16/11/2015 BBC Business Live


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This is Business Live from the BBC with Ben Thompson and Sally Bundock.


Solidarity with Paris - a grieving city returns to business


and the stock market opens as usual, but investors search


Live from London, that's our top story, today, Monday November 16th.


Worries grow over the impact the Paris attacks could have


on France, with tourism and consumer spending likely to be hit.


A big blow to Abenomics - Japan slides back into recession


And we'll have a full round up of the global business pages, looking


at the economic impact of the terror attacks in Paris talking to our


correspondents in the French capital and here in the studio about the


longer-term implications for France and Europe.


do get in touch with us with your comments - you know what to do,


has been a big drop at the open - Paris stocks fell 1.1% at the


opening bell, but most analysts agree that the reaction will be


Public transport should be running as normal today in France -


Museums and some other attractions will also open as usual,


but more vulnerable sites, such as the Eiffel tower will remain closed,


as will Disneyland Paris, which will remain closed until Wednesday.


Virginie Maisonneuve from Maisonneuve Global Advisors is with


Thank you for coming in. This has enormous poignancy for you because


the places that were attacked on Friday, the places that you used to


go to in your youth? Absolutely, the Bataclan is the place where young


people go to listen to music, those little cafes, it is part of the


Parisien and French lifestyle in general. In terms of the impact of


all of this, you were looking into all of this prior to Friday, you had


put out new research about the impacts of these kinds of events.


Talk us through your thoughts in reaction to what happened on


Friday? Clearly beyond the human tragedy, which we must acknowledge,


it is important to think about the impact on the economy and


geopolitics. To me, there are four very important points to study. One


is psychological impact. When does the human psyche, if you will, take


a series of independent events and create a pattern out of it? Clearly


this is after Beirut, Turkey, the Russian plane, so there is a


question Mark there. If there was eight psyche shift, it would impact


business and consumer confidence, which would have an impact on


economy. You also talk about the geopolitical element, which is


important with the uber project, but this could bring people together and


solve some of the problems we have seen? -- the euro project. We have


seen it in terms of discussion at the G20, some of the announcements


made yesterday in terms of fighting against financing of terrorism,


bringing people together, and I would say not only within Europe but


so far there has been a loose association in terms of tackling the


issues, possibly Russia, the US and Europe being more aligned, and


clearly with the intervention of France in Syria yesterday possibly


discussions took place before that, so geopolitics is very important.


The other factor that is important is macroeconomy and clearly there is


a direct way to look at this, which is, what is tourism overall, what


does it mean for the economy? Tourism and related activity is


about 10% of the world GDP, a large industry and also a large employer,


with over 270 million jobs around the world. With regards to France,


it is about the same, 9% of GDP, so you can see if we had another event


or if, again, the consumer and business psyche thought we would


have more of that and we had a ship, it could have an impact on the


economy, and that is important. What is your gut feeling about this? Do


you think it will have a long-term impact or actually it will be a


short-term situation, a knee jerk reaction? The fact it happened late


Friday after European markets closed was significant in that there was no


immediate reaction, there has been the weekend for rational thinking to


set in. There definitely will be a long-term impact. Some of them will


be the same way that 9/11 had impact. The way we think about


communication, corporation, definitely. In regards to the US


monetary policy it might have an impact depending on how markets


behave between now and December because Janet Yellen has made it


clear she wanted a relatively stable global environment for US rates to


go up, so I think that is more medium term, but I think definitely


will have an impact. We appreciate you coming in and giving your


analysis of the situation you. You can see it on the screen there,


Paris stock market down about 40 points.


Japan, the world's third-largest economy, has slipped into recession.


Personal consumption in the country remains positive, but there was weak


corporate investment blamed on concerns for the global economy and


It puts policymakers under further pressure


to deploy new stimulus measures to support a fragile recovery.


China's President Xi Jinping says he expects the country's economy


Xi's remarks were made at the G20 Summit in Turkey.


