18/01/2016 BBC Business Live


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milder across the far west. High pressure will keep the milder air at


bay for the next couple of days. We will have cloud floating around.


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


$28 a barrel or less - oil prices continue to slide


after decades of sanctions are lifted against Iran.


Live from London, that's our top story on Monday the 18th of January.


Oil has fallen to lows not seen since 2003.


It's $28 a barrel and set to fall even further.


Also in the programme - the downturn in China is being felt


here in the UK - Tata steel is set to lay off over 1,000 people


It's the start of a new trading week, but the same pressures


Oil, China, Middle Eastern tensions and slowing economic growth.


And we'll be getting the inside track on how media


bartering is transforming the advertising industry.


Francis Dickins, the founder and chief executive of Astus,


will tell us how companies like Mazda and Sky are trading


their services against huge ad bills.


Today we want to know as the wealth gap grows -


do you feel richer or poorer than you did 10 years ago?


Iran's president, Hassan Rouhani called it an economic turning point


after sanctions over its nuclear programme were lifted.


He said it's time for the country to build and grow.


Mr Rouhani says Iran needs 50 billion dollars a year in foreign


investment if it's to reach its goal of 8% annual growth.


Iran is seen as one of the largest untapped markets in the world


And the economic payback for Iran and its potential business partners


The US estimates more than $100 billion of funds will be


And it's the oil and gas industry, banking, transport and tourism


services that will all likely benefit from foreign investment.


Amrita Sen, Chief Oil Analyst, Energy Aspects, joins us


We have talked about this many times, what will it mean, will it


work. It has happened and a knee jerk reaction on the financial


markets? We shouldn't we surprised. This has been in the making for six


months. Yes, it has probably come about six weeks and we expected and


probably the market expected, but I think the markets are reacting as if


this has come out of the blue. It is positive for Iran, but for the oil


market it will take a bit of time. Because the dollar sanctions are


still in place. Things will be a bit slower. Companies need to evaluate


how that will impact the other operations. Some of the newspaper


articles are saying it is kicking off an oil war in the middle East,


what do you think about that? Iran, we have all known once the sanctions


are lifted they will come back to the market and sell more. I don't


think they will be able to sell a lot more quickly. They are talking


about a million barrels a day, but that won't be possible without


Western expertise, and that will be the key. It will happen, but it will


be slower. If you look at what Saudi Arabia is doing, it is pre-empting


Iran coming back in Europe and is starting to make new alliances. It


is starting to sell more oil to Eastern Europe, which will become


the new battle ground between Iran and Saudi Arabia for oil. You


touched on the Western expertise that will be needed, where do you


think the biggest investment will come, other than oil and gas? We


touched on tourism, banking and it is these big infrastructure


projects? It is infrastructure, and some of the deals they are talking


about with India and the Chinese are to do with the railway and road


infrastructures. That is where the demand story for Iran lies. Iranian


oil demand could be on the upside if these infrastructures kick in. I


will get you to say how low oil will go in the future, are you willing to


give us a number? At the moment, it could literally go anywhere. I was


joking with a colleague saying, everyone is talking about $10 oil,


what about zero! We are starting to see a lot of cancellations of


projects, so the physical side of the market is telling us the


rebalancing is starting, but I think it could go a little lower. Nice to


see you. Tata Steel is expected to confirm


later that it is cutting more About 750 of them in


Port Talbot in south Wales. The firm announced 1,200


redundancies last year. Chinese president Xi Jinping


has officially launched a new international


development bank. The Asian Infrastructure Investment


Bank or AIIB is seen as a rival Mr Xi said the bank would be used


to meet Asia's enormous financing needs and invest in high


quality low cost projects. The aid and development charity,


Oxfam, says the richest 1% of the world's population,


about 73 million people, now has more than the combined


wealth of everyone else own as much as the poorest half


of the global population, How rich do you feel, do you feel


less than you did and at the height of the financial crisis. Let us


know. Let's have a look at some of the discussions on our web page.


There is a discussion about China, whether it is due for a soft or hard


landing. The lower oil price prompted by no demand from China.


