:00:00. > :00:00.be evacuated. Now want BBC News it is time for
:00:07. > :00:12.Talking Business. Once the darling of investors, the
:00:13. > :00:18.shine is coming off a emerging markets. Businesses are looking to
:00:19. > :00:26.developed economies. We hear from global CEOs from where best to put
:00:27. > :00:48.your money. In Singapore, I am Linda Yueh and we are Talking Business.
:00:49. > :00:54.It wasn't very long ago that emerging economies excited
:00:55. > :00:59.investors. Their growth rate outpaced that of developed
:01:00. > :01:03.economies. In fact, they still do. Developing countries are expected to
:01:04. > :01:10.grow at 5%. That is more than twice as fast as developed economies at
:01:11. > :01:20.2.2%. Asia is expected to grow even more quickly, at 6%. China has 7%,
:01:21. > :01:27.this is the US at 3%. So why are so investors leaving emerging markets?
:01:28. > :01:32.There is a downside risk to that growth. Some economies have grown
:01:33. > :01:37.accustomed to plentiful cash and have large external deficits. After
:01:38. > :01:42.all, the Fed has been injecting cash for five years stop but now, it is
:01:43. > :01:48.winding down. That is why some countries have raised rates to
:01:49. > :01:56.attract investors with higher returns. It increases gross, but if
:01:57. > :02:00.they do not last, they risk a crisis if the cash dries up.
:02:01. > :02:04.It is not all down to the Fed. Emerging economies have huge
:02:05. > :02:09.potential. Look at their large populations. But they are economic
:02:10. > :02:16.league and politically violent -- volatile. Only 17 countries have
:02:17. > :02:24.grown large enough to be rich. That is why it is even riskier to invest
:02:25. > :02:27.in them. With the recovery, investors are reconsidering where to
:02:28. > :02:33.invest their cash. Here, I will be debating the merits
:02:34. > :02:42.of putting your money in developed searches -- versus emerging markets.
:02:43. > :02:47.But first, I sat down with Dennis Nally who told me that CEOs are more
:02:48. > :02:52.confident about investing this year than the five years of the global
:02:53. > :02:57.crisis. Investment is up this year. A couple
:02:58. > :03:05.of points about that. When we ask CEOs about the local economy for
:03:06. > :03:09.2014, a high percentage see that the economy will continue to improve,
:03:10. > :03:13.which is a major change from when we were last year. A big change in
:03:14. > :03:18.thinking about global economic growth, which is really good news.
:03:19. > :03:25.Then we ask them how they felt about the prospects of their own company
:03:26. > :03:29.and their growth for 2014. Again, confidence levels are up. Some
:03:30. > :03:32.encouraging news, not to say that there are not issues and challenges,
:03:33. > :03:38.but people are feeling a lot better than where they were 12 months ago.
:03:39. > :03:44.Other countries or regions that CEOs are interested in?
:03:45. > :03:51.It is interesting. A year ago, it was about developing markets, people
:03:52. > :03:55.feeling good about China. When you talk about the developed markets,
:03:56. > :04:00.things were not looking as good. Interestingly this year, the exact
:04:01. > :04:07.opposite. People talking about opportunities in Germany, the UK,
:04:08. > :04:13.the US for investment. Things with China are still very good, not
:04:14. > :04:16.surprising. But in other areas, confidence levels are down. In
:04:17. > :04:23.Brazil, in Russia, in India, confidence levels are strong, but
:04:24. > :04:26.not as high as they were last year, which I think points to how
:04:27. > :04:30.interconnected the global economy really is at this point.
:04:31. > :04:34.What a chief executive is most worried about?
:04:35. > :04:39.Interestingly, it has all been about the economy. Is the recovery is
:04:40. > :04:44.going to stay in the right direction? Where do we stand with
:04:45. > :04:47.interest? This year, the number one issue is regulation. This has always
:04:48. > :04:52.been one of the topics that this CEOs, but this is the first time
:04:53. > :04:59.that it has been the number one issue. I think what CEOs are saying,
:05:00. > :05:06.post-financial crisis, there are new rules and regulations to deal with
:05:07. > :05:09.the aftermath of the financial crisis. Increasing complexity, more
:05:10. > :05:15.difficult to do business. That's number one. The second issue which
:05:16. > :05:22.is interesting is fiscal deficit. Many CEOs are concerned about the
:05:23. > :05:26.magnitude of the fiscal deficit. 92% of the CEOs said that this was the
:05:27. > :05:32.issue there were most concerned about. The only way that you can
:05:33. > :05:38.solve these deficit issues is to cut spending or raise taxes. Without
:05:39. > :05:41.that clarity, there is a cloud that overhangs the confidence. So
:05:42. > :05:51.interesting that the top two issues are those for 2014.
