15/06/2016 BBC Business Live


15/06/2016

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From gold to government bonds and the Japanese yen, demand is high

:00:20.:00:24.

right now. We will talk you through the other reasons why, as investors

:00:25.:00:27.

seek refuge. Here is a clue. The US Federal Reserve is due

:00:28.:00:30.

to announce its latest decision - the big question -

:00:31.:00:33.

when will the world's biggest And looking at financial markets,

:00:34.:00:43.

they are bouncing back. In Europe today, that was the scene in Asia as

:00:44.:00:48.

well, but how long? We will be getting an expert view.

:00:49.:00:50.

And you've heard of 'Made in China', but what about 'Made in Greece'?

:00:51.:00:55.

Could manufacturing be the boost the ailing Greek economy needs?

:00:56.:00:59.

We'll meet one start-up that's out sourcing its production to Greece

:01:00.:01:02.

to create jobs and growth after the country's

:01:03.:01:04.

And as Twitter snaps up a stake in music service Soundcloud,

:01:05.:01:11.

we'll assess Twitter's battle to stay relevant.

:01:12.:01:13.

What's the one thing you'd like to see on Twitter?

:01:14.:01:15.

Let us know, use the hashtag BBCBizLive.

:01:16.:01:27.

As ever, a completely jammed show. A very warm welcome and let's get

:01:28.:01:31.

cracking. Financial markets around the world

:01:32.:01:32.

are on edge with investors looking Today, America's Central Bank

:01:33.:01:35.

concludes its meeting but the focus Markets across Europe took

:01:36.:01:40.

a battering on Tuesday as investors weighed up the possible

:01:41.:01:45.

consequences of next Today we have seen a slight bounce

:01:46.:01:56.

back but many are wondering for how long. As worries over the

:01:57.:02:00.

referendum, global growth and slumping commodities give us little

:02:01.:02:03.

reason to be optimistic at the moment.

:02:04.:02:03.

Despite Japan adopting negative interest rates in January -

:02:04.:02:06.

you can see here - its currency - the Yen -

:02:07.:02:09.

has continued to strengthen against the dollar as investors head

:02:10.:02:11.

to the relative safety of major currencies.

:02:12.:02:13.

It has almost been a one-way bet really. The Swiss franc also popular

:02:14.:02:19.

right now. Gold too has shot up -

:02:20.:02:22.

it has risen by more than 200-dollars an ounce

:02:23.:02:25.

since the beginning of the year - with some economists predicting

:02:26.:02:30.

market uncertainty is likely And of course investors have

:02:31.:02:32.

also been putting money On Tuesday, the yield on German ten

:02:33.:02:36.

year bonds turned negative territory for the first time ever -

:02:37.:02:50.

with investors effectively paying for the privilege

:02:51.:02:52.

of leaving their money You would think this is

:02:53.:03:02.

extraordinary, but these are are in at the moment.

:03:03.:03:04.

He's the managing director with London-based investment

:03:05.:03:07.

Nice to see you, welcome. Let's pick up on German bond story that Sally

:03:08.:03:17.

was ending on, turning negative for the time ever. It really does give

:03:18.:03:22.

us an indication of what investors are thinking. We use that phrase a

:03:23.:03:27.

lot, flight to safety, somewhere safe to put their cash, if they are

:03:28.:03:32.

willing to pay to store it at the German central bank there is

:03:33.:03:35.

something seriously wrong with the world economy. The right number of

:03:36.:03:38.

things worrying investors, the Brexit vote coming up shortly, the

:03:39.:03:42.

interest rates on the Fed coming through, which if they don't raise

:03:43.:03:46.

this time it is likely they will later this year. And China perhaps

:03:47.:03:51.

coming under pressure. The China story is an interesting one because

:03:52.:03:54.

it has been there for quite a while. We are coming up to the anniversary

:03:55.:03:58.

of the big stock market crash in China, that had repercussions around

:03:59.:04:01.

the world. And I suppose you would question the timing of what it is

:04:02.:04:05.

suddenly now. I suppose it is all of these things together, that perfect

:04:06.:04:09.

storm, that is once again scaring investors. The key issue was that

:04:10.:04:15.

the Chinese devalued their exchange rates this time last year and it led

:04:16.:04:19.

to some wobbles in the market, about three to -- about three to 4%

:04:20.:04:26.

devaluation. The very short-term stuff is all about the Brexit

:04:27.:04:31.

voting. Is it as simple as that flight to gold? Sally touched on the

:04:32.:04:35.

increase in the price to gold, and it is always the one that well when

:04:36.:04:39.

stock markets and equity markets are quite jittery. Is it that simple?