The growth number for the year will be released. We will be talking


about at this time tomorrow. But there will be some discussion about


what we can expect on our web page. Also about the situation in Port


Talbot in South Wales. The great pictures. These come from a global


entrepreneur. He has been developing pictures. This is a rocket and is


landing. The whole point is it is reusable. But when it doesn't quite


go according to plan. Oh dear! That is the rocket not managing to return


quite as successfully as they would have liked. But they are working on


that reusable rocket, which will cut the space of the leader-macro -- cut


the cost of space travel. But that one cannot recycle. Let's back to


the markets. Nervousness in global


markets continues. It was enough to send shares


in Japan to their lowest level Another difficult start to a week in


Asia? Yes, good to talk to you. In Japan, it felt to the lowest level


of the year and it follows the falls in the US market and the drop in oil


prices to below $28. By closing time, Japan would close some ground


and it is the same story much across Asia. Shares in Australia and Hong


Kong were down. In China, lob beat property report showed property


prices rising 1.6% in December from a year earlier. This good move,


along with the central bank to stabilise saw the composite moving


out of negative territory closing 4% higher. China's quarterly gross


domestic product numbers are out on Tuesday and analysts are expect in


shares to be hurt later in the week with falling oil prices and


continued worries about economic growth. Thanks very much.


So we're starting the week with oil prices nearly 20% lower


than the start of the year, and stock markets around 10% lower.


And it's widely expected the losses wont stop here,


with China and oil prices keeping investors nervous.


The lifting of sanctions on iran, good news for some, not great news


for oil producing nations as Iran re-enters the oil market pushing


That's also sparked heavy falls on Middle Eastern stock markets


including Saudia Arabia, Kuwait and the UAE.


Markets are closed in the US for a public holiday.


Here's how european numbers have opened.


Lots of the markets to die just and a lot of nervousness in those


figures, even though they are green for now.


Joining us is Brenda Kelly, Head Analyst, London Capital Group.


Looking at Europe for the start of the week, how they ended on Friday,


it's not much, that little bounce back we are experiencing so far? No,


since the beginning of the year we have seen serious declines and


levels have not been breached over the last few days. A lot of visit


down to the oil price and the FTSE 100 and the mining sector as well.


It is this slowing global demand, not just in China but in other parts


of the world, that is adding to the woes of the FTSE do nominated stop


us. Until we see the heightened demand or a cutback in supply,


particularly amongst oil or iron ore, we can expect this negativity


to follow. If you look at the bets on oil, as in people predicting it


will go lower, they are at a record high and often you get a squeeze


which sends oil prices higher, because there is little left to


sell. Most people have to reduce their positions and buy, which sends


the prices higher. But there will be choppy markets for the next few


weeks. There is a tendency to talk about oil prices falling as a bad


thing, but around the world it makes goods and services in the shops


cheaper because fuel is cheaper, it is cheaper to produce things because


factories are spending less on energy. Where is the impetus for


prices to rise? It is coming from the oil producing countries


themselves saying we need the price to be higher? There are a few


drivers for oil. Supply is one thing and Saudi Arabia have refused to go


back in production because they want to eradicate some of the cheaper


shale producers out of the US. That hasn't worked very well. And also


political issues have failed to stem the price of oil falling. It is not


just a supply issue but a lack of demand. As well, you have seen the


US dollar has been rising for the last 18 months. As the dollar rises,


commodity prices fall. With expectations the Federal Reserve


made put interest rates up higher in the coming year, that is to the


detriment of oil as well. We could see the US Federal Reserve deciding


not to be as strong headed about tightening monetary policy, because


we are beginning to see the fallouts of the emerging markets, oil prices


and a manufacturing recession as well. Thank you very much. We will


talk to you later in the programme. Still to come: How to cut


the cost of advertising. We look at the new way some


firms are paying for ads by swapping their goods and services


for air time and ad space. You're with Business


Live from BBC News. And now a look at some


of the stories from around the UK. Tata Steel is to cut more than 1,000


more jobs in the UK, with most of the redundancies


in Port Talbot in Wales. It's currently the UK's


biggest steelworks. Simon, these job cuts we are expect


link come on top of a whole raft of cuts that were announced last year?


