11/10/2016 BBC Business Live


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


Samsung suspends sales of its Galaxy Note 7 smartphones


and warns existing users to turn them off as the scandal grows over


It could abandon the model altogether over fears that it could


overheat and explode. Live from London, that's our top


story on Tuesday 11th October. The electronics giant


warns customers not We'll get the latest from our Asia


business hub and assess what it means for Samsung


with our technology correspondent. He has won with him, it is switched


off. Regulators shut down the Singapore


operations of a private Swiss bank over accusations


of money laundering. Financial markets have got the


jitters, with the rising price of oil and the falling pound. What does


that mean for inflation? We will tell you all you need to know.


We'll meet the member of the Rothschild family urging


businesses to put people before profit and make society fairer.


And, in the light of that Samsung saga, we want to know,


has it damaged your trust in the brand?


Let us know, use the hashtag #BBCBizLive.


It's a disaster for Samsung at a critical time for


It has told all users of its flagship Galaxy Note 7


smartphone to switch them off whilst the company investigates new reports


Samsung has also announced it is to stop all sales


The company recalled 2.5 million phones in September after complaints


of exploding batteries, and later assured customers that


But there are now reports that even those phones were catching fire.


Now, organisations such as the US Federal Aviation Administration


are telling airline passengers with these phones they must be


switched off and not stowed in checked-in baggage due


The Galaxy Note 7 was meant to be Samsung's flagship phone,


released just weeks before Apple's iPhone 7.


It was well received, but since the scandal,


Samsung shares have taken a major hit.


There's also expected to be significant damage to brand


There have been reports the firm is considering halting production of


the phone altogether. We have talked about this since


September, what is the latest today? Shares have taken a beating today,


down by another 8%, after Samsung announced they would stop sales and


they told users to turn their phone off. They are also facing a


shareholder challenge from a hedge fund. All of the woes it is facing


at the moment, it is giving the hedge fund ammunition to take their


proposal to split Samsung into two. The hedge fund is looking to see


them spin it off into an operating company and list that on the Nasdaq,


to bring up the shareholder value of the company. This would be a major


corporate shake-up, one of the biggest in history, and it will be


hard, because Samsung is South Korea's biggest company, it has a


complex structure, but shareholders are looking to change that.


You have got the phone, it is turned off, but we should have some sort of


risk assessment to have a PR. There was some chat about bringing a


dangerous item into the studio. This was one of the original ones that


were sent out in late August, early September, it should have been sent


back already. Some song thought it had identified the original problem,


which was that the battery was from one particular supplier and there


was a fault at that one particular supplier. It withdrew them, it sent


out new phones, with actress from different suppliers. Now in the last


week we have had at least five different reports in the did state


that replacement phones have suffered problems from catching


fire, in a teenager's hand, and on an aircraft. The crisis for some


song is they have failed to identify exactly what has gone wrong. Once


they have identified it, they can act. As late as yesterday afternoon,


I was talking to them about a British owner who was worried, he


had a replacement phone, 1MDB said, don't worry, it is a replacement,


everything is fine. If you hours later came the statement. The timing


is also a disaster, the crucial holiday season coming up, people


replace devices or buy new ones, and Google launching their phone. This


is a great phone in many ways. When it first came out, it was so much...


It was outlandish, it looked huge, now everybody else is doing them,


but this phone set the pattern. It is not as big as the Galaxy S seven,


which is the flagship, but it is a very well reviewed version. Very


important to Samsung. Huge competition, not just from Apple's


iPhone seven, but Google also hitting the top end of the market.


That is an android phone, for those who don't want an Apple device. If


you wanted a top end android phone, Samsung has been the dominant


player. They have dominated the luxury end. It has been hard to make


money, but Samsung have been making serious money at the top end of the


market. That must be under threat. In terms of brand damage, Tim


tweets, my faith in Samsung is not shaken, they are pushing the limits


and bumps on the road to be expected. One person says, I will


not ever buy one after this. That is the issue. There are lots of loyal


fans, and I doubt that many of them will disappear, but you don't need


to lose much of the market to have your margins really seriously


threatened. It is becoming ever more competitive, margins have been


getting thinner. It is a big problem. We are all over this, Rory


and Dave Lee on Twitter, and our team in Asia. Keep it with the BBC


for our latest. Keep your comments coming in as


well, use the hashtag. Is your faith in Samsung tempted?


The price of Brent crude oil has surged to its highest in a year


after Russia said it will support Opec's plans to freeze production.


The group of oil-producing nations are gathered once again,


this time in Istanbul, on the side lines of


Oil has come down a tad from its 15 month high.


US investor Warren Buffett has released his tax details


after Republican candidate Donald Trump accused him of using


Mr Buffett said he had paid income tax every year since 1944,


following Mr Trump's assertion that he had taken a "massive


deduction" during Sunday's TV debate with Democrat Hillary Clinton.


In 1995, Mr Trump claimed losses of $916 million


There is no evidence he did anything illegal.


