26/01/2017 World Business Report


26/01/2017

The latest business news with informed analysis from the world's financial centres.


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Wall Street puts its doubts aside as the Dow Jones

:00:13.:00:21.

Can Brexit Britain and Trump's US beat the likes of Ireland

:00:22.:00:30.

at their own game and lure back the multinationals

:00:31.:00:32.

We will be checking how markets are doing in Asia in just a moment.

:00:33.:00:57.

We start in the US where President Trump has been

:00:58.:01:00.

provoking more controversy over his plans to wall off Mexico.

:01:01.:01:03.

Meanwhile, traders at the New York Stock Exchange

:01:04.:01:05.

Here's what they have been celebrating:

:01:06.:01:10.

the Dow Jones Industrial Average of top US shares ended here,

:01:11.:01:13.

finally closing above 20,000 points for the first time

:01:14.:01:15.

It's a huge psychological milestone for traders,

:01:16.:01:21.

the Dow has now risen some 9.5% since the election in November,

:01:22.:01:24.

one of its biggest rallies on record.

:01:25.:01:29.

It got within one point of 20,000 back on January sixth

:01:30.:01:32.

before nerves caused the rally to fizzle out.

:01:33.:01:36.

But since President Trump's inauguration, the confidence

:01:37.:01:39.

Some investors are predicting it could rise a lot further

:01:40.:01:46.

if he follows through on promises to slash business taxes

:01:47.:01:49.

and regulations and boost infrastructure spending.

:01:50.:02:00.

World, they printed the T-shirts and hats weeks ago and on Wednesday

:02:01.:02:06.

finally after everyone was beginning to wonder if they'd ever get a

:02:07.:02:11.

chance to wear them, the Dow Jones industrial average finally rose

:02:12.:02:13.

above 20,000 for the first time. Now, Kellyanne Conway, an adviser to

:02:14.:02:20.

President Trump, was quick to take credit calling it the Trump Effect.

:02:21.:02:24.

Now, it is true that Donald Trump's selection has been really good for

:02:25.:02:28.

shares in the US's leading companies. Since November the night

:02:29.:02:33.

the Dow has risen by about 8%. President Trump campaigned on things

:02:34.:02:37.

like rolling back bank regulations and simple find the US tax code.

:02:38.:02:43.

Now, the recent US damn executive orders signed by the president has

:02:44.:02:48.

given Wall Street confidence that he will follow through on some of those

:02:49.:02:52.

promises and that has helped the Dow make it over the 20,000 mark. That

:02:53.:02:57.

said one cannot talk about these market milestones without making

:02:58.:03:00.

mention of the strength of the US economy that Mr Trump inherited from

:03:01.:03:05.

his predecessor, Barack Obama. The unemployment rate is sitting at a

:03:06.:03:08.

10-year low and the Federal Reserve was engaged in a massive stimulus

:03:09.:03:12.

programme that's kept interest rates near zero for a very long time. All

:03:13.:03:16.

of which has helped to bring US markets where they are today.

:03:17.:03:19.

I remember when it went beyond 10000 and the champagne was popping them

:03:20.:03:24.

too! So what's happening now

:03:25.:03:26.

on financial markets. Let's go to our Asia business hub

:03:27.:03:28.

and join Rico Hizon. I want to see you in one of those

:03:29.:03:37.

hats with 20,000 on it, one of the baseball hats. Have you got one? You

:03:38.:03:44.

just mentioned the Dow 10,000, that was aeons ago! Your showing my age,

:03:45.:03:52.

it was one of my first stories! You're very young. Everyone is

:03:53.:03:58.

cheering the Trump jump in Asia, Dow, 20,000, stocks are rising here

:03:59.:04:04.

to 3.5 month highs on hopes that Mr Trump's economic plans will ramp up

:04:05.:04:09.

growth. This surge is the latest sign in investors are brushing aside

:04:10.:04:15.

for now worries about Mr Trump's trade protectionism stance and are

:04:16.:04:19.

instead betting that the White House and the Republican Congress will

:04:20.:04:23.

implement what's in the era mentioned, tax cuts, spending big on

:04:24.:04:27.

infrastructure and cut the bureaucracy -- what Samir mentioned.

:04:28.:04:34.

The Japanese Nikkei 225 is stronger by 1.2%, the Hong Kong Hang Seng has

:04:35.:04:39.

risen by 1%. If you look at the Chinese stock market, it is

:04:40.:04:42.

currently flat as investors are set to start their Chinese New Year

:04:43.:04:47.

holidays. Everyone is migrating to their respective hometowns and

:04:48.:04:50.

travelling overseas and markets there will be closed from tomorrow

:04:51.:04:54.

until next Thursday, a very long market holiday for the mainland.

:04:55.:04:59.

That is the latest on the markets. Sally, back to you.

:05:00.:05:02.

We are also looking closely at that issue of corporate tax cuts.

:05:03.:05:06.

It's a central part of President Trump's strategy

:05:07.:05:08.

to boost the US economy and is on the agenda today

:05:09.:05:11.

at the Republican Party's annual retreat in Philadelphia.