Beijing has already rolled out a raft of support measures since last


Let's look at the Business Live page online, keeping across all of the


business stories. We are focusing on events in Paris and the implications


on the French economy and Europe, but there are other business stories


out there. Just imagine on the Business Live page, our


correspondent based in Paris and elsewhere covering the event as they


happen. This is Lucy Burton posting earlier today from Paris. But if you


want to keep across other business stories and events taking place,


companies like Majestic Wines, the Japanese recession, and also MTM, a


big South African mobile operator, the biggest in South Africa, in


trouble with regards to a fine it has to pay today, the deadline has


been extended to give some breathing space. Lots of stories there for you


to die just when you have time. Let's cross to


our Asia business hub as markets Not least because of the Paris


attacks, but also news that Japan is Talk us through these two issues


weighing on the stock market and the minds of investors today?


The Asian markets were down after the deadly attacks in Paris. We saw


the benchmark Australian index closing down almost 1%, and in South


Korea the index finished down 1.5%. Korea the index finished down 1.5%.


The Hang Seng in Hong Kong fell by a similar mark, 1.7%, and indicate


also closed down 1%. Market analysts have said they expect the attacks


have a sharp but short lived effect and that longer term investors will


stub looking towards what happens with the slowdown in China and with


the US Federal Reserve, whether it will raise interest rates next


month. The other big economic news in Japan was the preliminary GDP


data saying the country was in a technical recession. The Japanese


economy shrank 0.8% in the last quarter, following a contraction of


0.7% the previous quarter. This is the second time the economy has


fallen into recession since Prime Minister Shinzo Abe came to power,


and it raises serious questions about his aggressive economic


policies and whether they are working.


Thank you for talking us through that.


So confirmation of what was expected.


Asian markets ended down - after the terror attacks in Paris


unnerved investors, on top of the news that Japan had


slipped back into recession for the second time in two years.


Airline stocks taking a beating on concerns over the tourism industry.


A big player in France, we will talk about that more in a moment.


But whilst there are falls, most investors don't expect this to


The CAC 40 down there. But what does it mean for the state of your risen


economies? Investors are temporarily looking for safe havens, somewhere


to put their cash, including in the dollar, gold, the Japanese yen, we


have seen that through the course of the day, but that is the current


state of play on the markets. We will keep a close eye on those for


you. Jeremy Stretch is Head of FX


strategy at CIBC. Ben was running through the markets,


the euro down, the dollar, it is what we would expect at this point?


It is, you would expect in a period of risk and uncertainty, which we


have clearly seen over the weekend, generally equity sentiment markets


will sell off, some safer havens, ironically the yen often seen as


that despite the GDP downgrade, generally it performs well so we are


seeing the traditional market reaction you would expect at this


stage of the session. As ever, lots of reaction in the press, social


media, everywhere about the impact this will happen. Your thoughts? As


your previous guest was talking about, there is an impact on


consumer spending, airline stocks in terms of equity markets. The real


immediate reaction is in terms of sentiment, how that plays out. If we


get further volatility in equity markets then it has enormous


implications for global model triple as a, including the Federal reserve


in December, but we have to be careful about extrapolating that


after just a few hours of the first session of the week. All of these


are different elements, I touched on it there with the market boards, of


how governments will react, what it means for things like monetary with


the state of the economy, numbers. They seem like just numbers and it


perhaps feels in sensitive to talk about it at this time but they are


huge issues and one that policymakers will be looking at


closely. Absolutely, and clearly we have to remember the human tragedy


that backs this up over the weekend. In essence we are trying to extract


the ramifications of that in times of economic performance and global


monitoring of the. -- monetary. The question is whether the cycle in the


US is being delayed or postponed by the events, clearly a factor we need


to consider. In September they talked about global economic


conditions, suggesting economic uncertainties were front and centre


but if we see further vulnerability, we had seen a good run in October,


but a lot of fragility starting to come back in, and we overlay that


with the commodity markets, the oil price under pressure in the last few


sessions, there is a big infantry overhang, and it was the question


about demand going forward it would start to imply that the oil price


could fall further, which has enormous invitation for those


producers and the countries. Thank you very much. Jeremy will


return in about five minutes as we look at what is being discussed in


the papers and on social media. We will be looking at what the


papers say about the attacks on Friday in Paris and as concerns


about about the economic impact we will look at what it would mean for


Europe's Academy. -- what it could mean for Europe's economy.


