13/07/2012 World Business Report


13/07/2012

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the headlines from BBC World News. Time for the latest money news.

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Here is Alice and World Business Hello. Welcome to World Business

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Report. I'm Alice Baxter. Trouble for the global economy. China

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reports the slowest growth in more than three years. And in Singapore

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growth more than expected in the second quarter. We'll hear more

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about the disasterous trading strategy at JP Morgan Chase, it

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cost the bank at least $2 billion. China's economy is experiencing the

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sharpest slowdown since the global financial crisis in 2008. Figures

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out Friday showed that the annual pace of economic growth slowed to

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7.6% in the 3 months to the end of June. In the previous quarter

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growth was running at 8.1%. The Government has been trying to

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revive the economy by lowering interest rates and lifting spending.

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Private sector firms have been seeing a fall in sales and are

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cutting back on staff. One simply tom at the slow down is because

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stockpile of coal has been building up at its ports. If you want a

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symbol of China's economic slow down, this is it. We are here home

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to China's biggest coal port. It is from here that Cole is transported

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in ships to the power plants across the country to fuel China's

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economic boom. Analysts say the demand for coal is dropping and

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dropping fast. Huge mountains of coal that you can see here has been

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growing higher in recent months. It was a clear indication that China's

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economy was slowing. Analysts say stock piles reached record levels

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with 8 million tonnes of coal stored. That's happening because

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China's factories are cutting back in production. The last sign that

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this happened was back in 2008. When the global financial crisis

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struck. That was a report from Singapore. Michael is a Professor

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of finance at Peking university. Thank you for being on the show.

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How worried should authorities in China be about this. Growth is

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slowing. They've been trying to boost the economy by cutting

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interest rates. Will they redouble their efforts, do you think? Yes, I

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think they will. I think we are likely to see and already are

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seeing an increase in loans, and moving attention towards ajustments

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etc. The problem is a slowdown in growth is a necessary component of

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rebalancing the economy, which the authorities urgently want. So my

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suspicion is because this was the leadership transition year. We'll

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probably see them step on the accelerator more, growth in the

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second half being better than the first. That doesn't solve the

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problem, it postpones the problem. We have a once in a decade

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leadership change due later this year. Realistically, what can

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authorities actually do in China? Surely the real problem here is a

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slowdown in Europe and sluggish US growth. The two biggest exporters

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for China. Well, I don't think that's the biggest problem in China.

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The problem is that those things are happening at the wrong time.

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The biggest problem in China is we have been overinvesting through

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many years in projects whose economic value does not justify the

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amount of the investment. You have to bring investment levels down in

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China. Since is the main source of growth, as you bring levels down,

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growth slows down. The fact that this is happening at the wrong time,

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while the US is slow and the Europeans are going through a

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crisis makes everything much worse. Michael, Professor of finance is

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the Peking university, thank you for joining us. There's been gloomy

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economic news from Singapore as well this morning. The economy

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shrank an annual rate of 1.1% in the second quarter. Our

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correspondent is in Singapore. Is this a surprise? It is, indeed.

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There were expectations that it would expand marginally in the

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second quarter. All of this is a sign of how much the slowdown in

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Europe and the anaemic growth in the US is hitting trade in this

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economy, which is reliant on trade. The EU is Singapore's largest trade

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partner, and trade makes up a great portion of growth numbers. It was

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really the manufacturing sector that took a hit, down 6% from the

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previous quarter, due to a drop in biomedical production, coming amid-

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a day's bigger story that you have been reporting, that China saw its

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lowest growth in three years. China was one of the biggest drivers of

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Singapore's export growth. There were some bright spots, we saw

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gains in the service sector growing marginally. Thanks for that.

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Exactly how many billions of dollars did JP Morgan lose when

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trades went bad earlier this year? Investors will hope for an answer

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to that question when the bank releases results for the three

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months to the end of June, losses estimated at $2 billion caused the

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departure of the chief investment officer and triggered an

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investigation. Jamie Diamond, JP Morgan's Chief Executive is getting

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used to being in the hot seat. you too big to fail? No, we are not

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too big to fail. We belief that a bank should be bankruptable. That

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was him grilled by US law-makers. This Friday shareholders will be

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asking the tough questions, keen to know how much America's biggest

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bank lost on bad derivative trades. Whatever the figures, the damage

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has been done. The size of the loss is not the issue. The issue is why

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did they miss the loss in the first place. It raises a question of are

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the banks too big to manage, regulate and fail, and too big to

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understand. The trading loss may seem like another example of risky

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behaviour by an investment bank. There's a key difference. JP Morgan

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is going after the pay of the group where the losss occurred, starting

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with the head of the investment office who worked here. This makes

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it the first major banks since the financial crisis to penalise its

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staff in this way. The claw backs are symbolic. They are designed to

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send a message to the market, which has been troubled by the fact that

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a few individuals can cause such a precipitous market drop in the

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value of JP Morgan. I think this is to say to the market "Look, we'll

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penalise people who do bad acts". This Friday, the 13th, JP Morgan's

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horror show is unlikely to end with regulate investigating other

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potential missteps by the bank. BBC investigation has raised

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questions about the effectiveness of advertising on Facebook.

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Companies spend money to attract Facebook users. A report by our

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correspondent found some responded to other adverts. Facebook said

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Rory's example does not work, because it was poorly targeted. His

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credit -- Moodys cuts rates concerned about euro leading Greece,

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it could have an knock-on effect to Italy. Praises fell 5r' in New York

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trading, -- prices fell 5% in New York. Trade fell 18% in the second

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quarter compared to the same period last year. Trade blamed a slowing

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