:05:12.:05:13.

President Trump will be there to give an address

:05:14.:05:16.

as will British Prime Minister Theresa May,

:05:17.:05:17.

Before winning the election, Mr Trump promised he'll

:05:18.:05:26.

cut the US corporate tax rate from 35% to around 15% to try

:05:27.:05:30.

He's also targeting the billions that US multinationals,

:05:31.:05:34.

the likes of Starbucks, Google, and Microsoft make overseas.

:05:35.:05:43.

Mr Trump says he'll allow them to repatriate those profits

:05:44.:05:46.

That's what he said anyway before his election.

:05:47.:05:54.

But the US President is likely to face competition.

:05:55.:05:57.

UK Prime Minister Theresa May has pledged she will deliver the lowest

:05:58.:06:00.

corporation rate in the G20 as the UK tries to make itself

:06:01.:06:03.

attractive to big companies once it leaves the European Union.

:06:04.:06:06.

And just next door is Ireland, which is in the European Union,

:06:07.:06:19.

has had big success luring multinationals.

:06:20.:06:20.

The likes of Apple, Intel and Pfizer are some

:06:21.:06:23.

of the big American companies based there.

:06:24.:06:27.

Its controversial arrangements include corporation tax

:06:28.:06:29.

Here's how Mr Trump made his pitch to business leaders earlier this

:06:30.:06:39.

week. to companies that do indeed

:06:40.:06:42.

make their products here. So we've seen it, it is going

:06:43.:06:47.

to get, it is going to be a wave, And I've always said by the time

:06:48.:06:52.

you put them in these massive ships or airplanes and fly them,

:06:53.:07:00.

I think it is going to be cheaper. Now, what we are doing

:07:01.:07:04.

is we are going to be cutting taxes massively for both the middle

:07:05.:07:07.

class and for companies We are trying to get it down

:07:08.:07:10.

to anywhere from 15 to 20% and it is now 35% but it is probably

:07:11.:07:14.

more 38% than it is 35, Dominic Stuttaford is a senior tax

:07:15.:07:18.

expert at the law firm Norton Rose

:07:19.:07:33.

Fulbright. Good to see you. Good morning. This

:07:34.:07:41.

will be discussed in Phil Duffy and Theresa May is there and the

:07:42.:07:46.

competition is getting hot globally, but will this become a reality --

:07:47.:07:50.

Philadelphia. People have always talked about a change in the US tax

:07:51.:07:54.

system, it's complicated and there's many with vested interests, it may

:07:55.:07:58.

take time but now there's pressure. It's interesting, in the UK the

:07:59.:08:02.

government will have a budget and it will make the announcements, it

:08:03.:08:06.

often comes into effect immediately, in the US the system doesn't work

:08:07.:08:11.

like that? In the US you need the President and Congress to work in

:08:12.:08:14.

tandem for anything to happen. That's why it hasn't changed for a

:08:15.:08:18.

long time? And when you have something that is so, located, what

:08:19.:08:22.

bits do you change? Radical reform is difficult because there will

:08:23.:08:26.

always be winners and losers -- is so complicated. That is on the

:08:27.:08:31.

agenda, firmly on the agenda of President Trump, he's made that

:08:32.:08:35.

clear in deed. Will it have the impact if he was able to get the 10%

:08:36.:08:41.

rate on money come back home, from Apple and Google and others, would

:08:42.:08:47.

it have that effect? Would Apple repatriate the billions it has

:08:48.:08:51.

overseas? They will always keep some money overseas to fund subsidiaries

:08:52.:08:54.

but fundamentally yes, because that money has been sitting there, they

:08:55.:08:58.

need it in their home jurisdictions to pay dividends and money back to

:08:59.:09:03.

their shareholders so why keep it overseas if you can bring it back

:09:04.:09:07.

without massive amounts of tax? There in a bizarre situation, big

:09:08.:09:11.

companies like Apple and Google, where they have this money stashed

:09:12.:09:15.

overseas because of the money they used bringing it home but they may

:09:16.:09:19.

borrow in the US to pay things like dividends -- they are in. Yes, but

:09:20.:09:24.

the problem with the system is the system hasn't incentivised you to

:09:25.:09:28.

bring your money back to your home jurisdiction. There's a tax charge

:09:29.:09:33.

if you put it back in the US. That is contrary to every other major tax

:09:34.:09:41.

administration. Thank you very much, Dominick, for making sense of this

:09:42.:09:44.

scenario. Of course it is something we will keep you across as it

:09:45.:09:47.

develops. That is all from World Business Report for now. Thanks for

:09:48.:09:51.

watching. We'll be back in a moment reviewing all the stories in the

:09:52.:09:52.

news. See you then. Half of hospitals aren't yet meeting

:09:53.:09:59.

new Government standards for patients' food,

:10:00.:10:01.

according to a new report. National standards were introduced

:10:02.:10:03.

two years ago with ten key

:10:04.:10:07.