You're with Business Live from BBC News.


Here in the UK, the Prime Minister, David Cameron, has announced a big


increase in funding for the security services in response to the threat


There'll be more money for our intelligence agencies,


Our business correspondent Simon Jack joins us. Let's look at


UK reaction. You will see from here, that's the FTSE 100. It is green. It


is up. It is the only one up. The rest of the European markets are


dourngs but not by much. The UK -- down, but not by mush. The IAG which


owns British Airways, airline stocks have been affected, but not very


much reaction and this is typical. We have seen this before in Madrid,


and we saw it in the 7/7 bombings in London. Short-term little hit and


people recover quickly. This one is different in the sense the UK is


isolated because it is not part of the Schengen group. This moment


comes at a very sensitive time for the European Union. They are under


the pressure of a migrant crisis and they are wondering if their Schengen


deal is fit for purpose and there is a lot of bickering going on in


Europe and this comes at a sensitive time. David Cameron finding 1900 new


security officers to bolster his defences against this threat. I


don't know where you find 1900 spy ins a short period of time, but


maybe he know where is to get them. Extra funding for GCHQ and MI5 and


MI6. The markets are taking it in their stride.


Thank you very much, Simon Jack. More details too of events today. We


have been assessing the economic impact of events on Friday.


We have got, they are at pains to say it is business as usual in terms


of travel to and from France. The Eurotunnel is open. It could take


longer, French borders controls are tightening. It could take long tore


get across borders today. Online, you can see the details there. Some


other stories as well, Ben on the Business Live page.


A new Nationwide boss. Nationwide is hiring Joe Garner. We have had an


update from the CBI and its view on Europe. Details on the live page.


As France enters a third day of mourning after the gun and bomb


attacks in Paris killed 129 people and left more than 350 wounded,


resilient businesses are opening and Parisians are going to work.


The stock market has also opened as usual with stocks falling 1.1% in


The numbers have pulled back. That shows resilience. We have only


been trading for 15 minute sos far in Europe. You can see the numbers


there. Paris down a third of a percent at the moment.


Joining me now to discuss this is our Economic


Clearly the extent to which they have switched to a risk aversion is


somewhat limited, isn't it? There is a bit of concern at the opening of


trade about the potential economic impact, but the figure we are seeing


now, a third of a percent down as you say, a normal day frankly, if


you were seeing falls in the market over the day, you would regard that


as unremarkable. Also similar kind of pattern emerging in the bond


market where Government debt is trading. We are seeing there have


been some move in towards buying the ultimate safe asset in Europe which


is German Government bonds, but it is really modest and we have not


seen a great flight from the riskier assets.


This is very important, isn't it? For full confidence and for the


perception that France is able and will return to some normality. Ity?


There are potentially issues about this. The economic aftermath of


these dreadful events in terms of both supply and demand sides of the


equation, the demand question is does it affect consumer confidence


and of course, with France being the world's biggest, most popular


destination for tourists, there is an impact there. On the supply side,


there is the question of the border controls will add somewhat to


business costs for the businesses that are shipping goods or people


across borders. I suspect the impact of that will be rather limited and


perhaps confined to some particular types of businesses that are trading


locally across borders, but it is not to be discounted. The issue of


tourism is important. About 7.5% of French GDP, the issue for French


businesses, hotels and restaurants is whether people will be put off or


whether as they are hoping people will think, "We will not be bowed by


this. We will go to Paris." Tourists have in the end come back. In the


short-term, certainly, the stock market is showing the impact of that


kind of concern. Eurotunnel a little highly ago was down 4.5%, airlines


have been affected and the French hotel group was down about 6% a


short time ago. So yes, there clearly is an issue there and I


think, you know, and the big question will be just how quickly,


how durable is any effect on tourists confidence? Anna joins frus


Paris. One of our correspondents there for us at the moment. Anna, it


is a difficult conversation isn't it to have at the moment because as you


can see behind you, all the tributes, I mean Paris is a city


that's grech grieving right now and yet wanting to show strength at this


time and show that they want to get going again, get businesses moving


again where you are and the economy, but not stalled by this?


