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(generated from captions) incrementally politicises performance pay, which I think

senior public servants. You're

bonuses actually arguing performance pay, these

bonuses actually draw people

into the political process who should be independent of it, is

that what you're saying? I'm

concerned about that long-term.

I think we've got to look at

other ways by which we provide

incentives of people of tall

ynt and ability to be recruited

to the public service and to

stay there, to be our best

advisers into the future. When

I look at the likes of, you

know, Ken Henry and those sort

of guys and Ken runs the

Treasury, he was a good

Treasury officer also when

Labor was last in office.

Finding the calibre of the Ken

Henrys of the future is what

worries me as a former public

servant. Get those people into

the system and keep them there

and to cause them to conclude

that their careers will

flourish on the basis of the

calibre of the advice they

provide, not whether they're

going to politically

accommodate the government of

the day. If I look, for

example, at the way

example, at the way in which

this Government currently has

abused things like taxpayer-funded advertising, $2

billion worth of ads in their

period of office, I just wonder

how the public service, for

example, can co-exist with a

system like that. I think

we're getting the system quite

wrong. It sounds like you're

saying heads will roll because

involved in those senior public servants were

advertisements? Actually, I'm

not. Part of the restoration

of Westminster means ensuring

that you don't have some Knight

of the long knives of the type

that Mr Howard had when he was

elected in 1996. I actually

believe in the independence of

the public service. It's very

important. I've seen other

models at work and I've worked

in other models which are

slight variations of it. My

firm belief is that the

served by nation's interests long-term is

served by a

highly-professional,

independent public service and

the best traditions of

Westminster. And I believe

that that is also in the

interest of good government.

That's why if we are forming the next government of the

country if we're elected, what

I want to see is the best

mandate possible out there

providing us with the best

ideas and best tempering of the

administration which become disciplines of public

administration which become

necessary when it comes to

implementing Labor's

program. Finally Kevin Rudd,

many people are still trying to

work out what sort of a Prime

Minister you would be, the

comparison with Tony Blair is

often brought up, do you shy

away from that? People make

their own judgments about who

I'm like and not like, Tony.

They'll sort that out in due

season or they've made their

judgments already. I'm a Labor

moderniser. Always have been,

always will be and what that's

on about is good evidence-based

policy in terms of producing

the best outcomes for this

nation, carving out its future

in a pretty uncertain century

where things fundamentally are

changing. The rise of China,

the radical changes in the

Asia-Pacific region, the

globalisation of the economy,

great fundamental technological

challenges like the digital

revolution, the future of

broadband, to be part and

parcel of all that as a Labor

moderniser, and to be serious

about what I would describe as

enabling our community through

an education revolution. And

through the proper provision of

basic services like health and

hospitals to be part and parcel

of the country's future. Let me

ask you this, what Australian

Prime Minister do you most

identify with? Oh, I take bits

and pieces out of them all.

You know,... John Howard, as

well? That's drawing a long

bow, Tony. Andrew Fischer, I'm

a Queenslander, there's a great

guy who was an Australian

nationalist who came to this

country from Scotland and grew

up I think in the Ayrshire

Miners' Union and taught

himself to read by

himself to read by going to

Presse tierian primary school.

Curtin, saving the nation the

dark days of World War II and also you draw inspiration from

the likes of Whitlam and Hawke

and Keating in their engagement

with China and anticipating

well ahead of the curve the

emergence of the Asia-Pacific

century and the great reforms

of the Hawke and Keating

Government when it came to

internationalising the

political price for Australian economy and paying a

political price for it. But

that's reforming modernising

Labor leadership and it set up

this economy with an ability to

survive the Asian financial

crisis and I see no such

parallel reform effort by Mr

Howard or Mr Costello who

frankly on the reform agenda,

micro economic in particular,

has gone asleep at the

world. John Howard used the

phrase " comfortable and

relaxed" to explain what

Australia would be like under

his leadership. What would you

like to say Australia should be

like if you become Prime

internationally competitive in Minister? Competitive,

a very difficult and changing

world, but never, ever throwing

the fair go out the back door.

That's the ethos of Labor.

