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ABC News 24: Business Today -

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(generated from captions) Welcome Bjelke-Petersen Kaz Coming up on the program - Coming up

market fallout. Stocks in US and Europe slide as fears

about Japan rock confidence. Fear Investors sell out of the Japanese market.

Japanese market. And issue. Origin Energy says its

capital raising will be fairer for small shareholders. Those stories coming up shortly but markets. first a quick look at the

The losses over the past The losses on the Nikkei

exceeded the 11% fall October 16, 2008 in the aftermath of the global Fukushima nuclear plant, there

is the potential for further major declines. It's not often a

tail spin has reflected But the Nikkei index's 16.8%

panic among investors over the tail spin has reflected the

deteriorating situation at the Tokyo power and company's Fukushima company's Fukushima nuclear plant. And the effect it and

Friday could have an Japan's the devastation wrought last the devastation wrought

seen is just an overreaction to what's going what's going on in Japan. market what's going on in Japan. The

that something worse should

happen in the rest of the

When I thought OK, situation

could be at the bottom. The vicious cycle starts,

naturally people's naturally people's risk appetite wanes more. Nobody knows how the Nikkei should fall. investor wealth investor wealth of $364 billion or 9.4% was wiped of the Tokyo Stock Exchange. The big drop came after the

The big drop came Prime Minister confirmed there

was a high risk of Prime Minister

radiation levels from the nuclear people within 30 kilometres of

the plant to stay indoors. That its lowest point of the day, warning saw the index slump to

down 14%. Ranking among the major losers shares electric major losers shares of Tokyo 24.7%, electric power company, sinking 24.7%, Toshiba, Race and 24.7%, Toshiba, Race and Fast Retailing. 9.5% was sliced the broader topics index and Retailing. 9.5% was sliced off

the country's default the country's default credit

traders held risk jumped. Initially some

clarity about the situation. traders held off, awaiting more

But by the closing were unloading stocks, too. But by the closing bell, they

Authorities moved to reduce short selling, placing limits

on broker sales of stocks for arbitrage arbitrage trading. Stocks finished off their lows. The plunge in Tokyo sparked large

falls around the region. The Australian market posted its

biggest one-day drop in nine months, with uranium miners or in krch, it's what we saw in Queensland

or in krch, now in Japan.

slid 14.3% and Paldin Energy

closed down more than 17%. For more on market action I'm joined by Juliana Roadley from

come seek. Good morning. Let's

start with Japan, start with Japan, the Nikkei

suffered massive falls in

yesterday's trade. It appears investors have really lost confidence yesterday. It confidence? They lost

mightn't be the same today. We

saw in the overnight markets

that the yen came back into especially fairfs which is great to

especially even with the fairfs which is great to see

default credit rating lifting T

shows there is more confidence

building, maybe they feel some

but we're really in a wait and of the falls were reactionary

see phase. We don't know what's

going to occur at the Fukushima

nuclear plant and whether that

will add concerns over the next

few days or not. If you have a look at some of the break look at some of the break downs

in the market you can see not even the banks were gaining on

the back of this. The insurance

companies have been but not only in Japan, across but not only in companies have been hit hard

the globe. We've also seen the globe. We've also seen that major manufacturers, the fact

they're doing I suppose they're

saying at the moment they're

a brown phase which means it's

not total black-out but you

have factories in Japan who

were working 24/7 and only

having two days off a month for cleaning and maintenance

cleaning and maintenance who

are now working only two to

that the manufacturing levels

that are going to come out, the product levels out of Japan

will be dramatically lower than we we previously had expected. As

you mentioned we're in wait you mentioned we're in wait and

see period. The local session

is about to kick off for the

day. How will the huge drops day. How will the huge drops in Japan affect today's

session? When you finish at a six month low everyone homes six month

the market will be able to

stabilise the next day. If you

have a look at what happened in the US we saw a massive sell-off at the regaining in some sectors. We saw the market holding and

saw money coming into the steel stocks, money coming into the large large copper and gold companies

which is a great sign. Maybe they're playing on the back of

the recovery scenario in Japan

around the third and fourth

quarter or maybe it's a flight

to safety into companies they

felt were oversold in the last felt were oversold in the last

few days. If we see few days. If we see some

strength coming back in miners today, if our banks hold

up well, we might see a bit table. Let's move over to the US. Both major indices lost

ground despite some manufacturing data? The US ground despite some massive manufacturing data was stronger. It rose from 15.4 up to 17.5. A to 17.5. A nine-month high. But

when you read into the numbers,

some of the areas were a some of the areas were a bit

weaker. New orders and shaimts

actually fell and really when

coming through in you stripped out the movements

price it wasn't so much of the

game. One of the things that helped the US markets was that we had the Federal Reserve

coming out with their monthly statement. No change to interest rates, but the

commentary was quite positive. They said

They said they're coming

towards the end of their quantitative easing program and it doesn't it doesn't look like there's

any concerns about putting on another program in the future.