Yes, dark days for the steel industry. The 752 go at Port Talbot


on top of 1200 that went in red car on Teesside and the job cuts in


Lanarkshire in Scotland. They have an emergency meeting last year. They


approach the EU to get approval to offset some environmental subsidies


and also an investigation going into dumping of Chinese steel on European


markets. But is the problem. Steele has been produced in China, but not


being used there because the economy is slowing. So it is flooding


European markets. Lots of the UK demand is being met by Chinese


imports which means prices for hot coiled rolled steel have fallen.


There is some hope a private equity firm might buy some of the Tata


operations. But I think it might be too late for the job cuts we have


heard about today and on top of the 1200 we have heard about last year.


So many parallels only talk about commodities, second macro is in


focus, but talking about oil which is what we have been talking about.


So many parallels that as demand for what ever commodity falls, we are


seeing that immediate reaction and oil firms, steelmakers cutting


investment and cutting supply? You were saying isn't the oil cut a


jolly good thing? It is. If you look at the knock on effect it is having


on the manufacturing supply chain, some of the industries that serve


the North Sea industry, that's where you're seeing the problems show up


there. Generally a good thing, but in some industries, it is really


hurting very badly and we are seeing more evidence of that today. Thank


you, Simon. Tata Steel, the story online, as


soon as we get confirmation from the company, we will bring you


up-to-date as and when the news does come through that the jobs which are


widely expected to be chopped are done so.


Our top story: Oil prices slide to lower than $28 a barrel


as investors weigh up the lifting of sanctions against Iran.


For Iran, the economic gains could be immense.


For everyone else, the fall is hitting their budgets hard.


Now new technology and the internet has changed the way firms advertise


and target customers, thanks to social media and web ads,


rather than traditional newspapers and billboards.


But one thing that hasn't changed is how they pay for it.


Firms traditionally pay money in return for advertising space.


In the UK alone it's estimated that companies are likely to spend nearly


$25 billion on advertising this year.


So a growing practice to off-set this whopping cost is something


That means that a company will provide goods or service


usually whatever they produce themselves -


in exchange for a portion of the advertising bill.


Astus Group is a leader in the field with nearly half of the market share


in the UK which is said to be worth $583 million with many leading


Frances Dickens is the chief executive of Astus and is


We briefly explained how this media bartering works, but could you just


add a bit more meat on-the-bone as it were? Yeah, sure. As you partly


explained when brands want to advertise their goods or services,


one of the biggest costs that they will face is actually the media


spends whether that's television, radio, print or even digital. And


what media barter does, it is a process that evolved over the last


20 years to allow those companies to lower the cost of that advertising


by paying for part of their advertising and their own goods and


services because lots of companies will have capital tied up either in


unsold goods or services that they have yet to provide. You have media


owners on the other hand who always want to get more share. They might


want to attract new clients and make it as competitive to them as


possible and what the media barter agency is connect the two so that


each of them gets what they want, but without having to pay 100% cash


for it. What sort of things can you barter? If you produce something


that's really useful to that other company, that's useful. But what if


you produce something that's niche? How do you find a market? For


starters it isn't a direct swap. We will take the product that's being


offered and we will move that on according to what the client asked


us to do. That's the first difference. And you


know, generally, we can find a use for almost anything. We have


barterred a huge range of things in the last ten years. Give us some


examples. What are the weirdest things you have had to barter? Ah, I


knew you were going to ask me something like that! Not the


weirdest thing, but the most challenging was some little ceramic


bowls that were produced particularly for a food manufacturer


and of course, we had to find an alternate use for them. We also


early on, we took some cars that were in the UK market, but they had


no roof, no doors and they were inpractical for the UK weather, but


we managed to find a home for those as well. Why would a big global


player, the big brands that are your clients, want to go for this process


as opposed to going to a traditional advertising agency and doing is it


the normal way? Yeah, well, we always work alongside the media


agencies. So they are using the media agency and they will still


select the media and negotiate as usual, but our bit is to set up the


arrangement where we can pay partly in product. It might be about


reducing the cost of the advertising because by using their own product,


they can do that. It might be about getting products out there. We have


launched several new cars by getting them out on the road early or it


might be about clearing stock that they have discontinued and they


don't want it anymore and they want us to get rid of it. You're going to


expand to China? Yes. And you have just got a licence. Yes. How do you


expect this to take off? People have to be educated as who how it works.