That's what I stand for as a

Labor moderniser, as

well. Kevin Rudd, we will have

to leave you there. We thank you very much for taking the

you very much for taking the

time. Hopefully we'll see you

again before the end of the

campaign. Thank you. Thanks

for having me on the program,

Tony.

Pakistan's president Pervez

Musharraf has reaffirmed plans

to resign as army chief and

says elections will be held

before 15 February. Despite

that pledge, Pakistan police

rounded up hundreds of

Opposition supporters overnight

in an apparent attempt to

prevent a mass anti-government

demonstration. Already, three

politicians and a trade

unionist have been charged with

treason for making speeches

against the imposition of

emergency rule. South Asia

correspondent Peter Lloyd

reports from Islamabad. Until

now, lawyers have been doing

most of the protesting. This

street was the first foray into the

street by Benazir Bhutto's

party. Around 400 supporters marched on the national

Parliament. Security forces

responded with tear gas and

arrest for those who broke

through the barricades. Ms

Bhutto has called for a greater

protest tomorrow to pressure

the regime to repeal the

emergency. And if this is not

done, then from 13

done, then from 13 November, we

will start a long march from

the hall, through to Islamabad

where we will do a

sit-in. After cricket, Imran

Khan became a politician. He

once batted for Musharraf but

these days plays with the

Opposition side, urging revolt.

This message was recorded from

a secret hideout after he

escaped arrest. If we want rule

of law, independent judicial

system a genuine democratic

system through free and fair

elections we have to go out on the streets. This is probably

one of the most defining

moments in our history. The US

President George W. Bush is

also urging General Musharraf

to return to the rule of

law. We believe strongly

that... in elections and that

you ought to have elections

soon. And you need to take off

your uniform, you can't be the

president and the head of the

military at the same time. I

had a very frank discussion

with him. Pervez Musharraf

remains a poster boy for some

Pakistanis who believe he saved

them from ruin under civilian

rule. These are women MPs from a friendly party.

a friendly party. Five days

into emergency rule, and there

have been no less than three

calls for the people to rise

up. So far, the revolution is

staying at home. The regime

has become embolden, some

seeing the absence of mass

protest as a vote of

confidence, or at the very

least, indifference to the idea

of going back to the days of

plund er under civilian rule.

That's all from us. If you'd

like to look back at tonight's

interview with Kevin Rudd or

review Lateline's stories or

transcripts, you can visit our

website. Virginia Trioli will be in this chair tomorrow

night. I'll see you again on

night. I'll see you again on

Monday. For now, it's

'Lateline Business' with Ali

Moore. Thanks, Tony. Tonight,

breaking news from London where

BHP Billiton has confirmed it's

made a bid for rival Rio Tinto

and has been rejected. We'll

have more on that in a moment.

First, though, a season of

discontent. AGL shareholders

give the company a caning over

a nearly $6 million payout to a

sacked former boss. Probably

caning is not a bad example.

That's way we took it. That's

the way I took it, and as I

said, we will learn from that.

But it was expected. Nowhere

near good enough - Symbion

rejects Primary Health care's

takeover bid. When the US

sneezes Australian investors

panic and wipe $37 billion from the value of the local

market. I do think we've

reached a limit of how much

debt consumers can carry in the

US and I don't think we're far

away in Australia.

Straight to that news from

London. After months of

speculation, BHP Billiton has

confirmed it offered to buy

rival Rio Tinto, but was

knocked back. But BHP is not giving up.

giving up. In a statement to

the London Stock Exchange a

short time ago, Rio Tinto wrote

to the board for a plan with a

merger. It doesn't put any

number on the premium, but does

say it's examined in detail the

regulatory issues of a combined

BHP Billiton and Rio Tinto.

Following the rejection BHP says it's now

says it's now written again

seeking a meeting and intends

to continue to seek an

opportunity to discuss its

proposal with Rio. Rio shares

are up 20% in London. The

company is worth $170 billion

after recently completely the

purchase of Alcan. And just

minutes ago, Rio Tinto also

issued a statement, saying the

BHP plom was unanimously rejected

rejected by the board because it significantly undervalues

the company. Rio says the deal

would have meant each Rio share

would have been exchanged for

three BHP Billiton shares. To

see what all this means I'm

joined by David Jones from CMC

Capital Markets in London.