:05:52. > :05:54.That was Dennis Nally. With me to discuss the merits of the emerging
:05:55. > :06:01.and advanced Commies are Anthony Bartolo, senior vice president of
:06:02. > :06:09.Tata Communications, David Mann, regional head of research for Asia
:06:10. > :06:16.at the Standard Chartered bank, and the manager of extension strategy. I
:06:17. > :06:23.will start with you David. -- Ascension tragedy.
:06:24. > :06:31.I think you have to take a long-term perspective and BS -- be aware that
:06:32. > :06:39.people have been in turbulence for many years. Markets have been beaten
:06:40. > :06:43.up. I would say that emerging markets rather than developed, but
:06:44. > :06:49.having a diverse portfolio is important.
:06:50. > :06:52.I think that we have seen growth in all the major economies, from the
:06:53. > :06:58.US, China, Japan, Germany and the eurozone and stop I think that this
:06:59. > :07:03.is about those companies that are working across the globe that are
:07:04. > :07:09.based in the US and Europe and operating in emerging markets and
:07:10. > :07:16.those who are in developed markets. So it is about an and model.
:07:17. > :07:23.Where do you stand? I think that the emerging economies
:07:24. > :07:29.are there to stay. They are vibrant economies. But in Europe, it has
:07:30. > :07:36.bottomed out. There has been a reluctance recovery. They are very
:07:37. > :07:40.strong economies. They are old favourites. I can imagine that they
:07:41. > :07:46.will be tough economies to ignore going forward.
:07:47. > :07:50.Let me start with you with emerging markets. You said that they have
:07:51. > :07:54.good prospects in the longer term. But what about the shorter term? Is
:07:55. > :08:03.that where you are going to put your grandmother's pension?
:08:04. > :08:09.Letters look at the US, in 2007. We have been in perma-crisis mode and
:08:10. > :08:14.into what was going on in Europe, which you can treat like an emerging
:08:15. > :08:19.economy. I think that Greece is now an emerging economy. You look at the
:08:20. > :08:23.sort of comments coming from the private equity, they are seeing
:08:24. > :08:27.distressed opportunities. It is not mean that there are not
:08:28. > :08:32.opportunities. The US is probably the best of any economy in the world
:08:33. > :08:36.of helping new industries go through that creative destruction process
:08:37. > :08:41.and come out of it stronger. And the discrimination that you have to have
:08:42. > :08:45.between emerging markets. I would not want to generalise. I would want
:08:46. > :08:47.to go into the markets were you see the long-term growth prospects still
:08:48. > :08:50.being strong and I would even include China in this, seeing that
:08:51. > :08:56.people seem to be worried that there is not enough transparent in the
:08:57. > :09:00.process of dealing with a bad alone situation there. But when people
:09:01. > :09:04.mention shadow banking, they are wrong to think that it is the same
:09:05. > :09:08.as in the West. The lack of transparency worries people right
:09:09. > :09:12.now. In the long-term, still growing at 7% means that you will double in
:09:13. > :09:17.size every ten years. But the indiscriminate money, you will need
:09:18. > :09:22.to see much more process in policymakers to encourage money to
:09:23. > :09:27.come in and those economies that was suffering from being a victim of the
:09:28. > :09:31.success of the commodities are still suffering to some degree. They need
:09:32. > :09:37.to find ways of moving up the chain. That money that is coming in is
:09:38. > :09:41.stopping and it is leaving a lot of these countries?
:09:42. > :09:48.Yes, that is true in some of the economies. There are serial
:09:49. > :09:52.devaluations in Argentina. It is amazing that people think that means
:09:53. > :09:56.all emerging markets need to be tarnished with the same brush. I
:09:57. > :09:59.would say that there has been a blurring of the lines between the
:10:00. > :10:04.two economies, and you need to distinguish between all of them.
:10:05. > :10:08.Prior to the crisis in 2007, you would have said that developed
:10:09. > :10:14.markets were crisis free, they had low levels of debt and there were
:10:15. > :10:21.less questions about the quality of policy-making. You would have said
:10:22. > :10:24.the opposite of the others. I think the US is a born-again
:10:25. > :10:32.emerging country. I think if you look at the things going on in the
:10:33. > :10:39.last five years, you have cleaner balance sheet, financial prudence,
:10:40. > :10:44.cheaper supply. I think that CEOs and companies will be forced into
:10:45. > :10:46.deciding what to do with the balance sheets. I think they know that on
:10:47. > :10:54.the horizon the interest rate will not be as low as they are. In the
:10:55. > :10:57.next couple of years, there will be years of acquisitions and
:10:58. > :11:01.consolidations. I figured will be a fantastic time.
