27/04/2012 World Business Report


27/04/2012

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country illegally. They have been ordered to leave. Now it is time

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Welcome to World Business Report. More pain for Spain. Standard and

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Poor's cuts its credit rating by two notches. And Samsung's profits

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rise over 80 %. It is all down to the sale of smart phones. The

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central bank in Japan eases Standard and Poor's has lowered

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Spain's long-term credit rating from AAA to BBB +. They think the

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economy will shrink by about 1.5 % and that banks will need more

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capital. What does this mean for Spain? I guess this is a kick in

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the teeth for the Prime Minister who is working hard to turn things

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round. He is not finding it easy, is he?

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That is right. There is a lack of confidence from the markets.

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Borrowing rates on Spanish dead are creeping up. -- Spanish debt. A lot

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of bad debt. The bottom fell out of the market in 2000 and it. A lot of

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banks in Spain were left with bad property assets. -- 2008. And there

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are reports that next year will see negative growth. It is not a good

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picture being painted by Standard and Poor's but not a massive

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surprise. This is what we have seen from the market. How is that

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manifesting itself in Spain? The messages, when you compare it to

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Italy, at least there is progress in Italy. For Spain, we are hearing

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that it will fall further before going back up. What is the

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perception on the street? The normal people in Spain think

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things look bad. There is a lot of austerity in the new budget. Huge

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cuts to health, education, areas of government that will be

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controversial. Unemployment is a huge problem. It is expected to

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rise to at least 25 %. It looks very bad for average people. For

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the Government, they are trying desperately to send out messages of

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confidence. They have got this new budget. They have got tough

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austerity in place. They want to hit their targets for this year.

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Standard and Poor's have backed up the lack of confidence. Negative

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growth in the economy means you will not hit the targets. They were

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not at the projections for this year or next year.

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Thank you. Samsung made $4.5 billion in

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profits last year. The electronics giant sold about 90 million mobile

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phones. It beat both Apple and Nokia. We take a look at the

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changing image of the company. Some things cannot be expressed with a

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text message. At the headquarters of Samsung in South Korea, there is

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always room for a bit of tradition, even when you are battling for the

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future of the global electronics market. Samsung employees are known

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as dedicated and numerous. The company has known for decades how

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to attract them, with extensive benefits, and a strict corporate

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culture. Samsung is used to competing in fast-paced markets.

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The company built its name in microchips. With a reputation for

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being more of a fast follower than an original creator of mobile

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devices, how has Samsung are written to such superpower status?

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We are not following any more. That is a strange word. All of the good

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service and content cannot be realised without great hardware. We

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are very connected. We are bringing new innovation. When I say

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enervation, not just hardware but total solutions. -- innovation.

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It's mobile devices have become ever more aspirational. This is a

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cross between a phone and the Tablet. As the matter will -- the

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battle increases, the focus is on launching and guarding the next new

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weapon. Security is very tight. There is an electronic ID system.

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There are security gates and every building. Few things are more

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protected than this. This is the new smart phone. It will come out

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in less than one week. It is so well protected, it is being

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accompanied by 10 security guards on its way to the launch in London.

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For those curious about the future, the answer could lie inside the

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sport. I am not allowed to look inside.

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In another attempt to boost the economy, the bank in Japan has said

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it will increase its asset purchase program. Let's get more analysis.

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What is the bank up to? They are taking steps to ease monetary

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policy. They are easing the purchase of government bonds by

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about 10 trillion Yen, that is around $124 billion. The central

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bank has reduced by five trillion Yen a pool of funds it has been set

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aside for fixed-rate market manoeuvres. This shows how

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determined the central bank is to try and hit its 1% inflation target.

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This is why the bank maintained its key policy rate at a range of 0.2 %.

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That was by a unanimous vote. There was other data that showed the

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economy was stalling to some extent today. Industrial production rose

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by about 1% in March. That is the biggest rise in about three months.

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It is lower than expected. The rise was fuelled by a reconstruction of

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the country's tsunami-hit areas. The growth over the next few months

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looks fairly grim. Manufacturers' - - manufacturers expect growth to

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fall in May. That is as the benefits of the reconstruction wear

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off. Barclays Bank is facing a serious shareholder vote at its

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annual meeting today. It is thought that nearly 33 % of investors will

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vote against the executive pay plan. Barclays Bank have been under fire

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by shareholders. They gave details of the pay that top executives were

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receiving. Barclays is a major global player. It's pay for the top

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bosses has proved highly controversial among the British

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Because a bank contains mainly financial assets, it is very easy

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to see what the financial performances. -- performance is. It

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cannot be much clearer than in the case of a bank like this that

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senior management are taking large bonuses without a performance.

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Diamond has admitted that returns to investors were unacceptable. He

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has tried to take the sting out of this rebellion by agreeing to

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tougher conditions on his �4 million bonus. Barclays have said

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that they recognise the power of opinion. Investors in the US have

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rejected the multi-million pound pay award for another boss. Large

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shareholders are starting to flex their muscles. Barclays posted

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better-than-expected first-quarter results yesterday. It is hoping the

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figures will help to quell the opposition. Its earnings from its

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equities business argued in the first quarter. Because of the

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Environment -- are good. Because of the Environment, it is difficult.

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It will continue to trade at a discount. That discount should

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narrow. There is no danger that the pay plan will be dejected today.

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Maybe in the teeth of some significant opposition. A warning

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shot, perhaps, for other big banks. Let's take a look at the markets.

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