22/12/2015 World Business Report


22/12/2015

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Now for the latest financial news with

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As the price of oil hits a truly remarkable 11-year low, we

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look at what's driving the drop and if it still has further to fall?

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Finally punished - companies are forced to face

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the music after causing devastating fires in Indonesia.

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Also in the programme: Has London's super-prime property market finally

:00:32.:00:46.

Oil prices have fallen to levels not seen since 2004,

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surpassing the lows seen during the global financial crisis in 2008.

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A worldwide oversupply has dramatically driven

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down the price of oil, with suppliers failing to reach

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Just 18 months ago, brent crude was trading at

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Since then the price has tanked, with it briefly hitting $36.05

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a barrel in the last 24 hours - before recovering slightly.

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In the US a gallon of gas now costs less than 2 dollars for the first

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time since March 2009 and that story is mirrored around the world.

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For oil producing nations the picture isn't so rosie though.

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The commodity-related currencies of Russia, Mexico and Norway all

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fell against the dollar, while Venezuela looks like it could

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be on the brink of financial ruin unless the price recovers soon.

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With me now is Neil Passmore, the CEO of Hannam Partners,

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a financial advisory firm that focuses on natural resources.

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Thank you for coming in. It has been a theme that the price of oil seems

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thoughts on the last 24 hours? You thoughts on the last 24 hours? You

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are right, it has been a tough year and there is no rebate going into

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the back end of the year. As you say it has been a year of uncoordinated

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action on the supply side. Huge global supply which has not suffered

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setbacks that many expected in the market. And the demand side has been

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weak. A lot of the consumers of the XS marginal barrel of oil 1.5 years

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ago are struggling domestically using that little bit less than they

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were -- excess. Into the New Year, those fundamentals don't look like

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changing. Sadly that is exactly right. If we stick with the demand

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side, very hard to see in developed economies which for the main part

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enjoy a sort of lulling gas consumption and the need for powered

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heating, it is the warm northern hemisphere, we won't see a spike in

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demand. Similar, the emerging economies, if we take the Goldman

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Sachs BRICS, China, Rozelle, Russia, those countries are suffering real

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domestic issues at the moment, so it is hard to see their growing demand

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-- Brazil. Supply, likewise. I think the face of so much political risk

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in the world is nonetheless proven a huge surprise to most analysts and

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commentators, just how resilient supply from places like Nigeria,

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Iraq Antiua has remained. Talking of next year's supplied, do you think

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some of those companies who have been heavily supported this year,

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those who get oil from fracking, which is a

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will manage to get through again next year, support will be there

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despite the fact they went make any money? There is a wall of capital

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weighting in the US to invest it all but a lot of that is quite

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opportunistic in some senses, vulture-like capital. We will see a

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hard time for US producers this coming year, in particular the first

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half of this year when we saw $100 million float into Europe and the UK

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gas companies. -- flow. 25 billion went into US companies as big equity

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investors sought to prop them up. I think a lot of them won't find it as

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easy to be recapitalised. A lot of those with a boring base that will

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be recalibrated borrowing get. -- borrowing base.

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Thank you. Let's look at another market that many like to try to

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predict in terms of where it is going.

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When it comes to London property prices we're often reporting

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about how they're hitting yet another record high as demand can't

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But there is one part of the sector which seems to be bucking the trend.

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A slowdown seems to be taking place at the very top end

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Ramzan Karmali has been finding out why.

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Three years London has been a city that has attracted some of the

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richest people when it comes to buying property -- for years.

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Foreign demand for high end central London properties have seen many

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homes sell for astronomical amounts. This is Victoria Road in Kensington

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and Chelsea. This month it was the most expensive street in Britain.

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Around three years ago this house sold for over $13 million. But there

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are signs of cooling in this luxury end of the market. This year the

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number of sales in the high-end property has fallen 31% can -- and

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had to last year. In recent times luxury homes have been bought by

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wealthy buyers from emerging economies. Chinese and Russians in

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particular. Both are pulling out of the London market as their economy

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slows down. This and the strengthening pound seems to be

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dampening international demand. Should sellers of high end

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properties be worried? Central London is one of the main capital

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cities of the world and I don't think that will change overnight.

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Nothing will suggest it will change. A government has said they want the

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marker to cool a little. They are focusing on the top end. Do I think

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we will have some crash in central London's market? No. Investing class

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wants to buy in London. Rising prices is outpacing the rest of the

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country and it means for many ordinary Londoners that getting on

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the housing ladder is an impossible dream. Is a slowdown in the luxury

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and a bad thing? London attracts a level of wealth from around the

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world, which contributes positive jobs growth and positive investment

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activity right across the city. A lack of activity of course is on

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helpful for Londoners. It might be the house hotspot, but 2016 could

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see demand for top London properties continue cooling.

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Indonesia's forest fires and the subsequent haze across parts of

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south-east asia is estimated to have cost $15.7 billion.

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The fires are a result of annual slash-and-burn practices

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by companies clearing land for palm oil and pulp wood plantations.

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Until now no-one had been held responsible but the Indonesian

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government has now confirmed that 56 companies will be punished.

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Sharanjit Leyl joins me now from Singapore with the details.

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We all remember seeing the effects behind you at the time. That is

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right, Sally. In fact, just a a few months ago, September -November,

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have been blanketed in that Hayes. But of course it is much cleaner and

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now. It has put out much of the fire -- haze. It was horrific, thick haze

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blanketing this part of the world. It was caused by forest fires in

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Indonesia, started deliberately. Paper companies were widely blamed.

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As you say until now no one had been held to account. Essentially the

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Indonesian government said these companies will have to pay the

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price. For the first time the government is revoking and freezing

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the licences of these companies found responsible. We know the

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pollution caused by the fires had been carrying on for years. It was

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very bad this year. The government publicly did not

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firms but what they have done is released the initials and general

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location of 30 of the 56 companies who are being punished. Only one of

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the companies was confirmed to be foreign-owned. Another is a supplier

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to one of the biggest paper and pulp producers, Asia pulp and paper. We

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know that it has had a devastating impact not just on wildlife and the

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health impact at even economic impact, the World Bank said recently

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Indonesia's forest fires and Hayes has cost the country more than twice

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the amount on reconstruction after the 2004 tsunami -- haze. The bank

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says the cost amounted to nearly 2% of Indonesia's GDP. And that the

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regional and global cost would be much higher. OK, thank you.

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us from Singapore. That is all from me for now. Stay with us for a look

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at the papers in a minute. See you then.

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Schools in England will be expected to restrict and monitor pupils'

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internet access to reduce the risk of radicalisation.

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