05/01/2016 BBC Business Live

Hello, this is business live from the BBC.

Calm returns to global financial markets but for how long and at what

cost? Live from London, it is the top

story on Tuesday the 5th of January. The Chinese authorities pour nearly

$20 billion into money market to bring stability after Monday's

dramatic plunge. The stock market today was closed slightly lower, we

will have the expert view. Also, Volkswagen faces billions of dollars

fines as America's Justice Department sues the car-maker for

cheating emissions. The big question, how big will the legal

bilby? And question, how big will the legal

bilby? And here is how the European numbers are looking at the opening

after yesterday's big sale. We will assess what today could bring.

And how social media has changed the firms advertise as brands battle for

consumers' attention and agencies at that, but we will get the inside

track from Lindsay Paterson, part of the WPP empire. And the headlines

read happy new fear? Do you think financial markets are going the

wrong direction in 2016? Use the hashtag.

A very warm welcome to the programme. Stock markets in China

have recovered after opening more than 3% down earlier today. Shanghai

shares closed just a quarter of 8% lower. Traders described the initial

loss as panic following suspension of trading on Monday, when shares

plunged by 7% triggering an automatic shutdown. It was sparked

by weak manufacturing data and the introduction of a new circuit

breaker system that encouraged traders to make sales early in the

day. The plunge in China initiated a big global sell-off. Markets across

Asia, Europe and the US all suffered losses. So this is how the numbers

are currently looking, this is the picture in Asia overnight, when

China stepped in to support the stock market with state-controlled

funds buying up stocks and regulators signalling that the

selling ban on major investors will remain in place beyond the rest of

the week, that was due to expire this week. But whilst that has eased

the falls in the latest trading sessions, it gives the market more

autonomy and lets it move naturally. So this is what Europe is currently

doing at the start of the day. The FTSE 100 in London ended yesterday

down, it is clawing back some of those losses just shy of 1%. A

similar picture in Germany, where the losses were much greater, ending

down nearly 4%. The big question, what will today bring?

Thank you, well... Nandini Ramakrishnan,

Global Market Strategist at JP Morgan Asset Management

joins me now. Happy New Year. Or happy new fear is

some newspapers are saying, your thoughts? It is definitely very

dramatic, certainly not what we expected, but once again a signal

that there will be volatility in 2016 as new markets like China's

stock market adjust to being a more open, free market and understanding

how truly buy and sell mechanisms like this will work. As you say,

same time intervening quite heavily same time intervening quite heavily

by the sounds of things and trying to manage it as well, which for

foreign investors is a difficult thing to try and predict, isn't it?

Exactly, said the action of buying in the Open market, as we saw in the

latest session, is something they are doing to try and stave off the

losses but ironically, this circuit breaker that triggered yesterday's

trading was the first time it has ever been in place, so a new market

action to try and let the market decide where to stop didn't work as

planned, so I think they are figuring out how exactly to let the

markets be more free. And on that issue, the last time they stepped in

with those big falls we saw recently at the end of last year, there was a

lot of concern about how much intervention the Chinese authorities

would have in the markets and they said they would let the markets do

what they do best and let investors rule. It has not been the case this

time, should we believe it will be any different next time? I then

think we can say they will be completely hands-off, this has

taught us that they will step in if losses were as bad as they were on

the 4th of January's trading session, so I think we need to give

them time, take each volatile trading day on its own and see what

happens. Maybe they will reduce the amount of liquidity injected into

the market in the next bad session, but each time at a time. And

briefly, what are you saying at JP Morgan to your clients this year?

2016 will be a volatile year, you have two remain invested, stay

diversifying and be active in selecting specifics, not just the

full index and seeing losses like you saw on the 4th of January. Thank

you, we will see you again this year, I am sure, so fasten your seat

belts. Yes, we shall, in the meantime,

other news. The US Justice Department is suing

Volkswagen over the emissions scandal that saw the German car

giant fit software in millions In September last year,

VW admitted installing the so-called defeat device on 11 million vehicles

around the world and has now put aside billions of euros to deal

with the repercussions. Chinese airlines are stepping

up their plans to go global. Nearly a dozen carriers are expected

to launch international services in 2016, to cope with the huge

numbers of mainland These include Air China

which will launch services to Manchester in the UK,

Hainan Airlines that wants to start more flights to Canada

and Sichuan Airlines Copper price has slumped after that

week Chinese manufacturing data, it fell in December. It raised concerns

about the demand from the world's largest consumer of metal, a key

component in the manufacturing of everything from mobile phones to

houses and is seen as a good gauge of economic health.