:04:40.:04:43.

Very good quality bonds have been driving it as well. What has been

:04:44.:04:47.

interesting is that we have the Bank of America Merrill Lynch survey out

:04:48.:04:52.

yesterday, and it showed that the position in the Fort folios is as

:04:53.:04:55.

conservative as it has been since 2008, so when things bounce they can

:04:56.:05:02.

bounce substantially. What makes it go away, is it simply the 24th of

:05:03.:05:06.

June? I think it is a case of getting used to it, the world grew

:05:07.:05:12.

at a rapid rate the last 30 years, I think we are in a hangover pays --

:05:13.:05:16.

hangover phase, I think it will be like this for a while.

:05:17.:05:18.

US authorities have charged a Chinese national - Xu Jiaqiang -

:05:19.:05:21.

with three counts of economic espionage for allegedly stealing

:05:22.:05:23.

The Department of Justice has not name the employer,

:05:24.:05:27.

but it is widely reported to be software developer IBM.

:05:28.:05:30.

China and the US have both flung accusations at each other over

:05:31.:05:33.

state-backed hacking and theft of secrets.

:05:34.:05:45.

28 international organisations have pledged to tackle

:05:46.:05:46.

gender inequality at work by reviewing their own

:05:47.:05:48.

The pledge is part of the first United State of Women Summit,

:05:49.:05:54.

The 28 signatories include Pepsi, Amazon, Deloitte and sales force.

:05:55.:06:00.

Each of the companies will assess their salary policies,

:06:01.:06:02.

review hiring and promotion practices, and include new measures

:06:03.:06:05.

We will talk about that in the paper review later too.

:06:06.:06:16.

Retail sales in America rose more than expected in May helped

:06:17.:06:18.

by an increase in online and clothing sales.

:06:19.:06:20.

They were up 0.5% last month, after rising by 1.3% in April.

:06:21.:06:23.

The news will provide some cheer in the US after employers added just

:06:24.:06:26.

38,000 jobs last month, the fewest since September 2010.

:06:27.:06:41.

Let's head to Asia, where the world's biggest

:06:42.:06:47.

stock index provider, MSCI, has again failed to include

:06:48.:06:50.

mainland China's domestic shares in its emerging markets index.

:06:51.:06:52.

If it had, it would have been a major step forward

:06:53.:06:54.

for Beijing as it attempts to open up its financial markets

:06:55.:06:57.

Fill us in. That's right. As you said, investors were looking to dip

:06:58.:07:12.

their toes a little bit further into the Chinese market. Might just have

:07:13.:07:18.

to wait a little bit longer. The MSCI stock index has made

:07:19.:07:21.

significant steps to Word inclusion, but they have said investors need

:07:22.:07:27.

significant action -- axe and to aid shares in China, that are purchased

:07:28.:07:33.

and traded on the Shanghai and Shenzhen stock exchange is. -- a

:07:34.:07:45.

that need to be removed, more that need to be removed, more

:07:46.:07:49.

accessibility of the global investors. These were some of the

:07:50.:07:54.

reasons behind MSCI's decisions. The reason why would have been important

:07:55.:07:58.

to these Chinese shares to be included is because MSCI is the

:07:59.:08:03.

world biggest stock index provider. China has recently increased its

:08:04.:08:06.

efforts to reform its very volatile stock market, but the MSCI said that

:08:07.:08:11.

global investors were looking for more and analysts essentially saying

:08:12.:08:14.

they were not surprised by this move. They say it is a long-term

:08:15.:08:17.

possibility and Chinese authorities will take a little while putting in

:08:18.:08:24.

place the regulations allowing A shares to be brought by foreigners.

:08:25.:08:30.

