15/02/2016 World Business Report


15/02/2016

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Now for the latest financial news with World Business Report.

:00:00.:00:15.

Abenomics is dealt a severe blow as the Japanese economy contracts more

:00:16.:00:21.

The bosses of Europe's biggest steelmakers go

:00:22.:00:27.

to Brussels to demand urgent action to save its steel industry.

:00:28.:00:37.

Also in the programme, China's stock markets start trading after

:00:38.:00:44.

Japan's economy contracted in the final three months of 2015, adding

:00:45.:00:55.

to a string of setbacks for the government's economic reform policy.

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Weaker domestic demand was the biggest factor pulling down the

:01:00.:01:01.

economy, then add to that slumping exports and a stronger Japanese yen.

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Between October and December, official figures show it shrank

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This is worse than expected - most predicted

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The news highlights the challenges facing Prime Minister

:01:19.:01:24.

Shinzo Abe in attempting to drag the world's third-biggest economy

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Many are now saying three years of so-called

:01:27.:01:32.

at the School of Management and Information

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Nice to see you. Give us your reaction to the situation in Japan.

:01:41.:01:56.

It seems to be getting worse. The short-term negativity is expected,

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but the problem is people aren't spending because wages are not

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rising. It is not rising because capital expenditure is not going as

:02:13.:02:16.

well as expected. Corporate activities have not gone as strongly

:02:17.:02:21.

as excited. We saw 1.4% both on capital expenditure, but the

:02:22.:02:26.

Japanese corporate earnings for that period really stood out very

:02:27.:02:31.

quickly. There is a lot of murkiness ahead of us, leading to them not

:02:32.:02:36.

spending as much as expected. Why are big companies in Japan not

:02:37.:02:42.

investing or not increasing wages? A lot of them are sitting on cash at

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the moment. They have a lot of cash. Why are they not spending it? They

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have enough cash, with 225 trillion dollars, but why aren't they using

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it? Firstly because of their nature. Conservative nurse, but moreover,

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they are concerned about what is going on externally. They can see

:03:04.:03:13.

the slowdown creeping up on a lot of nations, and with the Japanese

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exports being poised to take the heavily in the economy, these

:03:17.:03:23.

players who sing down their capital expenditure are not investing. We're

:03:24.:03:28.

not getting a good kickstart from these Japanese exporters, and they

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are very cautious because they can see what is going on externally.

:03:32.:03:34.

Give us your take on this take on whether Abenomics is working or not.

:03:35.:03:41.

This is the three point policy of Shinzo Abe and his team, all about

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money supply, then increasing government spending, and then trying

:03:48.:03:52.

to reform the structure of the Japanese economy. Is this a sign it

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is not working or do we need more time for you to kick in? To see a

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third arrow, the trajectory is much longer than the first two, so we

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have to wait and see. But the first two certainly not looking as

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attractive, because his first game is to get them spending on capital

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expenditure, and that is not happening. That is probably one of

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the biggest problems in Japan right now. Thank you.

:04:25.:04:29.

Well, despite the bad news about the Japanese economy, share markets

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The Nikkei 225 was up over 5% earlier.

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Also China's stock markets have opened for the first time after

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Nice to see you. It is another manic Monday it would seem. Tell us what

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is going on. It was a manic Monday early in a Beijing trade and

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Shenzhen trade, and unfortunately we are seeing some of those losses in

:05:06.:05:09.

Chinese stocks being reduced. It is not as bad as what many investors

:05:10.:05:14.

thought would be. Flashback to last week, Japan plunging around 12%. The

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sentiment was that mainland stocks would play catch up after this

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Chinese New Year break. Fortunately, that has not happened. Chinese

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stocks are down -- unfortunately. They only closed about 1%. Better

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than expected sales numbers during the holiday season, tough talk from

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the central bank governor against speculators, and a firm exchange

:05:41.:05:44.

rate. Beijing released figures earlier today showing imports and

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exports both falling more sharply than expected in January, impaired

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with a year earlier. But it seems domestic investors at this point are

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shrugging off Mike this disappointing trade numbers for now.

:05:56.:06:02.

When you talk to dealers, the impact was mainly driven by falling

:06:03.:06:07.

commodity prices and concerns about the impact on Europe. When you look

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at the over Marco, it has been brittle with the Shanghai and

:06:15.:06:20.

Shenzhen losing about 20% so far this year, and that is about 1.8

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Chilean dollars in market value lost so far -- look at the overall

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market. Ouch. We will see you soon. That is the scene in Asia today.

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Let's focus on Europe. Steel is back on the agenda today

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as bosses of some of Europe's biggest steelmakers are in Brussels

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demanding urgent action to support They will march to the

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European Commission buildings where industry chiefs and unions will meet

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with senior commissioners, including the European vice-president, who is

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responsible for jobs and growth. The EU is

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the second-largest producer of steel in the world after China, which has

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been accused of flooding the Last Friday, the European Commission

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opened anti-dumping investigations Tanya Beckett explains what all

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the fuss is about. The price of steel has fallen

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dramatically in the past five years. The steel industry is

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dominated by China, accounting for almost half of global production.

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They produced nearly 900 million metric tons last year. But as growth

:07:34.:07:38.

in China's economy slows, it has been sending more steel abroad. It

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steel exports have surged 51%, whereas Japan and the EU have seen

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marginal changes. The European steel Association says more than five

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dozen jobs have been lost across Europe in recent months. With the UK

:07:55.:08:01.

particularly affected. Companies like Tata Steel and Redcar blame

:08:02.:08:05.

high electricity prices and cheap steel from China. With more jobs on

:08:06.:08:11.

the line, the EU took action in January and said provisional duties

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on Chinese imports of between 9.2 and 13%. But many say these measures

:08:16.:08:22.

don't go far enough. The steel industry employs 328,000 people in

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Europe, and thousands of these jobs are at risk from cheap Chinese

:08:28.:08:29.

imports. UK banking giant HSBC has announced

:08:30.:08:32.

it is to keep its headquarters Concerns about stricter UK

:08:33.:08:35.

regulations led Europe's biggest bank to launch a review into whether

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to move elsewhere, with Hong Kong But the bank said it had decided

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unanimously against the move and that London

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"offered the best outcome for our We will discuss that in more detail

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in a few minutes. Toyota says it has resumed

:08:52.:09:05.

operations at all vehicle assembly and parts plants in Japan

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after its longest domestic production suspension since the

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March 2011 earthquake and tsunami. The world's top auto-maker said

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earlier this month that it would temporarily stop all domestic

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vehicle production from February 8 through 13 due to a components

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shortage following an explosion at Let's show you the numbers. The

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mayhem in Asia at the moment. We have 20 minutes of trade to go in

:09:41.:09:44.

Tokyo, and look at that. Over 7% at the moment. The Hong Kong up over

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3%. The price of oil going down. Let's look at the currency markets.

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The yen has weakened a little bit, helping those markets in Japan,

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which has been ignoring that news about its economy shrinking. We will

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review the papers in a few minutes, so stay with us.

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