:11:02. > :11:06.On the issue of crisis in emerging economy, is that one of the reasons
:11:07. > :11:11.why emerging markets are looking better for businesses? Or do you
:11:12. > :11:15.think that other reasons behind the renewed interest in developed
:11:16. > :11:18.markets? I think positive sentiment in the
:11:19. > :11:25.developed and emerging markets is a great environment to be operating
:11:26. > :11:30.in. It gives companies the chance to drive back to top line growth. I
:11:31. > :11:34.think whether you are driving that topline growth or the emerging
:11:35. > :11:39.market is actually irrelevant. It is more about the markets and specific
:11:40. > :11:45.segments that you are targeting. I think there are three things that
:11:46. > :11:49.industries will really focus on. I think there will focus on
:11:50. > :11:53.innovation. One of the top agenda items will be innovation. New topics
:11:54. > :11:58.and services. The clients are looking at these around the world to
:11:59. > :12:04.drive in crime until revenue. The second thing will be around digital.
:12:05. > :12:10.It will be about using digital to get into understanding markets. And
:12:11. > :12:18.the third area will be around talent and talent as we move back to
:12:19. > :12:22.growth, talent will become the hot topic, the war for talent will be
:12:23. > :12:31.back. And companies that succeed with these three areas will be
:12:32. > :12:36.successful. I think it is exciting. If these companies are looking at a
:12:37. > :12:41.country that could suffer a run in terms of currency, what kind of
:12:42. > :12:49.strategy would you need to have two cup with that possibility. -- to
:12:50. > :12:55.cope with. The answer is the first. Many large companies in the world
:12:56. > :13:04.have put Prince across multiple countries and markets. That creates
:13:05. > :13:07.a stabilising effect. That means that your money and investments are
:13:08. > :13:13.not at risk in one area because organisations have learnt to be much
:13:14. > :13:17.more agile and to be able to sense and respond and react quickly to
:13:18. > :13:24.shocks. Whether financial or geopolitical. This point about
:13:25. > :13:34.crisis, it probably is not the right word to be using. There is a feeling
:13:35. > :13:39.that we are overdue a crisis in the emerging markets because somehow it
:13:40. > :13:44.is their turn. But looking at vulnerability measures, there is
:13:45. > :13:52.nothing compared to what there was previously especially in Asia. And
:13:53. > :13:59.if you think about what happened in this serious crisis time, this is
:14:00. > :14:04.night and day. The main difference is that currencies are allowed to
:14:05. > :14:15.adjust. It is a pressure valve. And it is healthy to see inflows as well
:14:16. > :14:19.as outflows. That was starting to creep in in many markets and there
:14:20. > :14:26.was a knock on effect from policies in the West. We need to get back to
:14:27. > :14:30.the positive sentiment that is out there. Risk is just part of
:14:31. > :14:35.business. We have got much more comfortable in operating in
:14:36. > :14:42.permanent volatility. Risk is just part of business. The best companies
:14:43. > :14:49.manage that risk. So I think it is getting back to positive sentiments.
:14:50. > :14:56.I often substitute the word ambiguity for risk. Companies manage
:14:57. > :15:01.ambiguity. When you participate in particular segments or countries
:15:02. > :15:07.there is a level of ambiguity that occurs. Your management capacity is
:15:08. > :15:13.to deal with that. The thing to watch for is if we are going to be
:15:14. > :15:21.pulled close to the cliff, could be from political disruption in
:15:22. > :15:29.Europe? It is not a risk for now or the next six months, but for the
:15:30. > :15:36.next ten years. Get used to the risk and watch the cliff! Thank you very
:15:37. > :15:43.much. I caught up with which lesser of the Boston consulting group to
:15:44. > :15:47.find out how he assesses the prospect of market recovery. We
:15:48. > :15:52.expect and have had healthy growth in the developed markets. But I
:15:53. > :15:59.think emerging markets will be higher still. The global
:16:00. > :16:08.challenges, emerging markets are looking to globalise. Plus companies
:16:09. > :16:20.see these markets as key to their continued success. So I expect to
:16:21. > :16:25.see strong growth in both markets. Are you to pessimistic about
:16:26. > :16:34.emerging economies? I think they tend to react to short-term
:16:35. > :16:43.challenges. China has undergone very strong reform. But the short-term to
:16:44. > :16:49.get their is tricky. Will this year be the best for China? Probably not.
