17/10/2016 BBC Business Live


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This is Business Live from BBC News with Sally Bundock


Chinese authorities have detained at least 18 people employed


by Australia's biggest casino company under suspicion


Live from London, that is our focus today -


Australian casino company Crown Resorts has confirmed that


at least 18 of its staff have been detained by authorities in China.


Also in the programme: a new report says Britain's economy faces


a "prolonged period" of weaker growth as consumer spending slows


And it is a brand-new trading week for Europe. So far, not so good. We


will talk you through the winners and losers.


And we'll be getting the inside track on advertising.


The boss of MC Saatchi - one of the world's biggest agencies -


will be here to talk Brexit, ad blockers and US politics.


And later we're going to talk about Hedge funds -


they are struggling and it's because of robots.


Let us know who you'd back with your cash - humans or robots?


When it comes to your money, cash or robots, who will make the right


decisions? Do send in your thoughts. It is a packed programme. Let's get


started. Shares in Australia's


biggest casino company - Crown Resorts have fallen by more


than 12% after it reported that at least 18 of its staff including


a senior executive have been It's believed that the arrests


could be linked to a move by China to go after foreign casinos that


attempt attract Chinese citizens overseas to gamble -


which is against the law But while gambling in China


is illegal, many Chinese people participate in state-run lotteries


and engage in legal gambling in the special administrative


regions of Hong Kong and Macau. The Chinese government operates two


lotteries: the China Sports Lottery The Chinese government does


not legally consider Illegal gambling in China


is still common, including unofficial lotteries,


clandestine casinos, and betting in games such as mahjong


and various card games. It sounds like a murky world and


many arrested? That is right, Sally. It is a murky world because the


Chinese love gambling, but the government is trying to restrict


what is known as illicit money flows through casinos and lotteries. As


you mentioned earlier, we are seeing a hit to Australia's crown resorts


which are owned by the billionaire James Packer. Some employees had


been detained in China. That includes three Australian nationals


as well as the head of the international operations. This is


the guy who brings the big spenders to the casinos as well as the


resorts overseas. China's Foreign Ministry did confirm in a statement


that it has detained some Australian nationals for suspected gambling


crimes but we did not get any further details. We are seeing this


crackdown on gambling because it is illegal on the mainland and they are


also cracking down on companies who have an exclusive advertising to


Chinese nationals to come to these casinos abroad. We have seen another


Korean operator get into trouble over similar violations. It is


called Paradise. Last year several employees were arrested as well. The


BBC are looking into the story and managed to speak to the husband of


one of the local Crown employees who was arrested. He said he has been


dumbfounded by the move because his wife only does admin work. Thank you


very much. Britain's economy faces a "prolonged


period" of weaker growth as consumer spending slows and business curbs


investment, according to a report. Although the EY Item Club think tank


predicts the economy will grow 1.9% this year, it expects that


performance to fizzle The economy's stability


since June's Brexit vote Joining us is Martin Beck,


Senior Economic Adviser to the EY It is all to do with the fall in the


pound, I presume that is the one hard thing we can hold onto which we


know has been a result of that Brexit vote? I think that is a fair


point. The fall in the pound is pushing up import prices which will


lead to a rise in prices for consumers. There is a positive, any


UK company selling abroad in dollars is benefiting which is acting as a


shock absorber to the economy. We really need to know what is in


Philip Hammond's Autumn Statement, what the government does in terms of


infrastructure spend is key? That is an important point. We assume no


change in the forecast but there seems a reasonable chance the


government will allow some sort of fiscal stimulus in the Autumn


Statement. There has been a tendency in recent weeks to row back a bit on


what might be in the Autumn Statement. The other thing we saw


last week was guilty of ticking up. That basically means borrowing costs


for the government are getting more expensive. We are also seeing that


happening in the States as well. It will be harder for the government to


finance these infrastructure projects? Let there in mind the


increase is from a record low level. The government currently pays 1% a


year on borrowing. But the more we spend on borrowing and below the


pound it goes, the more expensive it will be for the government? That is


a fair point but we are talking more expensive from a relative position


which was very cheap. The government is still borrowing at a rate far


lower than we have seen in most of the past century. Thank you for


talking us through that. More on that story on our website. Let's


talk about some other news now. China's president -