The moral of the story, don't take on Warren Buffett.


A quick look at our page. Sterling under $1 23. The continued fall in


sterling. As promised, this proves we are live, a picture of Rory with


his phone! I was feeling a little scared of that phone. Plenty more


there, including on sterling. And another story we're


following from Asia today, more fallout from Malaysia's


1MDB investment-fund scandal. Let's head back to


Leisha in Singapore. It has been a long-running saga,


explain some of the detail on what we have heard today. The scandal has


been rolling for years. The allegations are that more than $4


billion was misappropriated. There are six countries investigating


alleged corruption to do with 1MDB. Singapore is one of them, the


development has to do with them kicking out a second Swiss bank from


the city. The bank is Falk, accused of serious breaches of


anti-money-laundering rules. In May BS I was kicked out for some and


violations. In today's charges, UBS and a Singapore lender got


financially penalised, and the local unit of Standard Chartered is also


being investigated over possible breaking of these laws.


A week Japanese currency helping stocks listed in Tokyo. Hong Kong


hit pretty hard. Energy stocks pulling it down. The price of oil


and down a little bit. Technology stocks pulled down. He story with


Samsung, their suppliers, struggling.


A mixed picture in Europe, fairly flat. The pound falling again today,


four days in a row against the dollar, could be the worst run since


June. And Samira Hussain has


the details about what's ahead A high patent fight gets it day in


court, nearly six years after the legal battle began. This is a fight


between the design similarities between Apple and Samsung


smartphones. Samsung is appealing an earlier decision that would have had


them paying $548 million to Apple for a patent infringement. This


comes at a difficult time for Samsung as it deals with its woes


over its phones. Also happening, a new season for earnings, beginning


on Tuesday. The first company will report, the last quarterly results


before the metals company splits into two.


Joining us is Jane Sydenham, investment director


Let's talk oil, it is back-up, just when you thought things were


starting to calm down. We might see more money in our pockets? I don't


think it will be the case. Russia is trying to cooperate with Opec, to


agree a reduction in production, although Opec has so far only agreed


a freeze. It shows an intent. A lot of these nations are under pressure.


What it means for us is not only is the price rising, which means it


costs more to fill up the car, but the dollar has been rising against


sterling, so you have a double whammy. That is pushing up


inflation. Sterling has been weak, so food import prices, and clothing


import prices, they are rising, so inflation should be pushed up. The


next Opec meeting is in November in Vienna. That is when we are


expecting them to say, we have agreed to the freeze that we have


put out there to financial markets. It will be interesting to see if


they can finally agree to that, because who will agree to cutting


what? Exactly. The world will want to see the evidence that there is a


genuine cut taken place. What will it mean for inflation? The issue


with a weak pound, oil going up, energy prices going up, it could be


a problem for us in the future. Our ideal inflation target is around 2%.


At the moment the CPI is not .6, 0.7. The fact that sterling has


fallen should push inflation up I 1% anyway. If we see rage rises come up


oil prices going up, inflation will start to take up, which is good as


long as we are around 2%. If it really started to run away, that is


not good, because that has an effect on expectations for interest rates


and all sorts of things. It is very early days at the moment. You will


return to talk is through some paper stories.


We'll meet the Rothschild persuading companies to embrace


You're with Business Live from BBC News.


We have seen a lot of market volatility, and it has had an impact


on one company's decision over whether it should float or not.


It was going to be the largest IPO planned since June's vote to leave


the EU, but it has now been cancelled.


Pure Gym has pulled the plug on it, citing market volatility.


What's the reasoning? Market volatility covers a lot of things?


It does, indeed. It seems to suggest that investors are getting cold feet


and recent IFOs haven't done as well as expected. It is the UK's biggest


gym operator. It has been expanding rapidly. Largely due to a business


model which allows people to pay monthly and weekly or by the day


rather than having to commit for a full year and pay a large annual


fee. It is in the value sector, a low-cost gym chain. They announced


they were going to float on the stock market in September. So a long


time after the Brexit vote. But they have decided that that doesn't look


great and I'm led to believe that's because recent IPOs of similar sized


companies haven't done too well. They are worried although there is


initial investor interest, the share price may not be sustain over the


next year or two and they don't know what the immediate future holds. So


it is better safe than sorry. Pull the IPO now and perhaps return on


another day. If you want more details on that


story, there is more on the website. It is a featured on the Business


Live page. It is a story of sterling today.


Yes, sterling all over the financial press. Everyone keeping a close eye.


It is good news and bad news depending what you're up to. If


you're planning on travelling abroad, it is bad news. It is Budget


Day in Ireland and the UK traveller to Ireland is one of their biggest


areas when it comes to their tourism industry. So they're watching this


veriks very closely and they export a lot to the UK and Ireland imports


a lot from the UK. So lots of ramifications for that.


We're keeping an eye on that story for Samsung. Good news for Apple and


Google as a result of that scandal at Samsung.


Our top story: Samsung has suspended sales


The move follows continuing reports that battery problems are causing


some phones to catch fire including replacements.


