09/05/2013 World Business Report

Thursday. Those are the latest headlines from

BBC News. Now for the latest financial news,

World Business Report. Wall Street marches on to new

record highs but are stock markets living on borrowed time?

After thousands of job cuts and billions of dollars of losses, Sony

is poised to return to profit. Welcome to World Business Report.

Also in the programme: South Korea's central bank announces a

surprise cut in interest rates. We will have the latest on that.

Wall Street's record-breaking run continues but are we heading for a

fall? The S&P 500 index closed last night and yet another all-time high

for the fifth day in a row. A new record high for the DOW Jones as

well. Let's have a look at the closing numbers so you can see

where they ended the day. The broader market, the DOW Jones and

the S&P 500. The Nikkei in Japan is still hovering around a five-year

hire and the DAX is remaining high. Where is the optimism coming from?

Not from the stage of the global economy because growth this week to

say the least in Japan and the USA and it is virtually non-existent in

Europe. In previous slumps, in 1974,

economic slowdown prompted investors to sell shares. Prices

began to rise as the world economy revived. In 2013 it is not so. The

DOW Industrial Average has risen nearly 15% since the start of the

year. Japan's Nikkei has risen by around 37% up and the FTSE is up as

well. The US economy is estimated to be growing at 2.5% a year.

Exuberance could not be the driving factor so what is? If we are

entering in a period where we expect to anaemic growth for five-

ten years and we expect interest rates to remain low for that period,

we expect the bond markets to have healed satire very Laura. The

earnings yield on equities becomes more and more attractive. Some

stockbrokers think share price indexes in London and New York

could rise by a further 20-30% over the next two months. But what are

the risks it will collapse again? The biggest risk will be

disappointment in US economic recovery more than an expected

slowdown in Chinese goas, something going wrong in the eurozone Ward

general investor sentiment starting to wonder if we have come too far

too fast in the first few months of this year. One thing that could

really harm the share prices is if leading economies like America

start to motor again. Governments will start to increase interest

rates and that would make other investments look much more

attractive than shares. That is a story we will be

discussing more women look at the papers. The record highs do feature

in the newspapers around the world. We have seen a surprise cut in

interest rates in South Korea. We joined Rico Hizon. Not many were

predicting South Korea would cut rates but they did.

That is right. It caught the markets and investors off guard.

That is why we are seeing the bond and shock -- stock markets... The

first reduction in seven months. The weak industrial growth and the

weaker yen include ingredients for this. It will jump-start the

economy and ease the pressure on the currency. Economists had

different views on the rate cut. One has said the Bank of Korea

admits that the economy is as good as they think. The central bank's

decision comes after a central banks in Europe and Australia Low

Wood rates. This could be the last rate reduction from the Korean

central bank until the end of the year.

It was once the biggest name in the world of consumer electronics but

Sony has recently been elbowed out by the likes of Samsung and Apple.

And now the fall in Japanese giant could confirm in a few hours its

confirm to profit last year. The good news is it looks like Sony

has finally returned to profit. Later today it is expected to

report around a 400 million US dollar operating profit for 2012.

That contrasts with the operating loss of more than 2.5 billion US

dollars in 2011. Since then Sony has gone through a painful

restructuring and has lost 10,000 jobs, it has cut TV 10 production

in order to get things manageable. But the bad news is it has not

worked. The consumer electronics division is not making money and it

is now selling its corporate headquarters, life insurance.

Without the sale of its US Office it would not be reporting a profit.

Sony does have some much better electronic products on the market.

It has a tablet and smartphone line that is considered to be better

than its predecessors. The PlayStation for is due to come out

later this year. But the simple truth is that when it comes to a

head-to-head competition with the likes of Apple and Samsung, Sony is

still not making much headway. In its home market in Japan last year

the iPhone wasn't the single biggest selling smartphone.

We will get an update later when they do report their results. We

will tell you if the profit came through.

In South Africa there are more than 1000 top politicians and business

leaders gathered in Cape Town for the World Economic Forum in Africa.

One of them is a Nigerian energy entrepreneur who has been telling

the BBC about the importance of the private sector in tackling

corruption. One of the key to Sieders is privatisation. -- key

drivers. The power sector reform is coming in, the government is

privatising the power or -- power plants. Moving on to the

infrastructure with the deficits of building roads, water systems. The

minute this infrastructure is put in place and privatisation takes

hold you will see an effective position where the private sector

is driving this for profitability, not take charity. That is the

differential we are seeing across the Continent. You did not answer

the question I asked earlier about corruption and governance impeding

investment in Nigeria. What is being done to address this? I do

not think corruption will be wiped away overnight but I can assure you

that it is getting much better. This generation of Africans, my

generation, are doing things differently. We are doing things

properly. The more of us that have driving the economies of this

continent, the better business environment it will be.

We will have more fun that forum as the week progresses.

Slovenia's parliament is it due to pass an economic reform programme

today, aimed at avoiding a bail out. The plan will be sent to Brussels

later. The government is battling to stay solvent and rescue state

owned banks that were sinking. The Bank of England wraps up its latest