:00:00. > :00:00.Those are the latest headlines from BBC World News. It is time for the
:00:00. > :00:17.latest financial news with World Business Report.
:00:18. > :00:19.Japan suffers its biggest economic contraction since the devastating
:00:20. > :00:26.March 2011 earthquake, as a sales tax hike takes a heavy toll on
:00:27. > :00:29.household spending. Investors are hoping for a big surge
:00:30. > :00:38.in profit for Asia's biggest technology company China's Tencent.
:00:39. > :00:51.Welcome to World Business Report. Also in the programme, we will talk
:00:52. > :00:55.about Cathay Pacific Airways. It is revealing more about its financial
:00:56. > :00:59.health and has been investing in a company in the United States. Let us
:01:00. > :01:02.focus on Japan's economy. Japan's economy has seen its biggest
:01:03. > :01:04.contraction since 2011 when it was devastated by an earthquake and
:01:05. > :01:08.tsunami. Japan's gross domestic product` or the total output of
:01:09. > :01:10.goods and services ` shrank by an annualised 6.8% in the second
:01:11. > :01:18.quarter` but that is smaller than economists expected. Many economists
:01:19. > :01:22.argue this is down to the hike in sales tax at the beginning of April,
:01:23. > :01:25.which held back consumer spending. Buyers of major purchases, such as
:01:26. > :01:31.cars, rushed to beat the tax jump, somewhat inflating spending in
:01:32. > :01:34.earlier months. The government, under Prime Minister Shinzo Abe and
:01:35. > :01:36.his Abenomics strategy, has been trying to revive the world's
:01:37. > :01:39.third`biggest economy by freeing up regulations and encouraging the yen
:01:40. > :01:56.to rise, a move that helps exporters. So is it working? We will
:01:57. > :02:01.go to Singapore. It is an interesting scenario. On the one
:02:02. > :02:04.hand, the economy shrunk by a big amount, but it is not as bad as
:02:05. > :02:12.economists were predicting. That is right. The sales tax is a
:02:13. > :02:18.double`edged sword. We may see household and corporate spending
:02:19. > :02:27.slumping after Tokyo raised taxes from five to 10%. This could
:02:28. > :02:35.increase by 2% in 2015. On the other hand, it is basically trying to
:02:36. > :02:41.solve the massive mountain of debt that Japan has. It is one of the
:02:42. > :02:45.highest in the world. When you speak with economists and analysts who say
:02:46. > :02:58.many Japanese consumers slowed down their purchases after a Kinglake in
:02:59. > :03:05.many `` accumulating many items. At this moment, when we analyse the
:03:06. > :03:13.situation, many are saying that Japan will not be going through a
:03:14. > :03:19.technical recession, two consecutive contractions. They say we will see a
:03:20. > :03:25.recovery in consumer and household spending this quarter. It would
:03:26. > :03:31.offset the contraction during the April`June period. We will keep our
:03:32. > :03:38.fingers crossed. That would explain why the markets are muted, they are
:03:39. > :03:47.not wobbled by these news. They were expecting a worse number. 1.9% on a
:03:48. > :03:51.quarterly basis. This was that are expected. Let us talk about the
:03:52. > :03:56.Cathay Pacific Airways. We are expecting some news to tell us how
:03:57. > :04:07.they are doing financially. They have been on a spending spree. What
:04:08. > :04:12.have they been doing? Before they report their half`year earnings
:04:13. > :04:27.results, if we take a look at this agreement with this company Fulcrum
:04:28. > :04:33.BioEnergy. , this agreement is about sustainable aviation fuel towards
:04:34. > :04:39.the next decade. Cathay Pacific Airways is Fulcrum BioEnergy's first
:04:40. > :04:43.Caroline investor. They have also negotiated a long`time supplier
:04:44. > :04:54.agreement with Fulcrum BioEnergy for an initial 375 million gallons. This
:04:55. > :04:59.represents approximately 2% of the airline's current annual fuel
:05:00. > :05:03.consumption. Fulcrum BioEnergy, which is in partnership with Cathay
:05:04. > :05:08.Pacific Airways, plans to construct its first commercial facility later
:05:09. > :05:18.this year and build large scale waste to fuel renewable plants. I
:05:19. > :05:24.merrily in North America. `` primarily. Let us stay in Asia and
:05:25. > :05:30.talk about its biggest technology company, Tencent. It is updating
:05:31. > :05:34.shareholders on its financial performance as well. Investors are
:05:35. > :05:37.expecting net profit to have surged by more than 50% over the spring
:05:38. > :05:40.months. The Chinese company got its start by providing an instant
:05:41. > :05:45.messaging service called QQ, before making its name in online games.
