19/08/2011 World Business Report


19/08/2011

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Those are the latest headlines. It is time for World Business Report.

:00:11.:00:19.

Welcome. Market turmoil. Shares take a battering around the world

:00:19.:00:23.

as gloom surrounds the economic prospects through Europe and the US.

:00:23.:00:29.

In Asia, investors do the same as their US and European counterparts,

:00:29.:00:33.

driving markets lower. All change at Hewlett Packard,

:00:33.:00:40.

planning a big move into software and will stop making personal

:00:40.:00:48.

computers, tabards and phones. After a few days of calm, turmoil

:00:48.:00:53.

has returned to the financial markets. The Asian markets are

:00:53.:00:57.

trading low and the New York the Dow industrials fell more than 3.5%

:00:57.:01:02.

and the Nasdaq more than 5%. That followed steep falls in European

:01:02.:01:06.

markets. Investors were upset by disappointing news on the US

:01:06.:01:10.

economy. Concern remains about Europe's debt crisis. Shares in the

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European banks were particularly hard hit. Most down yesterday,

:01:14.:01:18.

around 10%. Their fortunes are linked to the state of the global

:01:18.:01:24.

economy. But gold is seen as a stake -- safe haven. It reached a

:01:24.:01:31.

new record high. It is now up over 20% since the

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beginning of July. I am joined by head of global research at HSBC.

:01:36.:01:45.

What specifically is making the markets scared? It is a collective

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understanding. Growth is much weaker than expected. The problem

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with that is that, if growth is low, the debt levels will not get paid

:01:57.:02:02.

down, the economy is just trawling along. It is one hit after the

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other. Last week we had the US Federal Reserve saying that they

:02:07.:02:12.

were keeping interest rates close to zero for two years. The markets

:02:12.:02:19.

were very volatile. It is all back now. Central banks and governments

:02:19.:02:22.

have been saying for some months that they expected a slowdown in

:02:22.:02:26.

the second half of the year. What has changed? It is the speed of the

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slowdown. The fact that yesterday we saw manufacturing data,

:02:31.:02:35.

employment data and housing day that out of the US have all week.

:02:35.:02:40.

We saw weak economic data out of Europe. They were weaker than

:02:40.:02:50.
:02:50.:02:53.

expected. We also saw some tensions in the money markets in Europe,

:02:53.:02:59.

European bank to get dollars and that sort of thing. That is

:02:59.:03:02.

worrying because the Federal Reserve in the US, they outsource

:03:02.:03:06.

it may be concerned about the European branches of some of the US

:03:06.:03:12.

banks. As you say, the European Central Bank is rumoured to have

:03:12.:03:17.

pumped liquidity into one bank. is not much and is not nearly as

:03:17.:03:22.

bad as it was in 2008 when we had problems with the lean and Robert -

:03:22.:03:27.

- Lehman Brothers. But it is the fact that some of the tensions we

:03:27.:03:31.

saw them are coming back. And central banks have just about run

:03:31.:03:36.

out of policy tools. What can they do? We have got rates at zero,

:03:36.:03:46.

long-term bonds at recurred lope years. -- at record low yields. The

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only good news I saw was that refinancing of housing in the US is

:03:51.:03:58.

at a lower level. And the oil price is down. Yes. Let's pick up on what

:03:58.:04:04.

markets are doing now. We are joined by our Asia Correspondent. I

:04:04.:04:14.
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see that the Nikkei is down 2%? And so are a lot of be other forces.

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Australia's is down. The Hang Seng is down. The worst occurred in

:04:23.:04:28.

South Korea where the Kospi was well down well over 4%. It fell to

:04:28.:04:34.

its lowest level in some two years. One analyst I spoke to said that is

:04:34.:04:41.

because the Kospi attempts to attract more foreign investors. It

:04:41.:04:45.

has also got more exposure to technology stocks as well, which

:04:45.:04:49.

had been seeing a huge sell-off in the last week or so. We have had

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the likes of technology firms like Hewlett Packard are having to cut

:04:57.:05:01.

their sales forecast. That may be another reason why the Kospi is

:05:01.:05:10.

falling. The likes of Taiwan as well is more exposed to technology

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firms. And also at there are continued worries in the US and

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Europe. In the US restore consumer confidence down quite dramatically.

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That really impacts a lot of the producers here in Asia.

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Thank you very much.. Hewlett Packard is on the verge of buying

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Autonomy, Britain's most successful software company. It is part of an

:05:40.:05:43.

overhaul of the business as it moves into software and away from

:05:43.:05:53.
:05:53.:05:53.

the Business it is best known for, making computers. This is

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considered the best place of Silicon Valley. HP was also behind

:05:58.:06:02.

one of the defining deals of the technology industry, merging with

:06:02.:06:08.

Compaq in 2002. It cemented its position as a computer maker. Now

:06:08.:06:14.

it is leaving that behind. Although it personal computers represent one

:06:14.:06:21.

third of revenue, it is only 13% of overall profits. It is important

:06:21.:06:25.

that we focus on the areas that are driving the bottom line. Just weeks

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after the launch, it is also saying goodbye to its tablet computer, the

:06:30.:06:36.

touch pad which runs on its operating system was in danger of

:06:36.:06:41.

becoming a money pit. They are no longer going to offer the hardware

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devices that they launched to a lot of fan fire up -- a lot of fanfare.

:06:45.:06:54.