It had very little impact on sentiment, Shanghai shares closing

:08:31.:08:35.

up at a two week high, shrugging off that negative news. Hong Kong you

:08:36.:08:39.

can see up higher and also Japan. But let's not forget, heavy losses

:08:40.:08:43.

at the start of the week in Asia, so maybe a little bit of people seeing

:08:44.:08:46.

stocks looking cheap at the moment and buying them today. That is last

:08:47.:08:50.

night in the States. Let's look at Europe to show you today's bounce

:08:51.:08:56.

back. The FTSE 100 still below 6000. It has not been below that since

:08:57.:09:03.

February of this year. And the scene across the board in Europe slightly

:09:04.:09:06.

higher. We will talk you through the sentiment in a bit more detail for a

:09:07.:09:12.

moment, but first Samira Hussain is in New York. Just a few weeks ago,

:09:13.:09:16.

Wednesday was going to be pretty much a sure thing is the day when

:09:17.:09:19.

the Federal reserve would raise rates again. That was before the

:09:20.:09:24.

last jobs report, with its indication of an alarming slowdown

:09:25.:09:30.

in job creation in the US. So now it would probably stunned investors if

:09:31.:09:34.

the Federal reserve finished its meeting on Wednesday afternoon with

:09:35.:09:37.

anything other than a decision to keep rates on hold until later,

:09:38.:09:43.

possibly much later in the year. And aside from more of the same from the

:09:44.:09:47.

Fed, investors will look to industrial production and wholesale

:09:48.:09:52.

prices data for clues as to whether the US economy can pick up steam

:09:53.:09:57.

again. In particular, they will be hoping industrial production shows a

:09:58.:09:58.

rise after falling 0.2% in May. Joining us is Simon Derrick,

:09:59.:10:05.

Chief Markets Strategist, Good morning. Let's look at the

:10:06.:10:13.

numbers, they are all green today, things are looking OK but how much

:10:14.:10:17.

longer? It has been a pretty tough couple of days. It has. As we heard

:10:18.:10:23.

earlier, it is a multitude of things, not just the referendum,

:10:24.:10:28.

about what the Fed is going to do, Japan, in part the China story. We

:10:29.:10:32.

still have a degree of uncertainty out there, even without the US and

:10:33.:10:37.

story. I think today will be important, we have the Fed meeting.

:10:38.:10:41.

It is very unlikely that we will get a rate move, in fact extremely

:10:42.:10:45.

unlikely, so what will be really interesting is the signalling we get

:10:46.:10:51.

from Janet. If she is cautious, which is the most likely outcome, it

:10:52.:10:57.

might cause things in the markets. It could be supportive. While

:10:58.:11:04.

talking about Japan, quite interesting, the policy chief of the

:11:05.:11:09.

Japanese ruling party, a lady who is seen as Shinzo Abe's right-hand

:11:10.:11:17.

woman, she said that she is closely monitoring the referendum next week

:11:18.:11:20.

and the impeccable have on currency markets, ie the Japanese yen,

:11:21.:11:25.

because a lot of the economics has been about weakening the yen, but it

:11:26.:11:29.

is getting stronger and stronger. This has been a major story because

:11:30.:11:32.

a number of other than nations around the world have been upset

:11:33.:11:36.

about the fact that they see Japan as a manipulator in this currency.

:11:37.:11:40.

There has been a lot of pressure to them not to do anything, but the

:11:41.:11:45.

reality is the stock market in Japan follows closely the strength and

:11:46.:11:49.

they will do something. Maybe not they will do something. Maybe not

:11:50.:11:52.

tomorrow, but I think they will do something over the course of the

:11:53.:11:56.

next few months to help weaken the yen, bubbly with monetary policy

:11:57.:11:59.

rather than intervention. Something I'm sure we'll talk about again --

:12:00.:12:09.

probably with monetary policy. Made in Greece, a term you are familiar

:12:10.:12:15.

with? We will meet the start-up moving its production to Athens in a

:12:16.:12:19.

bid to boost the economy. You are watching BBC live from BBC News.

:12:20.:12:26.

First, here in the UK, one man will be taking centre stage.

:12:27.:12:39.

The Former owner of BHS - Sir Philip Green -

:12:40.:12:42.

is to appear before MPs later to give evidence about

:12:43.:12:44.

Sir Philip sold the department store chain for just ?1 last year

:12:45.:12:48.

The collapse of the firm has left an uncertain future for its 11,000

:12:49.:12:52.

staff and many more pensioners who saved into the BHS scheme.

