:00:00. > :00:23.Crude is down some 20% this year, despite OPEC's attempt
:00:24. > :00:32.On edge over Brexit: Germany's industrial giants fear
:00:33. > :00:34.for the future of their multi-billion dollar UK market.
:00:35. > :00:42.We report from the port city of Bremen.
:00:43. > :00:53.Welcome to World Business Report. I am Rachel Horne. We also have the
:00:54. > :00:58.story on the excessive borrowing by China's biggest companies.
:00:59. > :01:01.We start with the price of oil, because, once again,
:01:02. > :01:06.despite the best efforts of the oil producing nations to prop it up,
:01:07. > :01:09.Let's show you what's been happening.
:01:10. > :01:12.This week the talk's all been about this guy
:01:13. > :01:17.Traders refer to a "bear market" when the price of an asset falls 20%
:01:18. > :01:20.It often signals a loss of confidence and further falls
:01:21. > :01:36.It is down over 20%. It was $56 per barrel in January, and is now below
:01:37. > :01:41.$45 in the middle of this week. of the Oil Producing Countries -
:01:42. > :01:47.OPEC - together with 11 other countries - agreed a landmark deal
:01:48. > :01:52.to restrict oil output to try Between them they are supposed to be
:01:53. > :01:58.cutting production by 1.8 million Although there are questions
:01:59. > :02:00.about whether everyone And last month, they agreed
:02:01. > :02:02.to continue that policy for another But there's still too
:02:03. > :02:05.much oil around. US shale producers were were hit
:02:06. > :02:09.hard when oil prices But this year, thanks to OPEC's
:02:10. > :02:14.action to boost prices - as you can see here -
:02:15. > :02:20.the number of active US oil rigs has That's just added to
:02:21. > :02:29.the global glut of oil. David Hunter is an energy analyst at
:02:30. > :02:33.Schneider Electric. He joins us from a Edinburgh studio. They you for
:02:34. > :02:39.joining us. We were saying there that oil is hitting a bear market.
:02:40. > :02:43.Once you get into that, it can be difficult to get out, can't it? That
:02:44. > :02:47.is right. History shows that when an asset of all is by 20% over a
:02:48. > :02:50.relatively short period, that they can be further falls. The of crude
:02:51. > :02:55.oil is very unclear at this point. oil is very unclear at this point.
:02:56. > :03:03.For some of the reasons that you have mentioned. -- the future. Some
:03:04. > :03:09.people are severely solution to low oil prices is low oil prices, big as
:03:10. > :03:14.any to keep the prices low, or the US shell producers will come back
:03:15. > :03:18.online. That is right. And that has been a big concern from the
:03:19. > :03:26.perspective of OPEC, who have seen that these oil producers have been
:03:27. > :03:30.robust and have become more efficient and cost-effective at low
:03:31. > :03:34.oil prices than OPEC expected. So the producers were kind of thought
:03:35. > :03:39.to be leading the market well before we got up to $45 a barrel, but what
:03:40. > :03:44.we have seen over the last 22 weeks, now, is the week on week increase in
:03:45. > :03:49.US drilling activity. And that is keeping a lid on prices by
:03:50. > :03:54.postponing the time that it takes for the market to get to demand and
:03:55. > :03:58.so I balance. David, we talk about these low oil prices and a bear
:03:59. > :04:03.market, but what is the problem with oil prices being low? For consumers,
:04:04. > :04:11.that must be a good thing. Is a sword. The major G7 economies are
:04:12. > :04:18.thought to... This is thought to be of benefit to them. -- this is a
:04:19. > :04:23.double-edged sword. This means lower cost for industry and for
:04:24. > :04:32.trepidation as well. But not good news for oil producers, from the way
:04:33. > :04:36.that he can hit countries like Russia, Iran, and others,
:04:37. > :04:41.particularly hard. -- and fought transportation as well. But if oil
:04:42. > :04:46.falls really far in value, then they can also be endemic of, all, sorry,
:04:47. > :04:55.representative of concerns in the wider economy. -- or. Oil is not a
:04:56. > :04:59.proxy for the economy, but if demand is growing, that would suggest a
:05:00. > :05:02.healthy oil price. If it is not growing, people might look for wider
:05:03. > :05:08.reasons as to why. Just briefly, David, when you think the price will
:05:09. > :05:12.go in the next six Gotze? That is the $6 million question. I think
:05:13. > :05:16.that some people believe that it could well be range bound for a
:05:17. > :05:19.while. As we move into next year, there are some analysts indicating
:05:20. > :05:23.that the supply will come into balance. But what I would say is
:05:24. > :05:27.that certainly over the last month or so, a number of analysts have
:05:28. > :05:34.reduced their immediate horizon expectations for the price. So don't
:05:35. > :05:36.expect a big bout soon. David Hunter from Schneider Electric. Thank you
:05:37. > :05:39.for joining us. We are also in the German
:05:40. > :05:52.port city of Bremen - exactly a year on from Britain's
:05:53. > :05:57.vote to leave the European Union. Bremen's manufacturers export goods
:05:58. > :05:58.all over the world - including 2.6 billion euros worth
:05:59. > :06:02.to the UK every year. That's why local businessespeople
:06:03. > :06:07.are on edge about the future of a trading relationship that
:06:08. > :06:09.goes back centuries. They are some of the most
:06:10. > :06:11.recognisable landmarks. -- Miller. But the specialist material that
:06:12. > :06:14.just one company in the German city just one company in the German city
:06:15. > :06:21.of Bremen. And for its manager, Brexit is a headache. This is one of
:06:22. > :06:26.the ongoing products, projects we have in the UK. We have discussed
:06:27. > :06:31.Brexit. It was a lot more of a hassle on the product. If we had
:06:32. > :06:35.closed borders and had to adhere to strict trade and customs policies.