South Korean safety authorities say they're investigating.


Some reports suggest Samsung may ditch the model entirely because of


the problems. A quick look at how


markets are faring. We are keeping a close on the pound


and dollar exchange rate. Brent Crude earlier today above $53 a


barrel. The last look just below $53 a barrel. Energy shares have been


sensitive. They were up strongly on Monday as the price of oil surged.


The trigger for Monday's 15 month hike in oil was Russia saying they


would adhere to the production freeze announced earlier by Opec.


Can the world's biggest companies help make the world a better place


That's the fundamental question when it comes to what's known


AXA Investment is - for example - pledging to make 75%


of its real estate investments green.


Top business leaders from around the world gathered in New York


to debate exactly that and Samira Hussain went along


to speak with the coalitions founder Lynn de Rothschild


about whether investors can really change the world.


We are as investors not only looking at what did you do


in the last quarter, were you up half


No, what we want to know is what did you do for your customers?


And if we as investors say that and we have $43 trillion of assets


under management involved with us at the CEO and CIO level so that's


almost two-thirds of assets under management in the world.


So if we all decide that we are going to ask inclusive


questions of our management and where we put our money,


How do you avoid turning into a meeting of elites that don't


We are asking everyone who comes to make a commitment that works


for their organisation, for their shareholders,


for their employees that leads them on a path to more inclusive


capitalism and the coalition for inclusive capitalism actually


works through the year with all of these organisations


to measure progress and we're not prescriptive and we don't have


We believe that a journey of 1,000 miles starts with the first


step and we are grateful for the first step.


So I think that's how we really differiate ourselves from a Davos.


People come to learn and to think and then to implement action


and that's where we really hope we distinguish ourselves.


Either we really believe that capitalism works for everyone


and we make it or we don't and if we don't, shame on us


and I think those companies that have let ethics go or let treatment


of employees go should be penalised by investors.


I'm glad you raised the issue of cynicism, especially


in this election cycle, I'm wondering if you feel that this


I think it is true that the system has let too many people


In this country, the medium income has not risen since 2000.


Now, granted last year it did go up by almost 4.5%


which is an improvement, but 90% of the gains,


after the great recession, went to the top 5%.


And that's why people are angry and so I don't think those


I think those people are right and I think


it is our obligation to bring them back in so we are all in this


society and in this economy together as one.


What would you say to the people that have become disheartened


with the way that the economy and the way big businesses are run?


I can promise you that the majority of the people in the 1% want


an economy and a society that works for everyone.


That the arc of history does bend towards justice and we have made


mistakes in the business and in the investment community.


I can grant that, but I also know that by and large the bulk


of the people who you call the 1% want a better outcome for everyone.


Lots of you getting in touch with the top story related to Samsung and


whether it would dent your confidence in the brand. Whether you


would still buy a Samsung. A viewer says, "They have got my trust. All


my previous Samsung phones have been amazing." Nick says, "I have had a


Note 7 and I have had it replaced, but I've had enough now." One viewer


says I'll get another Samsung when the bugs are fixed. I will never get


an Apple. This one which cracked me up. This is from Nicotine Lee, "I


have a Galaxy S6 and if my Samsung exploded in my hands, I would still


buy a new Samsung phone." Jay says, "It changed my life and then it was


gone. The best phone this year. Hands down regardless of the


problems." Jane is back with us to talk us through the stories in the


papers. Jane, let's stay with the technology theme and talk about


Facebook because it is moving into new territory? It is. It is. It is


launch ago rival to linked in. It is networking for business. So not


really posting of your cat, but spread sheets instead! And


networking on a global basis to do with business. A big change. It is


quite interesting for Facebook thaws that's the area it hasn't


infiltrated successfully. It has very much got the market of social


news and what you're up to on the weekends and your own personal life,


but not the office? I mean it is a gap and it would be interesting to


see how successful it is and it is really going to put measure on


linked in. Let's turn our attention elsewhere


to Dubai, a place that I spent many a year. This is an interesting one.


A new tall tower, they have got the world's tallest, but they want a


taller one. This is interesting when it comes to things like timing, you


build in a downturn and then are ready in another downturn? It is


interesting. Another 100 meters above the tallest building in Dubai.


It is not good for those of scared of heights, but timing is everything


and anticipating what the cycle is going to be is pretty difficult.


Obviously, if the oil price improves, it will help as far as


Dubai are concerned, but it is also, you know, it sends a signal to the


rest of the world. How long it will take, I don't know, but we will have


to wait and see where the business cycle is. Have you been to the top?


Me? Yes, I reported from the top. I have got a bit of a head for heights


so it was all right. But it tends to be very dusty so the view to be


amaze, but you don't see very much. Thank you for your company. That's


Business Live for another day. We're back tomorrow. Same time, same


place, bye-bye. Hello there. The weather is stuck in


a little bit of a rut for the next few days. The only thing that will


start to change is the strength of the wind and it will continue to


come in from the east thanks to this area of high


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