:12:53.:12:55.

Let's get more with Tom McPhail, head of pensions research,

:12:56.:12:59.

I would imagine you and many others would be glued to what Mr green has

:13:00.:13:04.

to say later? A fascinating session in store. Sir Philip Green account

:13:05.:13:13.

of the story, what happened to the business, the pension scheme, MPs

:13:14.:13:16.

will be looking to drill into what went wrong, whether Sir Philip Green

:13:17.:13:20.

critically should now be putting more money into the pension scheme.

:13:21.:13:25.

The pension's regulator is very keen to see more money put into the

:13:26.:13:30.

scheme, I'm sure. Ultimately the members of the pension scheme

:13:31.:13:33.

members, who were the ploy ease, will want to be reassured that

:13:34.:13:37.

tensions were safe. Sitting behind it all is the pension protection

:13:38.:13:42.

fund, which acts as a lifeboat in a situation, but the critical test is

:13:43.:13:47.

to see her how much money Sir Philip Green might be prepared to put into

:13:48.:13:50.

the pension scheme to top it up before it probably goes into the

:13:51.:13:55.

pension protection fund. What responsibilities he has, that is

:13:56.:13:59.

what people will want to know. He is famously quoted as saying if I

:14:00.:14:03.

soldier an airliner and you crashed it into a mountain, that is not my

:14:04.:14:06.

fault, but surely he has some responsible at either the pension

:14:07.:14:11.

fund? He can and may well argue he sold the business, it is not his

:14:12.:14:14.

problem any more. The question is did he leave it in a fit state,

:14:15.:14:18.

should he have put more money in the pension scheme before he passed it

:14:19.:14:22.

on? Will he willingly put his hand in his pocket haps to salvage his

:14:23.:14:27.

public reputation again always end up in the courts? Today's session in

:14:28.:14:31.

front of the MPs will be a very strong indicator of how this might

:14:32.:14:34.

play out. Thank you so much for your time. Of course, we will be across

:14:35.:14:39.

that questioning session for you, join us on the BBC for that. A quick

:14:40.:14:44.

look at the BBC website, another big company coming out in favour of

:14:45.:14:48.

remaining in the EU, joining the long list. BT gave an up date last

:14:49.:14:54.

week. Rolls-Royce says Brexit will heighten the investment risk.

:14:55.:14:55.

Details on the website. You're watching Business Live -

:14:56.:15:00.

our top story - Growing unease over the global

:15:01.:15:02.

economy leads to a big sell off on financial markets around

:15:03.:15:07.

the world. European markets opening up in the

:15:08.:15:20.

first few minutes of trade, the FTSE 100 up 0.9% so far this morning.

:15:21.:15:25.

Now - it's a question that's been debated

:15:26.:15:27.

How to get Greece's economy working again.

:15:28.:15:30.

Amid a deep recession, mounting debts and soaring

:15:31.:15:32.

unemployment, Greece is struggling to shake off its economic crisis.

:15:33.:15:35.

In the first three months of this year its economy shrank

:15:36.:15:37.

But help could be at hand, in the unlikeliest of places.

:15:38.:15:46.

A UK-based start up called Nima Composites - has

:15:47.:15:48.

moved its manufacturing process to Greece -

:15:49.:15:50.

in an effort to help create jobs, and boost the local economy.

:15:51.:15:53.

It makes high-tech covers for laptops and tablets

:15:54.:15:54.

And it won support from a group called Re-load Greece,

:15:55.:16:04.

which works to provide mentoring, legal advice and expertise

:16:05.:16:06.

Evangelos Zympeloudis is the Chief Executive of Greek

:16:07.:16:16.

So, you have got some examples of the product that you, as a company,

:16:17.:16:29.

have come up with and are going to manufacture in Athens? That's

:16:30.:16:33.

correct. Our RMT is based in Bristol and we will outsource our

:16:34.:16:38.

manufacturing facilities in Greece. We have secured a partnership with a

:16:39.:16:42.

company there and they are going to allocate space in their facilities

:16:43.:16:47.

to set up our production. Essentially carbon five casing? 100%

:16:48.:16:53.

carbon fibre casing. We will start with the Apple MacBook, but in the

:16:54.:16:57.

future we want to expand the range to consumer electronics. It's

:16:58.:17:03.

interesting. I'm looking at this. This is a very unlikely saviour of

:17:04.:17:07.

the Greek economy. Talk us through that process. You've been encouraged

:17:08.:17:11.

to move production back there to create jobs, create a bit of growth.

