19/04/2016 World Business Report


19/04/2016

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The bidders are gathering, but who will walk away with the price?

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The bidders are gathering, but who will walk away with the prize?

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And America's big investment banks are revealing they're experiencing

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a tough time so what will Goldman Sachs say later, we get

:00:26.:00:29.

Global miner Rio Tinto cuts its iron ore

:00:30.:00:45.

But it has done rather well this year.

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Yahoo reports its latest results but investors aren't exactly

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What they want to know is what's happening to the company,

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whether it'll sell its core business and to whom.

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Despite its huge losses, the firm remains

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an attractive target thanks to its stake in China's e-commerce giant

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I've used Yahoo since 2001, it's fine, I've had no problems with it.

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I think I just use it because it's easier and familiar. I would be sad

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if Yahoo wasn't around, it's like an old friend, you know? But the

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company is struggling financially. Take a look at its share price,

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investors really haven't been happy with the company performance until

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in February Yahoo announced it is open to selling its core business.

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Since then its share price has risen by some 30%. Yahoo management is

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feeling pressure from their shareholders to pursue a possible

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course of sale. This current management team has had three years

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, spent billions of dollars in acquisitions and revenue will

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decline by double digits in this quarter. So who is interested in

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buying Yahoo? There are reportedly dozens of companies, including US

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telecom giant horizon. Its bigger rival Google. And the owner of the

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British newspaper Daily Mail. A big part of what makes Yahoo appealing

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to buyers is its stake in China's e-commerce giant Alibaba. Its stake

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is worth $30 billion, much more than Yahoo's core business. But the

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popularity of its search engine is also attractive to those who think

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they can do a better job of making money from the Internet business.

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We will keep you up to date today as it progresses with Yahoo's results

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and any confirmation of bits coming in, who's interested etc.

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Today we'll hear more about the health

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of the US banking sector as another of the giants Goldman Sachs

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tells investors how the first few months of the year have been.

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Yesterday Morgan Stanley revealed its profits more than halved

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in the first three months of the year as a result of what it called

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The first quarter is usually the busiest time of the year

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for Wall Street, as money managers return from holidays eager to put

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But at the start of this year the crazy volatility

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experienced on global markets kept them on the sidelines.

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Plus low commodity prices, notably oil, has also hit

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With me is Chris Wheeler, banks analyst at Atlantic Equities.

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He can give us a perspective on this. Lovely to see you. Morning.

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Goldman, what's it going to say? Earnings down about 60%,

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year-on-year, not too dissimilar to Morgan Stanley -- 16%. Issues of

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equity and debt, normally a big part of the early part of the year, hit

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by the volatility. They have big private equity stakes

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which they have to mark down because a lot were based in Asia, and Asian

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markets were particularly weak. All in all a very tough quarter.

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Interestingly all the banks, Goldman is one of the last big ones to

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report, they've all come out with similar stories but they managed

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expectations so well that they beat expectations with shares going up.

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Explain that for us, because the results aren't good at all? The

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banks have been talking this down aggressively, but to be fair they

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have to stop talking to us in early March because they go into a closed

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period. Having said that, March was a better month. January and February

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were very volatile. But they have a tactic. If you look at the overall

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performance of the bank stocks in the first quarter, most are still

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down substantially. What now? Because they've made a lot less at

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their busiest time of year, are they going to have to cut back and lay

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people off those yellow looking at all the large banks, they have big

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retail banking asset management businesses. They are pumping along

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well. For the investment banking arms of those businesses, like

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Morgan Stanley and Goldman Sachs, who are focused in that area, it is

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tough because they won't make up the normal first quarter if you want

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surge of activity unless we have something extraordinary happened in

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the second half of the year. It's not just the US banks, it's all of

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them. We had an announcement from new mirror closing down its... Some

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drastic action being taken. One of my clients asked if we would see

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more consolidation in the investment banking space, but people are

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actually withdrawing. Since the crisis the amount of capital you now

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need quite rightly has been pushed up, making a lot of areas of the

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business a lot less profitable than before. People are taking some

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pretty tough decisions. We appreciate your time, a busy time of

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year for you so we will let you go. The world's second largest iron ore

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producer, Rio Tinto, has cut its But it has seen an 11% rise

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in shipments so far this year. So how is Rio doing amidst

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the commodity slump? Rico Hizon is in our

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Asia Business Hub in Singapore. Lovely to see you, Rico. Tell us

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more about Rio's situation at the moment. If you look at the situation

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right now in the iron ore business, it goes to show the big players such

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as Rio Tinto and BHP Billiton are indeed very resilient given the

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challenges of the slowdown in the Chinese economy. The world's number

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two iron or producer confirming it was on track for a record 315

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million tons in 2016 as it runs its mines at full tilt despite this

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global supply glut due to slower Chinese industrial growth. The

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production increases show the outgoing Chief Executive, they are

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determined to deny calls for supply restraints until markets are in

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better balance. He defended running at maximum speed as the steel mills

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demand slowed, saying contain one would fill the void for

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competitors. They are continuing their goal despite the oversupply

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issue. Before you go, what did the central bank decide to do in South

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Korea? They did nothing. They decided to keep interest rates

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untouched at 1.5%. The central bank governor stressed the current state

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of the current rate levels support economic growth, but a lower growth

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forecast for this year kept expectations of a rate cut alive and

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the decision to leave rates on hold follows seven successive cuts. You

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had the fallout from a parliamentary election earlier this month and the

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effects of measures in other economies are factors towards this

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decision to keep rates on hold. Thank you, Rico, good to see you.

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Argentina's return to the... with a sale of sovereign bonds

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after 15 years of exile The country is raising up to 15

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billion dollars and demand for the bond issue was strong and attracted

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orders worth $65 billion. Some of the money will go to

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repaying bondholders who for years opposed the terms

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of Argentina's debt restructuring Netflix shares fell more than 9% in

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after-hours trading on Wall Street after the video streaming company

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predicted slower subscriber growth. The company said it expected to add

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about 500,000 new customers in the US and 2 million

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internationally by the end of June. Analysts were expecting

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the company to add more. At the start of the year Netflix

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started a global push A quick look at the markets, look at

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Japan, up over 3%, yesterday it was down over 3%, it's becoming a daily

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event. The price of oil is down a bit but higher than it was this time

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yesterday. Loss of earnings to look out for today, we've mention Goldman

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Sachs and Yahoo, we've also got Johnson and Johnson, so a really

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busy time of year. Looking at the US, a really good end to the day on

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Wall Street. We will discuss some business news again when we look at

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the papers in a few minutes. See you then.

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