Looking at business live online as ever, lots of stories and

information and news to keep you right up to date. This is one that

is quite eye-catching, which is about gun sales in the United

States, a very controversial issue at

States, a very controversial issue at the moment, very much in the news

is that President Obama tries his best before his term ends to try and

get changes in the law regarding gun ownership, but this particular

story, Smith and Wesson expects to shift more guns in the three months

to the end of January, sales ranging from $175 million up to 180 million.

They are selling merchandise like he would not believe. Jon Sopel, our

correspondent in North America, you will have seen his piece on the BBC

about how easy it is to buy a gun in the US.

One of the industries that gets the world talking and one of the firms

that does very well out of it despite the controversy surrounding

it. This is another interesting one, a

storm in a teacake. These are the teacake may have seen, Tunnocks, at

the Commonwealth games in Glasgow. A bit of a row has emerged about the

company's latest advertising campaign, which says they are a

great British teacake, can the managing director make that claim?

He is the energy director and the grandson of the company founder. We

have a boss from the advertising industry later, perhaps a question

for her. In the meantime, the continued

nervousness on global stock markets, the sell-off in China, it has meant

pressure on Hong Kong's stock market. Giuliana is in Hong Kong,

can you explain this relationship between mainland China and the

markets there and what is happening in Hong Kong. That is right, Hong

Kong is a Chinese city but politically and financially, it is

completely separate and by law, mainland officials have no due

restriction here and that extends to interventions in the market, so the

regulators, if they intervene in Shanghai or Shang Jing or in the

money markets, let's say intervention cannot be carried out

in Hong Kong, so that is why sometimes you will see rather

curious occurrences with some companies that are listed both in

mainland China and Hong Kong having very different share prices on the

same day. We have seen that to some extent over the last few days. Here

in Hong Kong, it is a very free market, so investors are able to

respond as they see fit and sometimes, of course, they will be

affected by the intervention that they will see in mainland China but

they certainly wouldn't be bound by those interventions. Juliana, thank

you very much, in Hong Kong. Richard Fletcher is business editor

at the times. As we have said quite a few times, quite a start to the

year and a slot in the media love to make the most of it, but give us

your take on our part in the story of getting financial information out

there and getting the story right? It is important when dramatic moves

are taking place. Yes, you rarely read stories about billions wiped

onto shares, it is normally wiping off, so you have to be careful as an

editor to describe a 2% fall is a crash because it is not a crash and

also, what do you do when it does fall 10% or 15% if you have

described 2% is a crash, you are out of hyperbole. So others who have

done this for a few years, markets do tend to smack you slightly, as we

have seen today and they bounce back, it is or was difficult, so you

have to get the balance right and readers definitely pick us up, I

have had a few people on Twitter this morning who argue that we have

over emphasised the bad news rather than the good news, and we do like

the good news occasionally, which is important to remember. I think more

than occasionally, that is the impression we are getting. You have

to keep some sort of perspective. Yesterday was an important day, what

happened in China yesterday was important, which is why we put it on

the front page, but you have to keep some perspective and you can't over

egg these things. Richard, just a word on VW, that is a story that has

everybody talking as well. Yesterday, the US Justice

Department, suing Volkswagen for fitting these cheat emission

devices, but they have stopped short of naming individuals or criminal

charges, this is based on VW and the effect it has had in the US. This is

the civil case, we could still see criminal charges, the Justice

Department could still bring criminal charges and they stressed

that yesterday but the civil case will now move to Northern

California. What I suspect we will see on the civil charges, we will

now have a period of probably no news as they negotiate, because most

people expect them to negotiate. If you look at the cost per vehicle,

you could be looking at fines of up to 90 billion for Volkswagen, which

is a huge number. What we will probably see now is a bit of radio

silence as they negotiate some sort of agreement for the civil damages

which come under the clean air laws in the US, but we could still see

criminal charges and obviously we could still see elsewhere in the

world, both civil and individuals taking action. So watch this space.

We will see you later, thank you very much for now, Richard will come

back and talk about more stories in the press today.

Still to come, vying for your attention.

How has social media changed the way firms advertise?

