and less, you know, we entertainment and less, you know, we

:20:19.:20:20.

are less about the 50 million lines of code. You can delve deeply into

:20:21.:20:28.

video gaming, but we tend to approach it as more of

:20:29.:20:33.

entertainment, broad spectrum way to make it appealing to as many people

:20:34.:20:40.

as possible. It is interesting now that mainstream sponsors, the likes

:20:41.:20:44.

of people who would have sponsored the big games are getting involved

:20:45.:20:49.

in e-gaming and television channels such as yours, they are able to

:20:50.:20:53.

access a niche gamer, a person they want to target that they can't get

:20:54.:20:57.

anywhere else? There is two types of brands that come in. You're right to

:20:58.:21:01.

point out that there are bigger brands now looking to come into this

:21:02.:21:06.

predominanty male audiences which congregation of 16

:21:07.:21:12.

predominanty male audiences which are the most elusive television

:21:13.:21:14.

audiences to attract, brands want to be there. So whenever something like

:21:15.:21:18.

this moves into the mainstream, you can see mainstream brands coming to

:21:19.:21:22.

that and that benefits everybody because it creates that sort of echo

:21:23.:21:27.

system that more investment can go into e-sports and therefore, it can

:21:28.:21:31.

become even bigger and better and broader and get more adapted around

:21:32.:21:35.

the world. So yes, it is a good thing overall. Really nice to see

:21:36.:21:39.

you. Thank you for coming in. We could talk all day about it. We have

:21:40.:21:44.

many more questions, but time has got the better of us. Thank you for

:21:45.:21:50.

coming in. Virtual reality is being billed as

:21:51.:21:54.

the next big thing in tech and it may become true. Millions of people

:21:55.:22:02.

will be able to use it in their own homes as Sony release for sale their

:22:03.:22:08.

virtual reality head-set, but beyond gaming all sorts of uses are being

:22:09.:22:12.

explored. Here is our technology expert. In a freezing cellar with

:22:13.:22:21.

fake snow under foot, I'm inching my way up the world's highest peak. I'm

:22:22.:22:27.

getting a view of Everest, a virtual reality game out later this year.

:22:28.:22:31.

The manufacturers believe gamers are ready to immerse themselves in

:22:32.:22:35.

virtual worlds. It is the natural progression. We have got bigger

:22:36.:22:36.

screens. We have had 3 D screens and screens. We have had 3 D screens

:22:37.:22:43.

we have had curved screens. The next we have had curved screens. The next

:22:44.:22:45.

thing is taking us into a virtual environment and locking out every

:22:46.:22:47.

bit of stimulus so we are focussed on what they are trying to tell

:22:48.:22:53.

Getting into a us. Lift, especially one as old as this, could be a scary

:22:54.:22:58.

experience for some people. So could virtual reality help them get over

:22:59.:23:04.

their phobia? I have come to see how psychologists are working with the

:23:05.:23:06.

technology. I am going to focus on technology. I am going to focus on

:23:07.:23:10.

your breathing and muscle tension. They have developed a programme that

:23:11.:23:12.

allows patients to try out the experience of getting into a lift.

:23:13.:23:18.

You sweat, your breathing changes. You get a physiological reaction

:23:19.:23:21.

which you don't get in the 2 D environment. Let's see if it worked.

:23:22.:23:27.

How does that feel now? I'm honestly quite proud that I'm doing this!

:23:28.:23:29.

LAUGHTER You should be proud. Do you think

:23:30.:23:33.

all? Honestly, I would have been all? Honestly, I would have been

:23:34.:23:39.

taking the stairs about a month ago! That's an amazing story. It really

:23:40.:23:40.

is. James Hughes, chief market analyst

:23:41.:23:48.

at GKFX, is back with us to look at what's making business

:23:49.:23:52.

headlines in the papers. Winners and losers and the FT has a

:23:53.:23:57.

piece talking about the winners, well there were nine of them and

:23:58.:23:59.

tech stocks. Yeah and these are the tech stocks. Yeah and these are the

:24:00.:24:06.

real staples of these markets. The markets 2015 was a terrible year for

:24:07.:24:11.

equity markets. Particularly in America as well? Most stocks down,

:24:12.:24:18.

but this is the first time I heard this, the fangs, Facebook, Amazon

:24:19.:24:23.

and net flick and Google. These stocks did so well and Netflix was

:24:24.:24:25.

an interesting one. One of the an interesting one. One of the

:24:26.:24:30.

year, their Chief Executive said announcements of their figures

:24:31.:24:30.

year, their Chief Executive said about the market going up so

:24:31.:24:34.

strongly, he said he had no idea why the share price keeps going up

:24:35.:24:37.

because we're not actually in that good shape where his words! He is an

:24:38.:24:42.

honest man, isn't he? They went up further on the back of that. Fangs,

:24:43.:24:55.

Facebook, Amazon, Netflix and goodbyele are the FANGS!

:24:56.:24:59.

Take back Tuesday was the Tuesday after Christmas. Did you have to

:25:00.:25:04.

take stuff back, James? I didn't take anything back because anybody

:25:05.:25:13.

that bought me gifts bought perfect. This week and next week, we see the

:25:14.:25:18.

big retailers come out and give us information on how the Christmas

:25:19.:25:22.

period... It has been raining hard. The wrong weather. Boxing Day, foot

:25:23.:25:27.

centres was up 3.9%. That's because centres was up 3.9%. That's because

:25:28.:25:34.

people need to get out of the house! After the rain, they need to be

:25:35.:25:38.

under cover! That's true. Hopefully retailers for December, which of

:25:39.:25:42.

course, is pivotal, are going to be slightly better off this year

:25:43.:25:45.

because last year, it was the first time ever that online sales beat

:25:46.:25:50.

foot fall sales. It will be so interesting to see the retail

:25:51.:25:54.

figures. Thank you, James.

:25:55.:25:59.

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