:17:12.:17:16.

Just talk us through what it's like being able to do that and also the

:17:17.:17:20.

help that you've got along the way to be in a position to do that? Yes,

:17:21.:17:26.

so in missionary it was something important to us, we wanted to give

:17:27.:17:32.

back to our country. Hearing all the things about Greece and I realised,

:17:33.:17:35.

what's the point in complaining? I will try to do the best with the

:17:36.:17:39.

means that are available to me, to give back. And that's something, we

:17:40.:17:46.

serve this philosophy across Nima Composites and we have been

:17:47.:17:50.

fortunate to find like-minded people through Re-load Greece. Is it

:17:51.:17:53.

somewhere you would have considered manufacturing without this about?

:17:54.:17:58.

Most people would assume you would go to China, for example? Yes,

:17:59.:18:03.

especially for carbon fibre, the market in Greece is not well

:18:04.:18:07.

developed and I think that's most important to us. We will not only

:18:08.:18:11.

create new jobs but by transferring skills know how there is the

:18:12.:18:14.

potential to spark off a new industry in the country. From a

:18:15.:18:19.

personal point of view, you lived and grew up in Greece, but came to

:18:20.:18:25.

the UK to study. Yes. The other founders of the company, mostly

:18:26.:18:29.

Greek. Apart from one Brit from Bristol. Most of the founding

:18:30.:18:36.

members are doing research with carbon fibre composite at Bristol

:18:37.:18:41.

University. And that's something that was important to us.

:18:42.:18:44.

Manufacturing carbon fibre is very difficult. But because we studied

:18:45.:18:50.

for so many years in Bristol which is the leading institution at the

:18:51.:18:54.

moment, we had all the skills and the know-how and confidence that we

:18:55.:18:58.

could deliver. So the important thing is the difference between

:18:59.:19:01.

this, which is carbon fibre, and this which is plastic. This is a lot

:19:02.:19:07.

easier to do and does not need much skill, but it is this one that

:19:08.:19:11.

people can see there, it is not about pure manufacturing and low

:19:12.:19:14.

cost, it is about high skill and innovation, which is the crucial

:19:15.:19:18.

thing? Exactly, that's the key point. Briefly have Re-load Greece

:19:19.:19:26.

spoken to you about the economic risks increase? Yes. The main

:19:27.:19:35.

purpose of Re-load Greece is to set up UK-based companies which would

:19:36.:19:38.

have a social or economic impact on Greece. Because they have come

:19:39.:19:43.

across similar situations in the past, they had all the experience to

:19:44.:19:48.

help us set up our business. Ice to see you, thanks so much for coming

:19:49.:19:52.

in and good luck with it all. Thanks very much, really nice to see you.

:19:53.:19:55.

Rolls-Royce has written to its employees this morning saying

:19:56.:19:57.

it wants Britain to stay in the European Union,

:19:58.:20:01.

and that a 'Brexit' would "limit any company's ability to plan

:20:02.:20:03.

Speaking to the BBC, the company's Chief Executive Warren East said

:20:04.:20:15.

Brexit would give the aero-engine maker's big American rivals

:20:16.:20:17.

It's all about uncertainty and our position in Europe. We have a very

:20:18.:20:25.

interconnected operation around Europe. Half our employees are in

:20:26.:20:29.

the UK, a quarter of our employees are in mainland Europe. We have some

:20:30.:20:34.

big customers in mainland Europe, airline customers. A big airline

:20:35.:20:40.

aircraft partner, Airbus, in Europe. We have a lot of our external

:20:41.:20:45.

suppliers. What you are seeing here is people assembling that engine

:20:46.:20:48.

made of many components, some of which we make ourselves and some of

:20:49.:20:53.

which we buy in. Collectively there are thousands of companies around

:20:54.:20:56.

Europe that contribute to that engine. We are making investment

:20:57.:21:01.

decisions all the time about where to place different parts of our

:21:02.:21:04.

operation, where to place business like that. And uncertainty created

:21:05.:21:13.

by Brexit puts a lot of those decisions on hold. That's something

:21:14.:21:19.

our US competitors do not have to cope with.