President Xi Jinping - says the long-term prospects


of the Brics countries - Brazil, Russia, India,


China and South Africa - are still positive despite


a precarious global economy. Though they are currently enduring


slower economic growth, he has stressed that the potential


and strength of the group A flight ban on Samsung's Galaxy


Note 7 smartphone has been announced by more airlines after reports that


some of the phones had caught fire. Carriers in Australia,


Asia and Europe put the phone on a prohibited list over


the weekend, which comes after the US banned


the device last week. Samsung stopped making the phone


last week following complaints We have talked little bit about the


impact of Brexit, or we have had more organisations trying to predict


what it means for the UK economy but this is a story in the Financial


Times. It is a big story. The UK to pay up for city access to the single


market. There is a theory that the government is going to have to pay


if they want to keep that. It is an interesting story. Let's


have a look at the financial markets now. Europe's main markets have not


started well. We are seeing declines across the board.


the details about what's ahead on Wall Street Today.


Earnings continue on Monday, Bank of America is going to report. It will


take questions about how it's banking and consumer incentives


compared to Wells Fargo which is recovering from its own banking


scandal. IBM will also be reporting on earnings. It has been focusing on


building its cloud business that houses the company's artificial


intelligence platform but it struggled to show meaningful revenue


growth elsewhere. Finally, we will also hear from video streaming


service Netflix. It has launched in almost every country around the


world, but now it faces the task of adapting the service to different


markets and cultures, in the face of increasing competition. Key for


investors will be Netflix's subscription numbers for the Court.


Joining us is Nick Hungerford who is the Chief Executive


What has gone wrong? It is a bit of a pull-back. We have had a great run


over the last month or so, hitting record highs in the FTSE. This is a


reaction to two things. One is that sterling is strengthening a tiny


bit. We know that story has rallied the markets. The second thing is we


have a serious round of the gauche nations this year with Theresa May


heading to Europe for discussions with her peers. People are concerned


about how those negotiations will be and whether or not it will be a hard


or a soft Brexit, whatever that may mean. What are you looking out for


in the markets? The big market stories this week will be an results


from America. We had Citigroup, JP Morgan and Wells Fargo last week. We


have Bank of America and Wells Fargo this week. Can they maintain their


good loans? And secondly, the vice chairman of the Federal Reserve will


speak today. We had the chairman Janet yellow and and Bob Dudley


speaking with some mixed messages so we are looking for clarity today.


You talk about the Brexit negotiations being critical on the


markets. What does a canny investor do in an environment like that? A


canny investor it ignores all of that and says I invest in the


markets for the long-term. I know things will go up and down but I


will spread my risk and put my money in and I will not worry about


whether these Brexit negotiations change from day to day. Should the


canny investor have a robot investing on their behalf?! There is


no emotion there. That is really interesting. It is a way to take the


emotion out of it. If you think about your house you cannot see the


price going up and down every day and isn't that a good thing because


you leave it there? You can look on websites. Quickly, you must just


check! Nick, good to see you and we will


keep an eye out on what Stanley Fischer and co-have to say as the


week progresses. Still to come: What role did


advertising play in the run up We'll speak to one of


the world's leading ad men. You're with Business Live from BBC


News. A warning against a potential


Brexit brain drain. A group representing nearly half


a million engineers is calling on the government to take serious


steps to keep integration with the European Union


once the UK leaves. Engineering-related sectors


contribute ?280 billion - that's $343 billion dollars -


to Britain's economy. Last year the Royal Academy


of Engineering warned the sector needed at least a million people


by 2020 to keep everything Ryan Bourne, Head of


Public Policy, Institute of Economic Affairs,


joins us now. It all sounds like a stark warning,


a crisis in the UK. Is this about Brexit or have we not been


channelling young people into engineering for years? I think it is


a bit of both. The report was a bit more nuanced than your introduction


suggested. The Academy are quite keen to recognise the fact that


being open to investment and being open to skilled engineers being able


to come to the UK is a good thing, and of course, that might not


necessarily change as a result of Brexit. I campaigned for us to leave


the European Union, but I still want us to be open to foreign direct


investment and want skilled engineers still to come here. It is


the importance of openness rather than Brexit here. Do you think we


will be able to hold onto the engineers we have got from the EU?