:16:50. > :16:54.But it will position to be a strong economy in the years ahead. For the
:16:55. > :16:59.rest of the emerging markets there are many positive things. South East
:17:00. > :17:05.Asia continues to be strong. Latin America. In a number of places how
:17:06. > :17:11.they embrace the key agenda on how to spur investment and make
:17:12. > :17:17.companies want to come and invest is key. With elections coming up in
:17:18. > :17:22.many countries, how those elections turnout and what the agenda will be
:17:23. > :17:30.of the new leadership will be important. But overall we are more
:17:31. > :17:37.optimistic than pessimistic. Our the American companies as global as
:17:38. > :17:43.before? I think they are trying very hard to be global. In particular
:17:44. > :17:48.with an emerging market focus. Many of them see Europe with some
:17:49. > :17:53.scepticism. But when they looked towards Asia or the South they see
:17:54. > :17:59.enormous potential for growth in the years ahead. And they are working
:18:00. > :18:06.really hard and increasingly recognised the need to establish a
:18:07. > :18:15.business model for those markets. That will be a major focus for
:18:16. > :18:23.investment in the years ahead. When an economy grows, people feel better
:18:24. > :18:28.and apparently, drink more. I spoke to the CEO of one of the world
:18:29. > :18:36.doesn't exist or worse, Alan Clark of SABMiller. He explained why
:18:37. > :18:42.Europe is a tough market. If we look at the world was not geographies and
:18:43. > :18:49.average them out, for us Europe has been the most difficult environment.
:18:50. > :18:54.You start with relatively high levels of consumption so the
:18:55. > :19:02.economic downturn, people tend to save their money. There is more
:19:03. > :19:10.retail consolidation. So competition in retail channel and is -- retail
:19:11. > :19:17.channels was prevalent. So you have declining volumes and to add to that
:19:18. > :19:25.the inability to change prices. And the same for the UK. In our business
:19:26. > :19:35.we operate a small business in the UK. We are a niche business. The
:19:36. > :19:42.brand is Pirelli. We have seen some growth in that sector. What is the
:19:43. > :19:50.relationship between the consumption of year and the economy? I think the
:19:51. > :20:01.reality is that beer is quite price elastic. Around 70% of our business
:20:02. > :20:06.is in emerging markets. But also in developed markets consumers can be
:20:07. > :20:12.affected by economic downturns. Today in the US there is pressure on
:20:13. > :20:18.the core beer market because of levels of unemployment and economic
:20:19. > :20:24.recession. A lot of businesses find it difficult to operate in Africa
:20:25. > :20:30.because institutions are not well developed. What are the strategies
:20:31. > :20:34.for growth in Africa? There are multiple. One of the most effective
:20:35. > :20:41.strategies is the fact that we have operated there for a long time. Our
:20:42. > :20:47.company was founded in 1895 in South Africa. And we have operated in
:20:48. > :20:54.southern Africa for many decades. And we have expanded into East
:20:55. > :21:00.Africa and west Africa and beyond. So familiarity and the fact that our
:21:01. > :21:05.managing teams are used to those environments is significant. And
:21:06. > :21:11.second I think is the way we work with local governments. We are
:21:12. > :21:13.strongly entrenched in local communities and have strong
:21:14. > :21:20.relationships built up with local governments. In many countries we
:21:21. > :21:25.are the largest business and we are important within these economies. So
:21:26. > :21:30.we do get support from governments. And that does ease the burden of
:21:31. > :21:35.some of the infrastructure problems we have. What is the most exciting
:21:36. > :21:41.new market for beer? It is difficult. For us it would be
:21:42. > :21:49.Nigeria which is new for us. Over the medium term I think China,
:21:50. > :21:58.clearly. It is the largest beer market by volume of Eddie. --
:21:59. > :22:05.already. It has rapid economic growth and growth in consumerism. A
:22:06. > :22:10.massive growth in the middle-class. It is a very exciting place to be.
:22:11. > :22:19.We have been on the ground in China with joint venture partners for 20
:22:20. > :22:28.years. But there is a significant longer term growth ahead. Nigeria is
:22:29. > :22:47.exciting for us. But it absolutely must be China. Alan Clark. US is
:22:48. > :22:57.still where consumers spend the most dollars. For people looking for
:22:58. > :23:06.love, 54% of Americans celebrate Valentine's day this year. But the
:23:07. > :23:12.average spend is slightly higher at $133 per person. Still making for an
:23:13. > :23:18.impressive total. Men spent just over $100 and give. Twice as high as
:23:19. > :23:24.what women spend on their special someone. No comment from the! The
:23:25. > :23:29.American consumer still concentrate the biggest market in the world. The
:23:30. > :23:35.US and other developed markets are recovering. The contrast the
:23:36. > :23:39.structural problems of some emerging economies are becoming apparent as
:23:40. > :23:44.the era of cheap money comes to an end. But they have a lot going for
:23:45. > :23:50.them in the longer term. That is all we have time for this week. Do check
:23:51. > :24:03.out the website and Twitter. And join us next week for more.
:24:04. > :24:05.Good evening. It is not a miracle I