We've talked about and talked

about it now finally

confirmation that it has

happened. BHP Billiton has

made a bid and been

made a bid and been rejected? Yeah, there was

speculation, there's been

speculation for a while but

speculation had been picking up

over the last couple of days

that when Rio had finalised and

Alcan takeover it would leave

things clear for BHP to move in

and Lowe and behold Hazel

Sullivan happened today. We're

seeing Rio shares up between

20-25% in London at the moment.

They've rejected the offer

They've rejected the offer but

it does sound like BHP Billiton

are not giving up yet. They've

written to the board to arrange

a meeting to start and kick off

discussions. This one could

drag on for a little bit. It

looks like both sides at the

moment are fairly serious, but

BHP Billiton are serious about

taking it further. Rio said it

was a one for three offer. If

Rio shares are up some 20%, is

the market thinking one for

three is as the Rio

three is as the Rio board says

nowhere near what it would

take? I think so. This whole

sector has done fantastically

well over the last few years.

The big mining stocks have been

great investments. There's a

feeling amongst many analysts

Rio is one of the cheapest out

there compared to some of its

peers. Some analysts are

thinking a fair market value of

Rio is 20% higher than it was a couple of

couple of days ago. Because of

the growth they're seeing I

think companies will want a

premium to be sold off. Rio,

there will be a price it will

go at but obviously the board

thinks it's higher than where

it's trading today. BHP

Billiton says it's had a close

look at all the regulatory

issues. They had be massive,

wouldn't they? I would have

been competition across the

globe with these two big

miners? That is a concern. They've said they've looked at

it. There is a concern, Australia, obviously your market over there is one

concern. They reckon the

steelmakers would be up in

arms. One of the big drivers

behind this deal, the price of

iron ore is increasing at

record highs due to demand from

China and everywhere else, of

course it's used in making

steel. Maybe they will have a

monopoly, that is the concern.

It's difficult to see how it

would pass the regulators at

would pass the regulators at

the moment. BHP says they've

looked at this. Presumably

they know but a lot of people

would try to oppose the

deal. If they get it, it would

be one massive company? Yeah ,

a company the size of Microsoft

I think I read in the last half

hour, an absolute giant of a

company. These are big

companies. Over here in London

the likes of Rio, BHP Billiton,

Xstrata, make up a massive part

of the FTSE 100. It would be

enormous if combined. David

Jones, thanks for talking to

us. Thank you. To our

sharemarket today and, of

course, our market was trading

before this news broke in

London and growing worries

about the health of global

credit market sent shares

plunging to a 6-week low with

investors shitting the sell

button the All Ordinaries shed

160 points. The ASX200 plunged 2.5% dragged

2.5% dragged down by falls in

banking and mining stocks.

Japanese shares lost ground for

the fourth time this week

closing 2% weaker to a 2-month

low. The Hang Seng skidded 3%

and in London the FTSE has been

boosted by news of BHP

Billiton's takeover offer for

Rio Tinto. AGL investors have

reacted angrily to a decision

by the company's board to give nearly

nearly $6 million to sacked

former boss Paul Anthony and

they voted against the firm's

pay plans for top expectives at today's annual meeting in

Sydney. The company is reviewing its business

operations and today reaffirmed

last month's profit guidance.

That bolstered the share price

which over 0.5%. Sue Lannin

reports. It's been a week

that's seen the rise of

shareholder activism in

Australia and this time it was

the turn of AGL. Investors

were pacified by the food, but

furious at the termination payment given to former chief

executive Paul Anthony. He was

fired last month after AGL

announced it expected profit

for 2008 would be up to $70 million lower than

forecast. There's a lot of

strong feeling in the room

today, particularly in relation

today, particularly in relation

to remuneration and Mr Antony,

the former CEO's renumeration

in particular. For more than an

hour shareholders grilled the

AGL board and criticised the

former payout given to former

chief executive Paul Anthony

with one person saying it made

for horrifying reading.