:06:36. > :06:40.It is not just high-tech materials that make their way from Bremen to
:06:41. > :06:45.Britain. Although the bulk of the 95,000 cars in this terminal I
:06:46. > :06:50.headed to the US and Asia, some 2.6 billion euros worth of goods make
:06:51. > :06:55.their way to Britain every single year. Much of that comes from the
:06:56. > :06:59.local Airbus and Daimler plans. And there is a concern that a Brexit
:07:00. > :07:06.that leaves Britain outside of the single market could harm them and
:07:07. > :07:10.many local businesses that rely on them. For one company, it is the
:07:11. > :07:14.movement of personnel, as will the shipping containers, that is vital
:07:15. > :07:16.to their business. We have a fleet of up to 100 chips. When this free
:07:17. > :07:20.flow of people who work in the flow of people who work in the
:07:21. > :07:26.London office all come to Bremen from the UK, and with a hard Brexit,
:07:27. > :07:31.it has a massive impact on our business, at least the way we are
:07:32. > :07:34.doing it at the moment. The relationship between Bremen and
:07:35. > :07:39.London goes back centuries, to when local traders were granted a licence
:07:40. > :07:47.to sell their wares in Bremen's capital. And the representative here
:07:48. > :07:52.says the goodwill will outlast Brexit. The people of Bremen take
:07:53. > :07:58.out their umbrellas for London's rain. They are very pro- British.
:07:59. > :08:03.Whatever the legal framework will be, everybody will adjust to the
:08:04. > :08:04.situation. Local attitudes are one thing, but businesses he ultimately
:08:05. > :08:10.know that Brexit will be decided in know that Brexit will be decided in
:08:11. > :08:11.Brussels, and they can only hope that EU negotiators share their
:08:12. > :08:22.enthusiasm for all things British. And the Industrial and
:08:23. > :08:27.Commercial Bank of China - known as ICBC - has moved to calm
:08:28. > :08:33.fears about the health of loans to some of the country's
:08:34. > :08:36.biggest companies. On Thursday the shares of several
:08:37. > :08:38.well-known Chinese firms were hit after reports of an investigation
:08:39. > :08:42.into excessive borrowing to fund Sharanjit Leyl is looking into this
:08:43. > :08:47.in simple. What do you tell us? Well, that is right. -- is looking
:08:48. > :08:54.into this and Singapore. Following the reports that Chinese regulators
:08:55. > :09:03.might be cracking down on the big spending sprees, ICBC, one of the
:09:04. > :09:07.exposure to these companies, they exposure to these companies, they
:09:08. > :09:11.have said that this is all routine. It is a big deal. They basically
:09:12. > :09:17.checks of loans to companies that checks of loans to companies that
:09:18. > :09:21.invested overseas is just routine. And a handful of the deal makers
:09:22. > :09:37.that have been on those overseas buying sprees, they were also
:09:38. > :09:44.targeted, they saw their shares fall after the matter, in fact one fell
:09:45. > :09:49.about 10% before their shares were suspended, but some of the shares
:09:50. > :09:56.are up-to-date. They are rebounding, particularly a couple. Others
:09:57. > :10:02.continue to be sold. Sharanjit Leyl might think you for joining us. In
:10:03. > :10:05.other news:, and is very new ?18 billion nuclear power station has
:10:06. > :10:10.come under fire from public auditors, who called it a risky and
:10:11. > :10:16.expensive project. The report describes the case for the Hinkley
:10:17. > :10:27.Point seaplanes as marginal. -- C Plant.
:10:28. > :10:31.It says the deal with state-controlled French energy firm
:10:32. > :10:38.EDF and Chinese company CGN to build the plant is "not value for money".
:10:39. > :10:44.The 34 largest banks in the US have enough money on hand to withstand
:10:45. > :10:47.a severe recession, according to the US central bank.
:10:48. > :10:51.The finding comes from an annual "stress test" conducted
:10:52. > :10:57.The tests were put in place after the financial crisis
:10:58. > :11:01.to strengthen financial capacity in the event of a downturn.
:11:02. > :11:03.Banks have been pushing to relax those rules.
:11:04. > :11:04.Some said Thursday's results could make it easier to convince
:11:05. > :11:08.American Airlines has received an "unsolicited" approach
:11:09. > :11:10.from Qatar Airways which wants to acquire 10% of the US carrier.
:11:11. > :11:10.In a regulatory filing, American Airlines said Qatar
:11:11. > :11:15.intended to buy at least $808 million of its shares -
:11:16. > :11:16.and it would respond "in due course".
:11:17. > :11:20.Analysts say Qatar could be trying to strengthen its relations
:11:21. > :11:22.with the US amid the diplomatic crisis with its Gulf neighbours -
:11:23. > :11:23.and complaints from US airlines over alleged unfair government subsidies
:11:24. > :11:30.Let's take a look at the markets as they are going so far. You can see
:11:31. > :11:34.the markets in Asia, they are ever so slightly. In fact, this week, the
:11:35. > :11:39.Nikkei has touched heights it has not seen since 2015. Brent crude, we
:11:40. > :11:44.have been talking about oil, you can see that even though it has entered
:11:45. > :11:48.this bear market, it has come up a little and perhaps stabilise. Let's
:11:49. > :11:51.move on. We can see how America closed last night. Not a great
:11:52. > :11:57.session on the rack and markets. The Dow and the SNP are down. Keep an
:11:58. > :12:02.eye on that healthcare bill next week. Any turmoil can affect the
:12:03. > :12:15.markets. -- the American markets. There's a warning the government's
:12:16. > :12:20.deal for a new nuclear power plant at Hinkley Point is
:12:21. > :12:23."risky and expensive".