We'll meet the boss of global media agency Maxus for the inside track

on how businesses are battling for our business.

You're with Business Live from BBC News.

In the UK, high street chain Next has blamed unseasonably warm weather

for what it calls a "disappointing" performance

There was a fall in store sales and a sharp slowdown

Simon Jack has the details in our business newsroom.

Next, the first big retailer to update us on how it fared in the

crucial Christmas period. Yes, disappointing was the word they use

about their own performance, as you said, sales on the high street down

0.5%, sales online by 2%, not the growth we have seen in recent years.

Retailers always complain about the weather but to be there to Next,

seasonality does play a part and they went to the pains of producing

this chart in their statement which shows that as the weather goes down,

sales go up and we have had this unseasonably warm weather, November

to December where temperatures were up, so sales are down. Profits

already coming in at the lower end of estimates has seen shares fall 5%

this morning. We have Marks Spencer is to come in the next few

days to find out how the retailers' Christmas panned out. Apparently it

is fat cat Tuesday, please explain. This is a rather depressing piece of

information. By the end of today, the average FTSE-100 CEO will have

earned more than the average worker will have for the rest of the year,

two days into the year. I put it on my Twitter feed and I don't think I

have ever had a bigger response. So a little moment for that information

to settle, the average CEO will earn more by the end of today than most

people will the rest of the year. What a lovely thought, thank you, I

am sure we will get reaction for that.

What a depressing start to Tuesday if you are back at work after the

Christmas holidays. I am sure Mark Carney is back at

work. And he is talking consumer borrowing

levels rising to precrisis levels, so the question is what you did over

the holidays, did you splurge on the credit card, did you spend too much

and do you have that financial hangover?

Would you like to confess on air? Good, bad or ugly? I never use it

unless I can pay it off at the end of the month. We have to practice

what we preach, we talk about it all the time.

We will be hearing from Next and Marks Spencer's. We will keep you

across the news as it comes in. Always a crucial period over

Christmas, we will find out the winners and the losers. We will have

the details right here. Our top story, the calm

after the storm, a massive stimulus injection by the Chinese government

helps to stabilise Asian markets. Everywhere you look, it seems you're

bombarded with advertising. Firms all vying for our attention

to make us spend our As this year gets underway,

2016 is set to be a bumper year The biggest drivers of spending

on marketing and advertising But the boom in social media,

apps and smartphones are all offering consumers new ways

to communicate and shop and often And so as consumers evolve so too

must the advertising industry. GroupM expects digital advertising

to make up 31% of global ad budgets this year as the industry moves

online, away from traditional media. Our next guest, Lindsay Pattison,

took over as chief executive of global media agency,

Maxus in October 2014. And she's overseen the group's

billings grow by $500 million. You told me an important fact which

I can't remember. Tell us about, you are the only female CEO of a global

ad agency? Yes, depressingly. It is quite depressing. Ben, you wanted to

start off with the actual nuts and bolts of it. We talked about the

advertising industry as a whole and it is easy to talk about an industry

that's been changed by technology and social media, but advertising is

one of the biggest beneficiaries if you get it right, but at the

detriment of the industry if you get it wrong and we talk a lot about

Facebook and Twitter trying to make money from advertising. How does

that, what change have you seen in the way that you do your business as

a result of technology? Well, we saw some stats earlier with 31% of

global ad budgets moving into digital. In the UK we are ahead of

the market. I expect 50% of the budgets in the UK to be spent in

digital advertising and the reason for that is because, of course,

consumers are obsessed with their smartphones. You talked about

smartphone devices, we expect the major way that you will access a

brand and entertainment and content is by a mobile device. A

mobile-ready for a mobile first campaign is critical for all

clients. Did the industry see this coming? You look at something and it

has a tiny screen compared to cinema advertising that we might have been

used to. Did the industry see it coming that you have to win over a

consumer on a screen that big? I worked at Sony Ericsson, mobile

phones, we talked to them that the fact that you would take your device

and that was in the days of WAP, now, I think, marketers are having

to realise that, optimise your campaign and think about what you

can do on a mobile deviews, I mean that's an amazing device. You can

turn it rournd. He can engage with it, you can like, you can control,

you can interact and use the gyroscope whereas in the past, you

lent back, you watched your TV screen and you saw a billboard, now

marketers are having to lean in and see how you can get someone to use a

mobile device to make your advertising work harder. Does it

mean that advertising that's effective to the masses has become

much more accessible to companies? You haven't got to spend millions of

pounds or dollars on a TV advertising campaign. Yeah, exactly.