Another investor said she was

very disappointed in the

company's performance. Whether

we go and sell our shares

immediately or not will be a

matter of discussion,

matter of discussion, but I

think there've got some work to

do before confidence is

restored. Chairman Mark Johnson

told investors that Paul

Anthony was a change agent, but

new chief executive Michael

Fraser was a team-builder. He

said AGL wanted to regain their

trust. The board takes

collective responsibility. We

have taken collective

responsibility for all these

actions and all of the actions through to now and we continue

to do so. Shareholders were

more circumspect. I know it's a

very conservative company and

the energy sector is growth

orientated industry so it

should do well as long as they

don't make much mistakes. Mark

Johnson told investors that

Paul Anthony had been dismissed

because it was time for a

change of direction. They

wanted the record to be set

straight that we did not

dismiss him for cause, we

terminated his contract. But he was reluctant to explain

himself to the waiting media. I

think we really covered that

very thoroughly.

REPORTER: But there were no

cameras inside? No, for which

the good Lord be

praised. Institutional and

retail investors made a

non-binding vote against the

company's expective pay package

of more than 140 million votes

passed, just over 60% were

against it, while nearly 40%

supported the plan. Probably

caning is not a bad example.

That's the way we took it,

that's the way I took it. We

will learn from that, but it

was expected. Mr Johnson will

retire as a director next year,

the former Macquarie Bank

deputy chairman says he wants

to reduce his commitments. The

new man in the hot seat says he

will bring a different style of

leadership. I firmly believe in

making sure that those people

are empowered to make the

decisions that they're best

empowered to make and things

don't have to escalate all the

way up an organisation and

finally, I think it's very

important that people are

recognised for the contribution

they make to the business. Last

week the company said it would

not buy the remaining stake in

Alinta AGL that it doesn't own.

Mr Johnson admitted the fall in

AGL's share price makes it more

vulnerable to a takeover, but

he says the firm is not aware

of any threat. That protest

vote at AGL against expective

pay is just the latest in

what's become a growing number

of shareholder revolts

of shareholder revolts over

salary packages for top

managers. It comes just a day

after Telstra's renumeration

report was overwhelmingly

rejected although with the vote

non-binding Telstra's board is

going ahead with its pay plans

anyway. The big question now,

is will that shareholder

defiance continue? Andrew

Robertson reports. Yesterday

vote at the Telstra annual

general meeting was the second

year in a row shareholders have

delivered a strong rebuke to

the company on the way its

senior expective salaries are

structured and the board's

response was to lash out. Our

approach is about driving performance that delivers

long-term value to

shareholders, not striving for

conformance with the standard

templates often in flexibly

applied by proxy groups and

some institutions. At

Suncorp-Metway last week where

44% of shares were voted

against the renumeration report

and today at AGL there was a

more conciliatory board

response. The Australasian

Investor Relations Association

argues that boards can't ignore

these votes even though they're

non-binding. Not just in

renumeration but any matter

where a company may not be

heeding what shareholder

concerns might be, should be

reflected on very closely by

companies and boards and

management. And Ian Matheson

warns if companies don't pay

attention the next government

may legislate and make

renumeration votes binding. It

would potentially take away the

ability of the board to hire and fire the

and fire the best people and

any sort of limitation that was

put on that because it would

require essentially a

compensation package to be

approved by potentially by

shareholders prior to a new CEO

being appointed, for example. While institutional

shareholders in Australia have

only recently become active at

annual general meetings, in

Britain there've been flexing

their muscles for some time. In

the UK in 2000, Chris Gent the

CEO of Vodaphone his package

was voted down by shareholders

by a minority vote but it did

lead to a revision of the

package in 2001, Smith Kline

had to review a package offered

to a CEO and the following year

with Prudential the same thing happened. Even though

renumeration reports are not

binding the stakes are high for

companies involved. A group

close to yesterday's 66% no

vote at Telstra's AGM has told

Lateline Business that institutional investors will

now want a big say in who fills

the current vacancies at the

Telstra board table. It's now

expecting Telstra at the very

least to consult widely with

those investors. Ian Matheson

goes further and says failing

to heed shareholder concerns

could have implications for

existing directors. Major

shareholders would have a very

close look at individual

directors when they're up for

election next time. Even at a thriving company like Leighton Holdings shareholders are

becoming more active. At

becoming more active. At

today's annual meeting 13% of

shares were cast against its

renumeration report. The

year-long battle for assets of

Symbion Health took a major

turn today with Primary Health

care playing its hand in a

hostile takeover bid.