:05:46. > :05:50.Now, it is throwing its efforts behind mobile offerings, an area
:05:51. > :05:58.where there is keen competition. The BBC's Hong Kong correspondent
:05:59. > :06:04.Juliana Liu reports. The games arena. Let players have
:06:05. > :06:07.come to sharpen their skills in league of legends, and online game
:06:08. > :06:16.where teams battle to defeat their opponents. It is owned by the
:06:17. > :06:21.Chinese Internet giant Tencent. The biggest technology firm in Asia.
:06:22. > :06:26.Almost half of its business comes from computer games. While this is
:06:27. > :06:33.one of the most popular computer games on the planet, it costs
:06:34. > :06:36.absolutely nothing to play. Instead it makes money through online
:06:37. > :06:41.transactions. Players can spend their cash on purchasing new
:06:42. > :06:53.characters or outfits for those characters. This man explains its
:06:54. > :06:57.appeal. TRANSLATION: While you do not need a powerful computer to
:06:58. > :07:06.plate, there is high awareness of the game. It is regularly updating
:07:07. > :07:10.with new characters and situations. Computer games still have a massive
:07:11. > :07:15.fan base. Even the most hard`core players are beginning to spend more
:07:16. > :07:22.time their smartphones. Tencent launched a mobile games to its
:07:23. > :07:29.messaging applications. And that is not all. They have had to integrate
:07:30. > :07:34.things like mobile payments, online banking, games, even a blogging
:07:35. > :07:44.platforms to appeal to the Chinese consumer. They have had to offer
:07:45. > :07:55.many more channels. Tencent may be ahead, but it has tough competition.
:07:56. > :08:01.Alibaba has offered its own messaging app. Back at the arena,
:08:02. > :08:11.players are getting ready for the World Championships in South Korea.
:08:12. > :08:15.Tencent has profited from league of legends. But the future lies in
:08:16. > :08:17.profiting from smartphones. In other news. China's biggest
:08:18. > :08:22.e`commerce firm Alibaba has sold off its loan business ahead of a
:08:23. > :08:25.forthcoming share sale. In a recent filing with US regulators, Alibaba
:08:26. > :08:28.said it is selling off its small and medium enterprise loan business to
:08:29. > :08:41.Small and Micro Financial Services Company, in a cash deal for $518
:08:42. > :08:47.dollars. `` 500 $18 million. `` 500 $18 million. `` $518 million.
:08:48. > :08:52.In a few hours the Bank of England Governor Mark Carney sets out the
:08:53. > :08:55.latest forecast for growth and inflation. The city will be looking
:08:56. > :08:57.for hints on the timing of the first rise in interest rates.
:08:58. > :09:00.Australia's biggest bank, the Commonwealth, has posted a 13% jump
:09:01. > :09:04.in full`year net profit to a record $8.63 billion Australian ` which is
:09:05. > :09:06.$8 billion US. It has gains across each of its core divisions. The
:09:07. > :09:09.country's top home lender and biggest company by market
:09:10. > :09:15.capitalisation says net profit for the 12 months ending in June was
:09:16. > :09:20.above analyst expectations. A huge archive of hitherto
:09:21. > :09:29.let us look at the markets and see how the markets have dealt with
:09:30. > :09:35.Japan's contraction. To a degree it was expected that consumer spending
:09:36. > :09:43.would fall. You can see a dollar buying over 102 yen at the moment.
:09:44. > :09:48.Just a slight decline for the main markets. That is all for me from
:09:49. > :09:58.now. I will see you again when we look at the papers.
:09:59. > :10:02.A huge archive of unknown material relating to World War I tribunal 's
:10:03. > :10:05.has been discovered in Staffordshire. They were held after
:10:06. > :10:07.conscription was introduced in 1916 and when people asked not to be
:10:08. > :10:12.called up. Some were conscientious objectors, most had other reasons.
:10:13. > :10:16.At the end of the war the government ordered all but two areas' documents
:10:17. > :10:18.destroyed. This cache of 20,000 documents has laid undiscovered
:10:19. > :10:19.since 1920 and researchers have just