The entry points for advertising are minimal, you can start a social

media campaign and you can create your own Facebook page and start a

Twitter account and build up your social media followers and we talk

about paid, owned and earned media. In the past it was about the paid.

Hundreds of thousands of advertising dollars, it is a ?20 billion

industry in the UK is spent on advertising, but starting with your

own assets in social media is a great entry point for any

entrepreneur. So you run this company? Yes. Which is under the

umbrella of WPP, you have been in advertising since the start of your

career and you have seen a huge change since that time and you said,

it is depressing that you are the only female boss of a global ad

company. Why is that? Is it particularly tough in your industry

or is that across-the-board? I think advertising in the UK is in really

good health and we have a lot of female Chief Executives in the media

space and the media is a tough male environment, it is like the

stockbroking environment, but globally we have legacy structures

in place. People hire in the same image and women need to smash

through the glass ceiling, we need to make sure we sit on a panel and

come on a TV show. You are on the TV, great, I can be maybe like you.

In the UK, one of the reasons they are in good health, there are

specific organisations that you are a part of to help women get forward?

We have a club which Morrissey set-up, we have an organisation in

London, it is 92 years old designed to help women at the highest levels

in our industry. We need more of those. We are talking about the

global economy. We talk about the advertising industry being a

bellwether for what the global economy is doing. Quickly your take

on what this year is good, bad, indifferent? Good. Here in the UK we

think 5% to 7%. China, we just talked about earlier in the show,

slowing, but we see 8% growth, but the star market is India with 15%

growth in ad spend and ad spend generally outstrips GDP. Music to

the ears! Now how's this for a

glimpse of the future? Well, tech giant LG has been working

on a fully flexible screen and at this year's Consumer

Electronics Show in Las Vegas it's The BBC's Dave Lee has been given

exclusive hands-on access. This is from LG Display,

the first fully flexible LED screen. You can roll it, and the picture

stays in high-definition Rather than having a TV taking up

space, when you have watched TV, you can roll it up,

put it in the cupboard, You can only roll it

in one direction. If you are too rough,

some of the individual It means there are pieces

missing from the picture. Why would someone need

a flexible screen like this? Today you're watching

an 18-inch prototype, but imagine you have a larger size,

larger than 85-inch, but imagine you have a larger size,

larger than 55-inch, and you can roll up your TV

when you do not need it. You can still look at your

beautiful wallpapers. This is just a concept

at the moment. It is certainly an interesting side

of what might be the future of TV. Richard is here with us. Car makers,

normally it is the music players, I'm showing my age there! The car

makers. This time it is the car makers. A few years ago, you

wouldn't have seen car makers at CES, cars are probably one of the

biggest stories to come out, that will come out this year. And that's

because there is a great battle between the technology companies and

car makers. Car makers fear in a decade's time actually, they won't

be building cars, Google will be and therefore, they're trying to hedge

their bets and they're trying to make sure that they are part of the

industry going forward and therefore, they are at CES and it is

about everything from making sure your connected devices run in the

car. Stories today in the press by Toyota and Ford and other car makers

keeping together with their tech trying to keep out Apple and

Samsung. Absolutely. They want their technology to remain in house within

their industry. Let's talk about the oil price. A story that's been on

going because of the tensions between Saudi Arabia and Iran. This

in The Telegraph, "Saudi showdown with Iran nears danger point for the

world oil markets." They have looked at rise in tensions in Saudi. It is

a good point. A few years ago, if we had seen the pictures, you know, of

the Saudi embassy on fire in Tehran, you know, we would have seen a

massive spike in the oil price and because we have got a glut, the

market shrugged it off as just noise. They didn't really take much

notice. I mean oil did rise sharply at the start of trading, but by the

end of the day, it was up a fraction of 1%, it was hardly up at all. This

could be, this increase in tension could actually disrupt the supply of

oil and there is a glut as we all know, but nevertheless, you know,

this is increasing tension in the Middle East.

Richard, it has been great to have you on the programme. Thank you for

coming in and sharing your insights on the big stories of the day.

Hello again. Good morning. It is another wet day

with rain or showers in