Symbion's pathology and

diagnostic imaging assets are

highly coveted as the ageing

population becomes more reliant

on private health care and

they've rejected and primary

bid saying it's just not good

enough. Neal Woolrich reports.

After playing the spoiler's

roll for several months Primary

Healthcare is making its move.

The clinic operator owns 20% of

Symbion and is launching a $3.5

billion bid for the rest. In

the process Primary hopes to

scuttle the planned sale of

Symbion's diagnostic business to

to Healthscope. There'll be the

company transforming... it'll

provide significant benefits

for all stakeholders, primary shareholders, clinicians,

patients and staff. Symbion is

the last major health care

asset that's available. If you

look within Symbion, the

pathology and radio, radiology

operations would fit very well with

with Primary's medical centres

and its existing pathology

operations. That would give it

economies of scale, a strong

referral base to those

diagnostic sates and ongoing

growth.

That's less than the value of

Healthscope's rival offer which

has been recommended by Symbion's board. The

difference in value has led

Symbion to reject

Symbion to reject Primary's

approach but Rob Cook says

Symbion has been open to negotiations. It's a business

that has indicated a

willingness to participate in

health industry consolidation

and we engage with Healthscope

on that basis, we engage with

Primary 12 months ago when we

made an offer to buy

pathology. Shaw Stockbroking's

Brent Mitchell says Primary

will need to sweeten the offer to have a

to have a chance of

succeeding. Under the Primary

proposal the Symbion

shareholders get no benefits

from the synergies to be

derived from the putting

together of the two operations

as opposed to the Healthscope

proposal where they get ongoing

benefits through Healthscope

and secondly the capital gains

tax and the demerger rollover

relief they wouldn't get that

under the Primary

under the Primary Healthcare

proposal. The three-way

takeover battle has been marked

by animosity. There now

appears little chance of

relations improving between the

competing sides. We've had

numerous attempts at engaging

with Symbion and they've failed to engage on numerous occasions. We haven't spoken

to them as of today. Standard &

Poors has placed Symbion on a

negative watch until the ownership of the company

ownership of the company is

resolved. And Primary says it

will continue to pursue legal action against the proposed

deal with Healthscope. Those

concerns were of little concern

to investors who sent the share

price up 3%. San Miguel has

sold for $2.8 billion. It owns Pura

Pura Milk, Berri Juices and

King Island Dairy, as well as

it has the rights to yop yay.

The deal diversifies Kirin out

of beer where it's struggling

at home in Japan. Meanwhile

Lion Nathan will buy James Boag

from San Miguel for $325

million. Strong box office

sales from movies helped News

Corporation record a 23% profit

increase to $1.1 billion for

the first quarter. The result

beat analyst expectations on

the back of strong performances

from the entertainment and

cable network divisions. But

expective chairman Rupert

Murdoch warned of a rough

operating environment and

reaffirmed his forecast of

annual profit growth in the low

teens. ASX-listed News Corp

shares closed at $23.80. ecutive chairman Rupert Murdoch warned of a rough operating environment and reaffirmed his forecast of annual profit growth in the low teens. ASX-listed News Corp shares closed at $23.80.

With our market following

yeet down today a steady stream

of revelations about subprime

mortgage-related losses, the strong oil price and the

strong oil price and the higher

dollar not to mention the

prospect of another rate rise

there's a lot for investors to

digest. To get their views on

what's happening and where to

put your money, I was joined in

the studio earlier this evening

and before that BHP Billiton

news by well-known market bear

Morgan Stanley's Gerrard Minnac

and morj Capital's Shane

Ovaler. Our market was down

2.5% today almost mirroring the

dou. In fact, last night was

the third 360-point fall on the

Dow in less than three weeks.