So there was a bit more joy

coming through in the markets

later on in the day. Let's move over to Europe. Markets there

have also been pummelled, in

What's driving that? I think it

was the big announcement that came out the Chancellor, during the Chancellor, during the trading trading session. She said basically closed seven of basically closed seven of the older nuclear plants older nuclear plants in

Germany. She wants to look hat

new safety mechanisms for all nuclear capability that is occurring

occurring in Germany at this

time. She 's also pushing for

the EU and for NATO to come in

and have a look at the concerns

of the long-term controls of

nuclear capability around the

globe. Very strong words. really did react on market but it it wasn't only anything related

to uranium and nuclear stocks

losing ground. We saw the banks

falling, the airlines plummeting plummeting and a lot of money

coming out of retailers as

well. That hit their market sufficiently. Thanks for the

update. Thank you. Juliana

Roadley from CommSec there. Now

a closer look hat what's happening with currencies and

commodities.

I'm joined by John Noonan, senior currency strategist with Thompson Reuters. Good

morning. Why are we seeing

morning. Why are we seeing

such strength in the yen in

light of this disaster in Japan? It seems quite counter-intuitive. The reason for that

for that is the Japanese companies particularly the life

insurance companies are the

largest exporters of capital in

the world. The returns in Japan

have now that Japanese investors and now that Japanese investors and

Japanese companies push a lot

of money offshore of money offshore and invest in offshore. Of course with offshore. Of course with these massive tolls that have been

lined up from the damage of the

earthquake the tsunami etc., those life companies will have

to pay back a lot. They will

have to get rid of the overseas investments. Also, there is some speculation with being in such a terrible physical position before this happened, the government happened, the government will have to pay for the clean-up

and they have a very large, huge amounts of US dollar reserves. They could use some

of those reserves to pay for

some of the clean-up, and that

of course would put a lot of course would put a lot of

pressure on the dollar and the dollar yen in particular. What

about the $61 billion that the

BOJ has injected into money

markets for stability? Is that

also playing a role there? If

anything, that would take some of the upward pressure off the yen because

they're pumping liquidity into

the system, it's yen liquidity the system, it's yen liquidity

so that means demand for

will not be as great if the Bank of Japan is satisfying

that demand. It still dwarfs in

comparison to the amount of speculation that that much

repatriation will have to be

done. We don't know what the total cost of this clean-up will be. It's a fluid

situation. But there are some

estimate it is could be

trillions and that

that would put a lot of upward

pressure in the short term on

the yen. Longer term we think

that the bank of Japan will take other measures as well. Quantity Tait tiff easing. Quantity Tait tiff easing. It's

not in Japan's interests at all

at this stage for the yen

strengthen, they want a much

weaker yen. I think longer

term, the yen could

weaken. What about the pot fence for --

potential for the 2 billion yen

bond repurchase. What's the purpose of that? That's

basically to help out their

economy. There's two economy. There's two purposes.

One is to help their economy.

The confidence will be very

low. Investors in Japan will be very, very nervous. You can see

some credit squeezes from some credit squeezes from time

to time. And plus to time. And plus the just general slowness of the economy. Similar

economy. Similar to what the Is doing again with their Treasury

purchases by printing money, by putting money into the system,

this helps to spark the

economy. The second purpose course as I mentioned earlier is that should put down ward

pressure on the yen. If we just look around the

we've seen substantial falls in

most regional currencies. Which

are the worst hit and why? We saw the Korean currency hit

quite badly yesterday. competes with Japan a lot of

the exports. T steelmakers in

Korea were going up and the

Korean wand strengthened.