The first thing I would like the government to do is to guarantee the


rights of people working here, particularly in academia and other


industries. That is something they could do. They could reduce the


uncertainty over night. I think it is dangerous that some messengers --


members of the government have been suggesting that using people's


status here in the UK could be used as a negotiating chip in the


negotiations. We could kill that uncertainty dead and maintain the


best talent we have here, yes. Thank you for your time. Interesting


developments. We have to quickly mention this story on Ladbrokes.


They will sell 359 shops. It says Ladbrokes and coral have agreed to


sell the shops to rival betting firms. Lots of information on that


on our website. Our top story, Chinese authorities


have detained at least 18 people employed by Australia's biggest


casino company under A quick look at how


markets are faring. Not particularly well. Down 0.5%. A


lot to do with the slightly strengthening pound and worries


about interest rates in the United States possibly going up. Various


interpretations of Janet Yelland was saying in the United States.


Are you a fan of Mad Men? Oh, I missed it. It is a very popular


programme. It is about the global world of tiding and the individuals


that work within it. We'll get the Inside Track with M


Saatchi. The Saatchi name is synonymous


with advertising thanks to two enterprising brothers,


Maurice and Charles Saatchi. M Saatchi were founded in 1995


and have become leaders They've got offices in 21


countries and clients The most recent full-year


revenues were $206 million, from clients including Ikea,


Lexus, Carlsberg and Etihad. Moray MacLennan is the Worldwide


Chief Executive of M Saatchi. Good to have you in the programme.


Good morning. With we need Ing to mention, lots of clients and years


and years of experience. A name most people heard of around the world.


One of the most high-profile campaigns you ran recently was the


Remain campaign for the Remain group which was cross-party, it was the


Remain which was several parties, wasn't it, what happened? What


happened was we and other people thought that normal rules would


apply and they are that if people are going to be less well off they


will vote for the other side. So we thought that the rational arguments


were the best to put across, it is the economy stupid. Something else


was going on and it is interesting because I think people weren't


really voting for the EU. It was a rail against the establishment and


that wasn't spotted and we know in marketing that's the first rule,


understand the target audience and get the right insight and develop


your message and we didn't. And it should have been a positive message


first and fore most rather than trying to brow beat people. A fear


message? A fear message and the establishment wants you to leave,


everyone from the Pope to Obama saying you will be less well off and


the electorate said, "No, you will be less well off." Apply that to


America now? There are parallels. Huge parallels, the people who feel


hard done by for the last 20 years, they are voting because of that. Not


because they think that Trump has got the answer to everything? Yes,


Hillary can go out with the rational messages, but we have seen that


campaign. It is one of those campaigns it is difficult to learn


too much from, it is so extraordinary and the Trump


supporters aren't actually, even watching the debates at all. So


again, it is as someone described, it is a scream in the dark a vote


for Trump. You are involved, aren't you, as an agency? We are involved


with Emily's List which promotes female politicians in the Democratic


Party and it is a negative campaign. It is saying, "Can you seriously


vote for this man?" The critical thing in that election is to get


people out because in Brexit what happened was, 80% of the people who


wanted to leave said they would vote and only 30% of those saying they


would vote... If you're using a negative campaign, that sounds like


you haven't learnt anything from the Brexit campaign, saying what are the


good things about Hillary. You can learn too much. I wouldn't conflate


the two things. In this instance, he is ten points behind now. So I think


he's doing a lot of his own negative publicity. Moving on from politics


and campaigns to the industry as a whole, I mean, it is shifting and


changing so-so, rapidly and mobile devices are pushing that. To what


extent are you able to be on top of all of the change? Largely in the


short-term I think when you look ten years hence, it is difficult with


virtual reality, where is that going to go? You need to be aware and not


get ahead with yourself. With internet advertising half of the


spend, mobile in the UK increased by over 50% in the last six months.