Do you have any sense as to whether they are ready for this kind of


thing? We have spent two years researching on this because you


don't get a licence in China overnight. We spent two years


covering the ground. The media owners want to do it. We have


clients working in the UK and Australia who want us to work with


them over there which has been one of the big drivers to go there. We


have all three parties saying, yes, yes, please, the Chinese are very


entrepreneurial. Social media has changed how the advertising industry


works and how you target consumers and you can get a specific pay


become for a certain consumer rather than big mass market advertising. I


imagine this steps into that neatly because it allows people to target


people more specifically? Yeah, I agree and fragmentation is really


good for us because it gives us more opportunity to work with people. We,


you know, we've run digital campaigns for thousands of pounds


for clients, all part of the deal. It doesn't have to be big brands


we're working with and social media is a good opportunity for us.


All right. Thank you very much for coming in, Frances, and we will


watch how you get on in China. Best of luck.


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


but first here's a quick reminder of how to get in touch with us.


The Business Live page is where you can stay ahead with the day's


breaking business news. We will keep you up-to-date with the latest


details with insighing and analysis from the BBC's team of editors right


around the world and we want to hear from you too. Get involved on the


BBC Business Live web page. Business Live on TV and online


whenever you need to know. And Brenda is back


to look at the papers. This is another Business Live guest.


European Union to scrutinise usage of big data by large internet


companies. This is a story as to whether or not


this, these companies will be in breach of antitrust rules and would


actually block a lot of its rivals in term of joining into the


competition. The fact these companies have a huge amount of data


on people could become problematic and create something of a monopoly


which is what the EU is frightened about. For the time being, it seems


that there isn't any real concern, but it is something that they're


watching closely and if there are problems, they may very well impart


some regulations to ensure there is competition still in this industry.


We interviewed the Competition Commissioner on the programme and


she made the point we are willing to hand overall of this information


about ourselves online because you do so in return for free goods and


services and that's the issue. We're handing it over, and then we're


asking these companies actually to be careful with what they do with


it, clearly. But then, there is a trade off, isn't there? We get


something in return therefore the big firms are saying, "We need to


use your data as well." That's the case and that's what they are trying


to prevent because it might erect barriers to competition. When you


have all these large firms like Google and Facebook having all that


information, there is a lot they can do with it and it can be obviously


positive and negative as well, but this is, I'm just having to make


sure the companies use their data and use it in a responsible way


rather than selling it on and creating problems within the


industry. Now, let's look at the stories about what happened in the


Middle East yesterday. Because financial markets were open, of


course, on Sunday. It is the beginning of their week. This is the


business insider with a picture of a man with his head in his hands.


Markets had a rough time. They have had a rough time and the think the


markets should have been expecting this sanction to be lifted from


Iran, but Saudi Arabia has been not without problems and it has


introduced a lot of fiscal changes, but it needs to have oil prices


around $45 per barrel and now we're languishing around $28. That and the


fact that their currency is pegged to the US dollar is a little bit of


a problem for them and they're supporting that currency with huge


foreign exchange reserves in order to keep it on an even keel, but for


the time being, growth from Saudi Arabia, where it was set ten years


is vastly reduced. There maybe some fall-out from this later on. A quick


word on Davos, it gets underway tomorrow. Tanya Beckett is winging


her way there now for us. It is a golden ticket that gets you into


Davos, but it comes at a hefty price tag? It certainly is. If you look at


revenue that's been there over the last number of years, revenue to 144


million at the end of last June. It is like 3.5% higher than last year.


The S and P removed the floor against the euro even buying a drink


or a bag of chips in Switzerland at the moment will cost you at least a


tenner! What about hot chocolate on the


mountains? We will have more from Davos


midweek. We will. Thank you for your company today. We will see you soon.


Bye-bye. Rather grey and chilly out there for


many parts of the country. The chilly theme continues for most of


the week. There is milder air trying to push in from the west,


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