But the sales have been abysmal. with no personal computers, what is

:06:54.:07:01.

hate to be focusing on? Like IBM it wants to turn itself into a

:07:01.:07:06.

software company. -- what is Hewlett Packard focusing on? Since

:07:06.:07:10.

joining Hewlett Packard as chief executive, come this man has been

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trying to revitalise the company. It is a radical change of direction

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and one he hopes will pay off. US vice-president Joe Biden

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continues his tour of China. He and the vice-president of China joined

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a round table discussion with the US and Chinese business leaders. In

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the other name, he is due to hold talks with the Chinese premier

:07:40.:07:46.

before travelling to a south- western then town. Let's go to

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Beijing. What has been the tone of the visit? From what we are being

:07:54.:08:00.

told, up from the briefings being given out, the little stick bits

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coming from the US officials, they are saying they have been very

:08:06.:08:08.

productive and co-operative. They are saying it has been very

:08:08.:08:17.

friendly. There were meetings this morning with Chinese and American

:08:17.:08:22.

business leaders. China's vice- president, the man who everybody

:08:22.:08:30.

expects will be the President in just over one year's time, a hugely

:08:30.:08:35.

important figure for Joe Biden to be meeting, has been saying that he

:08:35.:08:41.

is confident that America can overcome its troubles. Convent

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words publicly it from him. -- confident words. They must be some

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concern from the Chinese perspective that a slowdown in the

:08:51.:08:57.

US economy would lead US politicians to become more

:08:57.:09:05.

defensive and protective of their economy. I think there is a real

:09:05.:09:12.

concern about a possible slowdown in America or even in Europe. Both

:09:12.:09:16.

are still enormous markets for China's exports. Exports are still

:09:16.:09:21.

one of the things that power this economy. More even than the

:09:21.:09:25.

concerns about protectionism is the simple concern for China that it

:09:25.:09:30.

does not want to see those exports drying up. That could cause a huge

:09:30.:09:34.

problems for companies and jobs. It could also push the US to do more

:09:34.:09:38.

quantity of easing to try to stimulate its economy. China is

:09:38.:09:42.

worried about that, fearing it would fuel inflation and reduce

:09:42.:09:44.

those huge dollar holdings China has.

:09:44.:09:54.
:09:54.:10:04.

Thank you. That's it from me. More Some more news from the UK: Prisons

:10:04.:10:08.

in England and Wales are taking in around 100 extra people per day as

:10:09.:10:13.

the courts continue to process cases linked to the looting and

:10:13.:10:17.

rioting. The Prison Governors Association release the figures and

:10:17.:10:21.

says there is no immediate crisis but once that jails could run out

:10:21.:10:27.

of space. -- but warns that. Just as the riots court police and

:10:27.:10:32.

politicians are aware, they came at a time there are fewer court

:10:32.:10:37.

hearings. August on England's streets does not usually look like

:10:37.:10:43.

this. But after almost two weeks of hearings, many of those found

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guilty are now packing prisons. The prison population in England and

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Wales has risen to more than 86. -- 86,000. In the past six days, 667

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people have been given jail sentences, with many other spending

:10:58.:11:05.

time in custody. There are now only 1,200 spaces left in prisons and

:11:05.:11:10.

room for just 200 more in immigration removal centres. The

:11:10.:11:13.

Prison Governors Association says that there is no need to panic, but

:11:13.:11:18.

if things get worse ministers may come under pressure to keep open to

:11:18.:11:23.

Max more prisons that were due to close next month. Contingency plans

:11:23.:11:27.

were also thought to include housing some inmates three to a

:11:27.:11:32.

cell. There are suggestions the illegal

:11:33.:11:37.

party drug Ecstasy could be developed as a treatment for cancer.

:11:37.:11:43.

Researchers at the University of Birmingham say the drug can be

:11:43.:11:47.

effective when modified into tackling blood cancers like

:11:47.:11:51.

leukaemia. Coming up at 6am, Charlie and Kate will be here with

:11:51.:11:59.

breakfast. You can also here more from the widow of the man who was

:11:59.:12:04.

killed by a sharp while on honeymoon in the Seychelles. --

:12:04.:12:14.
:12:14.:12:15.

The top stories: Afghan police are saying three people have been

:12:15.:12:22.

killed in a series of suicide attacks. One of British culture of

:12:22.:12:27.

this. A spokesperson said the target appeared to be the British

:12:27.:12:30.

Council, which specialises in cultural exchanges. Our

:12:30.:12:35.

correspondent has more. It was a very big attack. The explosions

:12:35.:12:39.

were heard across Kabul. Comics tell me some of their windows were

:12:39.:12:47.

blown open by the force of the explosions. We are hearing from

:12:47.:12:50.

witnesses that six suicide attackers attempted to gain access

:12:50.:12:54.

to the building. The Egyptian Army says three of its

:12:54.:12:59.

soldiers have been killed during an Israeli air ride against the

:12:59.:13:02.

militants along the border. The raid was carried out in a response

:13:02.:13:06.

to attacks on Thursday. Spain is due to announce further

:13:06.:13:10.

austerity measures in an effort to ease investors' fears about the

:13:10.:13:15.

size of its debt. There have been concerns that Spain may need a

:13:15.:13:20.

bail-out. The US, Britain, France and Germany

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have demanded that President Bashar al-Assad leaves of this it follows

:13:25.:13:29.

-- following the violent oppression of protesters in Syria. This is the

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first explicit calls from the US for him to step down.

:13:33.:13:42.
:13:43.:13:43.

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