Are we in for more of the

same? My feeling is we are in

for a period of volatility. We

saw almost a 25% rally in the

market from the lows in mid

August at the height of the

last subprime crisis to last

Thursday. So pretty huge rebound after such

rebound after such strong

rebound I think it's inevitable

we've got to go through a bit

of a direction. That's what we're seeing right now. At the

same time, all the subprime

problems in the US are

lingering. We've got a record

high in the oil price creating

concerns about the growth

outlook going forward and also

for the local market, the latest rise in interest rates

could be seen as a bit of a

dampner. My feeling is we've

probably got a couple of weeks

of pretty rough trading on the

Australian sharemarket to go. Where do you think

go. Where do you think we'll

end up? Another 10% down on

where we are today? I don't

think 10% down but we could be

down another 2-5%. Something

of that order. I think this correction we're going through

won't be nearly as severe as

the one we saw back from late

July to mid August which from

top to bottom saw the market

fall almost 15%. I think that

the climbs this time around

will be somewhere between half to two-thirds that

decline. Gerrard, not with

standing what Shane Oliver just

said don't you have to ask how

much longer can we bounce

back? My view is until

investors start to worry about

the risk of a recession in the

States. For now I actually

agree with Shane. I suspect

this is another correction.

When we start to see job losses

in the States which I think

we'll start to see in the first

of-of next year, then the

market stops bounce back. Once

people worry about the hard

landing in the US rather than

the soft landing which everyone

expects today then you've got

to sell rallies rather than

buying dips. Are you talking

about a tanking of the US

market which would take us with

it? Absolutely. If we get a

hand landing in the US then we

probably see close to a global

bear market in assets, and the

bear market in assets, and the

reason is there's tremendous

financial linkages between

markets. One of the big points

of this year has been growing confidence on the one hand that

the rest of the world's

decoupled economically from the

US, but despite that confidence

we're still seeing the markets

incredibly linked. So the

August correction, subprime in

the US was the problem. Asia fell, Australia fell, Europe

fell - they all fell. I

suspect if we saw a hard

landing in the US we would get

a persistent long-lasting bear

market in assets and that would

ripple through to the rest of

the world. Ewe are our bear,

are you calling a tanking in

the second half of next

year? I've got to see the job

losses before I get bearish.

I'm telling people to buy dips.

we look into next I am more bearish than Shane as

we look into next year.

Four-quarter growth is over 2%.

Our US economics team expecting

quarter and the March quarter. low 1% growth for the December

Bang that puts you in the zone

where you'd normally expect job

losses. Shane, would you

disagree? I would. Gerrard is

way too bearish. For several

reasons. Yes, I think the US

economy will come close to a

recession, but ultimately it

will be avoided because

will be avoided because the

corporate sector in America is

in good shape. Most American

consumers aren't having trouble

servicing loans and on top of

that the trade sector in the US

will contribute to growth over

the next year or so. We are

looking at a soft patch in US growth. I don't think it's

going to be a recession. On

top of that I think the Fed

will cut interest rates and

that will provide a big Philip

So that for investors and sharemarkets.

So that does mean a more

volatile ride but not the next

bear market. I think it's

several years away. Let's look

at today and markets per se.

So many issues affecting it, US

subprime not the least of it.

Oil nudging $100 a barrel,

right now Gerrard, what looks

good and bad? I'd steer away

from financials. I think the

financials globally, global

risk factor and part of the

story is we don't know who's

got what and we're seeing this

news run out, dribble out

particularly from the US,

there's been examples in Europe

but I think globally that's

going to put the financials on

the nose. If we do see a

correction in the correction

phase and I think the high Beta

sectors such as miners also

underperform. You wouldn't get

out of them now? No, this is a

correction. If you're

correction. If you're nimble,

they had be the first things

you'd come back into buy once

you get a sense if Shane's

right 5% lower than today's

close, that's the thing you buy

again. I really think in a structural sense the strurls

have huge headwinds, this is

where I am more pessimistic

than Shane. I think we've

reached the limit of how much

debt consumers can carry in the

US and I don't think we're far

away in Australia. If you

away in Australia. If you

think that the household sector

has to pull in the horns on

their borrowing in what's been

a huge tail wind for lenders

becomes a tail end and that has

a devastating impact. Shane, if

you're buying the dip, what do

you like? I'd be looking at

banks. I agree with ge

regards, I'd stay away from US

financials. That's a different story. Investment the banks? Particularly, they're at

the forefront of this crisis

and exposed to US subprime debt

and we don't know the full

extent of the downside, there's

a lot of risk around that.