:21:20.:21:21.

Responding to other letters Vote Leave said Some of Britain's

:21:22.:21:24.

leading firms have been clear that if we Vote Leave trade across Europe

:21:25.:21:27.

Of course pro-EU voices want to talk down the economy but the same hollow

:21:28.:21:33.

threats were proved nonsense over the referendum and the euro.

:21:34.:21:55.

Big firms take the limelight when it comes to this debate but what about

:21:56.:22:02.

small and medium-sized companies? We have been talking to them as well.

:22:03.:22:08.

I am John Hancock, I have been involved in the fishing industry for

:22:09.:22:13.

45 Years, I was a skip over 30 years, managing director of a

:22:14.:22:16.

company called charisma UK Limited imported frozen and fresh fish from

:22:17.:22:20.

Norway. When I first started here there were 400 boats. There is now

:22:21.:22:27.

five, six. This is all down to government policy and of course the

:22:28.:22:34.

EU and the ever increasing bureaucracy that's involved in the

:22:35.:22:38.

fishing industry. Because the stocks have recovered, I think we will be

:22:39.:22:41.

able to rebuild the fishing industry piece by piece once we are outside.

:22:42.:22:46.

We will never get back to the halcyon days of what we had, but you

:22:47.:22:50.

are going to regain the core traits that are needed to run the fishing

:22:51.:22:58.

fleet. Engineers, welders, Fish Packers, ice machines. Everything

:22:59.:23:01.

involved which means that the community thrives. Not just about

:23:02.:23:04.

Grimsby but the whole of the UK and the coastal communities.

:23:05.:23:07.

What other business stories has the media been

:23:08.:23:09.

Simon Derrick, Chief Markets Strategist, Bank

:23:10.:23:11.

of New York Mellon - is joining us again to discuss.

:23:12.:23:14.

This is a great story in the Huffington Post, a picture story. It

:23:15.:23:18.

says this photo tells you everything you need to know about corporate

:23:19.:23:24.

boardrooms. White, middle-aged men, not very diverse, despite their best

:23:25.:23:30.

efforts. The chap in the top left is a bit older, but it is quite

:23:31.:23:35.

shocking. And they actually pride themselves on their diversity policy

:23:36.:23:39.

as well. It clearly shows that there is so much more that needs to be

:23:40.:23:43.

done. I think it is interesting to the course of my career how things

:23:44.:23:47.

have changed. Certainly progress has been made, not just the board level,

:23:48.:23:53.

but more underground floor level as well, but still clearly a lot to be

:23:54.:23:57.

done. Interesting because in the United States it is seen as behind

:23:58.:24:03.

when it comes to boosting the number of women on the boards of companies.

:24:04.:24:07.

One fact I learned earlier this year which cracked me up, fewer large

:24:08.:24:11.

companies are run by women than by men named John. That is S and P 500

:24:12.:24:22.

companies. John is my middle name! That explains a lot, Simon. There is

:24:23.:24:28.

an event in the White House with 28 companies becoming signatories to

:24:29.:24:34.

say they are going to improve their gender equality policy. So there is

:24:35.:24:38.

change going on. Let's look at this story, Twitter, sound out, we

:24:39.:24:41.

mentioned it, Twitter buying a stake. It is their attempt to get

:24:42.:24:47.

more people to the site, live streaming, that sort of thing. Love

:24:48.:24:52.

Twitter. Middle-aged bloke who likes music, so no big surprises there. I

:24:53.:24:59.

don't quite see how they tie up. I don't see what Twitter wants to get

:25:00.:25:04.

out of this. Looking at Soundcloud, it was great for unlicensed music,

:25:05.:25:10.

new artist. It seems they are trying to go down the same streaming route

:25:11.:25:19.

as Apple, Spotify. I don't see what differentiates them from everybody

:25:20.:25:22.

else and why Twitter wants to get into bed with them. We asked you

:25:23.:25:25.

what one thing you would change. Caleb says fewer adverts. This one

:25:26.:25:31.

says change the management team. We had the boss of Soundcloud here a

:25:32.:25:36.

few weeks ago. That is it from us. See you soon, goodbye.

:25:37.:25:41.

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