That's right. It is almost like a kind of nervous defiance. You can


see people cycling past to work. We have seen kids with rucksacks head


to go school, but so many people, we have been here since 6am this


morning, so many people have been making a detour to come and pay


their respects and lay flowers here. It has been a constant, constant


flow. We have been hearing that, well, of course, this is the third


day, the third and the final day of national mourning and other


practical things are getting back to normal too. So the public transport


is running again. Flights. Ferry services, there are delays there.


People are advised to leave extra time because of the border controls


here in place in France. The question, of course, is what


people there are telling you. We have talked about the resilience and


the attitude of the Parisance there as Sally touched on wanting to get


back to normal, but wanting to get back to normal and the normality are


two very different things, aren't they? They are two very different


things. It was interesting, when we arrived here, the day after the


attacks, we were driving down past the stadium. A minute's drive away.


There were people sitting outside a Ras rant so they are trying to get


on with their lives. They don't want to allow the terrorists to win here


and we have been hearing from department stores, one of them


opened their doors on Saturday saying that it wanted to show a will


to resist in the face of terror, but they decided to close because it was


too difficult for them and for the customers. Just looking at some of


the other major tourist attractions here. The Eiffel Tower will remain


closed indefinitely for security reasons and Disneyland Paris is


expected to re-open on Wednesday. They have been closed. A decision


was taken in support of our customers. Smaller businesses, if


you look around the square. There are lots of cafes, restaurants,


shops, and they are reopening today. Some small businesses are donating


their profits to the Red Cross in support of the 129 victims who died


here. Thank you very much Anna and Andrew.


In a moment we'll take a look through the Business pages,


but first here's what British Prime Minister David Cameron had to say to


You can't deal with so-called Islamic State unless you get a


political settlement in Syria that enables you to degrade and destroy


that organisation. It has a long way to go, but there are hopeful signs


in that the meeting of foreign ministers including the Russians and


the Iranians as well as the Americans, the British and the


French in Vienna made some progress and I hope to have positive


discussions with Vladimir Putin this morning, but even without that, we


will do everything we can to make sure we keep our people safe, but we


live in a very, very dangerous world.


What other business stories has the media been taking an interest in?


Jeremy Stretch from CIBC is back with us.


The Paris attacks will put pressure on oil prices? There is an impact.


If there is a demand shock side to global economic activity it will put


further pressure on the oil price which has been falling because of


this perception of a big oil over hang infantry and for the oil


producing economies that is another headache and that puts further


pressure and fiscal pressure on countries like Saudi Arabia where


the cost of production are low, but their reliance on the oil revenues


is increasingly significant. During the attacks, Jeremy, we saw


technology play an important role whether it is Twitter or Facebook.


Facebook opting to let people indicate to friends and colleagues


that they are safe. Airbnb being involved and Uber and this shows how


technology tirms can help in situations like this? When we see a


period of crisis we go to the news media to find information from the


BBC News Channel for example, but having that ability to communicate


via social media is hugely beneficial for those people who are


trying to seek out more information and trying to learn about loved


ones, but it provides opportunities as you mentioned about accommodation


for those that were stranded in Paris. It provides great benefits to


individuals. Thank you very much Jeremy for


coming in. You're up-to-date with the business for now. Plenty of


details across the BBC as we get updaids from Paris.


-- updates from Paris. For the other business stories we haven't had a


chance to cover today, do take a look at the Business Live page. We


will see you soon.


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