Australian banks have little

exposure. You're talking retail

banks? Retail banks have little

exposure, virtually none and by

the same tone if you look at

Australian households and

Australian borrowers, yes I

think we're going to see a bit

but not of a slowdown in credit growth

but not a collapse. Yes,

Australians are paying more in

terms of servicing debts but

they're getting big tax cuts

and that's keeping the

Australian household sector

going and in turn will help

keep credit growth reasonably

strong which will help local

banks. Do you like the banks,

or not? Are you prepared to

counter? The retail banks are

the least worrisome at the

moment. The investment banks

and financial institutions in

the Australian market which are

very linked to global asset

prices I'd steer away from.

They're different sectors. What

else do you like? Resources.

Wherever there's uncertainty

about the global outlook the

against that, I think the resources stocks come off. But

outlook for resources is

extremely positive. Chinese

growth looks like remaining

pretty strong going well into

next year and probably decades

from here. The Chinese story I

think will continue to support

our resources stock and the

valautions I think still look

reasonable. You say that and

course, what's happened today it's interesting because, of

is a resurgeness of this rumour

about BHP taking a tilt at Rio

Tinto, do you put any store in

that? I have no idea as to

whether it's correct or not.

These rumours keep circulating

years. and they have for several

years. We've seen ongoing

rumours of takeovers in the

resources sector. Some have

proved to be true. It's

conceivable it might be, but I

have no particular insight. It

does tell you, though, that the

big miners are very cashed up

and they have the ability to

understood take these sorts of

takeovers. We saw it with Rio

and, of course, Alcan in North

America. So these things...

and there's lots of money around

and it's getting spent and that

in turn will help the whole

sector. If you look at the

money around and the corporate

news in our market today you

saw Leighton up grade profit

forecast, a number of

takeovers. It's not all

negative. JB fie hi, Harvey

normalian, there's bad news,

but lots of good news stories

out there. That's another

out there. That's another

sector worth looking at,

consumer stocks in Australia

will do well. Yes, higher

interest rates are a drag, but

it's offset by big tax cuts. We

haven't talked about the higher

dollar which is because of the

lower US dollar. If you look

at reports that China is

looking to sell the greenback,

our dollar is going in one

when you look at direction, what does that mean

when you look at the equity

market? Import competing, or companies earning foreign scmang when it gets translated

back have tended to disappoint.

It is a translation effect

rather than reflecting company

specific or growth slowdown

problems but it is obviously

tilting investors towards

either strong domestic retail

stocks, the banks in a sense are insulated from this and, of

course, the miners are an exception. They're getting

price gains. Steer clear of

those directly? Steer clear

until you get a sense the

dollar's peaked and my view is

once we get that change in risk

appetites next year the Aussie

dollar will have one way to go

except it will be down but

that's possibly a quarter or

two away. Final word to you,

Aussie dollar stocks stay

clear? Cautious at the moment.

The Aussie dollar has more

upside and within six months

we'll see parity, probably by

Christmas. It's not as

negative as it looks. It's a

drag for companies which have

exposure to the US but for

Australian companies which have

exposure to China and Asia it's

not quite as bad because the

Australian dollar isn't going

up as much against the Asian

currencies. I hope we haven't

confused our audience, but many

thanks for joining us this

evening. That's all for

tonight. To recap our top

story in that interview with

Gerrard and Shane, it was just

a rumour, but now it is fact.

BHP Billiton has confirmed it

made a bid for Rio Tinto, but

was rejected. However it plans

to continue to try to in its

words " discuss its proposal

with Rio Tinto". Rio shares in

London up 27%. BHP Billiton is down 1%. Off the

down 1%. Off the back of that

the FTSE is up 25 points and

the Dow Futures are up 67.

I'll be back on Monday night,

but until then, visit our

website. You can watch the

show online or download it as a

vodcast and listen to ABC News

for the very latest on that

potential takeover. I'm Ali

Moore, goodnight.

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