Extraordinary growth. And because it is precise right message, right


time, right person and measurable and all those things are important.


What about ad blockers? It is up to 20% in terms of people blocking


advertisements and I have said before it is a wake-up call and I


think it is the global organisations, global advertisers,


the coalition for better advertising they've formed in order to do basic


things better because you can talk to someone doesn't mean that you


should if you can interrupt their conversation online. So the usual


rules apply in that you need to be engaging and relevant and


entertaining and that stopped happening which is why it is being


blocked and it is good to go back to basics and remember those things.


With social media you're going for people, your existing customers,


aren't you? You're not getting out, the way you're doing it, you're


identifying who is buying your stuff and you're going back to them and


saying, "Why don't you buy a chocolate cake instead of Marmite?"


Right. And I think that's now been learnt by people, by certainly some


of the big advertisers, I saw Procter and Gamble last week coming


out in public saying they got it wrong through just going through


measurable precision marketing because what you need is fame and


relevance and to be talked about to emotionally engage, it is a


readjustment, well, you have seen the figures of the internet and


mobile, they are the dynamic media, but television is holding up well


and it is getting the balance right that marketers now need to do.


Moray MacLennan thank you very much. 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 all the day's breaking business news. We'll keep


you up-to-date with all the latest details with insight 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 at:


And on Twitter we are at: And you can find us on Facebook.


Business Live on TV and online whenever you need to know.


Let's see what other stories are being talked


Our business correspondent Dominic O'Connell is here.


We asked our viewers to get in touch about robots. We had a good guest on


the Today programme talking about hedge funds and why some big hedge


funds lost their way. Martin Taylor have shut their doors saying that


the trading environment has become too predictable. Predictable? Too


unpredictable. There are too many computer traders who don't have


natural human reaction. Human traders will be used to thinking if


Marks Spencer's gets to a certain level of earnings, it is time to


buy. The machines don't think like that. The machines do not have human


reactions. It makes to a more volatile and unpredictable. The


machines are starting to run the markets and the humans don't like it


much. To what ex-at any time is what happening? 40% of all share trading


is done by black box trading. The image of the 1980s stock exchange


floor with the men in red braces shouting at telephones, it is a


thing of the past. Does it change the direction of the market? Does it


change the day-to-day volatility? Only for a few minutes, as long as


you weren't on the wrong side. Five minutes later, we were back... If


you look at share price of a company like ex--on, it was 95, it was $85


when the oil price was double what it is, now it is $95 Y is that? It


is because machines trade up that stock. All these things are driving


against things what the humans think. The viewers are voting for


humans. James says, "Humans every time. Humans have feelings. The


greatest feeling to have on a trading floor is the gut instinct."


Can I take you back to the great Tulip Crash and the boom in the.com


boom which had nothing to do with machines, apart from people's


interest in machines! Humans are just as easy to, just as capable of


getting things wrong and badly wrong. The machines were doves. They


could move faster than the humans could. It is technology disrupting


markets, but volatility is the big thing. It makes things go faster and


further. Let's talk about other stories. Wall Street Jurpl how


Caterpillar's big bet backfired? Commodity prices were going to stay


forever because China was eating so much of the stuff. The Chief


Executive of Caterpillar bet big on this. Everybody knows the big mining


trucks, he built factories over China and bought a big competitor in


the States. The mining super cycle never came to pass. Prices fell and


the Caterpillar share prices have fallen. They came back up to 90.


Maybe there is a recovery in mining now. You need to be a human to work


that one out! A human to finish the show on time. Dominic, thank you


very much for coming in. We will see you tomorrow. Bye-bye.


Hello there. Good morning. We start the new week with a sunshine and


showers Monday. Quite a


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