However, this nuclear angle is

extremely worried. extremely worried. Investors in

the US and Europe are selling Asia right

Asia right now. They couldn't do anything else but buy Asia

leading up to this. leading up to this. This is

very unset length and it's made

investors nervous. The hardest hit currencies were the Australian and New Zealand

dollar. The Aussie against the

yen fell 2.5% at one stage and

2% against the US dollar. All

the so-called risk currencies, investors took their money and

put it back under the point, as risk aversion continues, will currencies that

are linked to commodities such as the Australian dollar continue to be continue to be hit? Risk aversion remains there's a lot of analysts

warning of the snap-back. That

will take place if the nuclear

situation somehow settles,, the rebuilding of Japan the rebuilding of the infrastructure Japan, all the

roads and all the towns that have been lost, have been lost, means that they

will be huge importers commodities. Commodity prices

should get a lift. Then you

will see the risk appetite

return. You could see a big

snap-back in some of these risk

asset an risk currencies such

as the Aussie and the Kiwi.

Chinese officials say that the

exchange rate will not be on

the agenda at the G20 meeting

at the end of the month. What

do you say to that? Just

wishful thinking on the wishful thinking on the Chinese behalf? Absolutely. While the

Fed is still involved in

quantitative easing they have

trouble putting pressure on the Chinese. A lot of the emerging markets are feeling their

problems are caused by the

quantitative easing. So while

the Fed is in that position,

they will have trouble putting

pressure on the Chinese and the

Chinese can sort of lay back.

If we see the end of QE 2 and 3 in the middle of the year,

you will seat pressure come on

China, not only from the US,

but also from the emerging market neighbours they have. You don't think that the

exchange rate will feature on the landscape on this the landscape on this meeting

we're coming up to. we're coming up to. Given it

was such a strong issue for

most of last year and it still is to a certain degree? It

still is but I think it will be

pushed to the background in the short term. Another reason it is because I would expect that the Bank of Japan will

the Bank of Japan will start

intervening in the market. intervening in the market. So without the G3 united against China but control their exchange rate, it's

very difficult to put that sort of mounted pressure. It will

come up as a major issue again

but some time after that turn of the half year. Thank you

for joining the program. Thank

you, Whitney. The uncertainty surrounding

the situation in Japan's failing

failing nuclear reactors failing nuclear reactors has

analysts concerned about how the economy will be impacted by

the state of disasters. However

a Professor from the La Trobe

School of Economics says finance says he is finance says he is confident

that Japan's economy is resilient enough to recover from the disaster. One can actually kind of evaluate the pure economic impact pure economic impact of something like this initially.

It does hit a significant part of Japan. Something like 10% of

Japanese GDP. But the actual

damage to infrastructure and so

on can be restored. It will

take some time. Particularly

because of the impact on because these particular because these particular power plants supply something like

10% of energy in Japan. But these things can be these things can be addressed. You know, Japan does have the

resources to do that. If this

immediate crisis is over

without a major radiation issue

coming up, then I'm quite

optimistic they can do it. optimistic they can do it. One of the hardest of the hardest hit industries

in Japan has been its massive

car industry. Plants from all the top car makers have the top car makers have been shut down, some affected

directly and all likely to be

struggling with power outages.

Two of Nissan's plants north of

Tokyo are expected to be

offline till at least Friday. That's estimated to be costing the company around $20 million a day. Dan Thompson the Chief

Executive Officer of Nissan figures but he admits the impact will be significant. I

think it'd be impossible for think it'd be impossible for me

to say sitting here in Australia what the Australia what the global

impact would be. Certainly

we're the the end of our fiscal year, financial year, year, financial year, so as far

as publicly released financial

results we certainly should be secure for

secure for this financial year.

But it will have a tremendous

and significant impact going

forward into next financial

year which starts on 1 April.

German Chancellor Angela Merkel

has released further details

about the moratorium Germany's nuclear power plants in light of

in light of the disaster being

faced by Japan. All reactors

that were built before 1980

will be taken offline

temporarily that is seven out

of the country's 17 nuclear

power plants the oldest of

which was built in 1976. Safety

checks of all nuclear power plants will despite the fact that

earthquakes in Germany are rare and generally very weak. The US Federal Reserve has kept loose monetary policy intact. Central Bank officials

said America's recovery is

gaining traction. They also indicated inflation pressure

from soaring energy costs should be short lived allowing

the Fed to maintain its support

for the economy. Further improvements in consumer spending and a slightly brighter domestic brighter domestic job pictures were noted. expectation that the effects of

higher oil prices will be

transit ory while the Fed didn't mention Japan's earthquake and tsunami specifically according analysts the disaster has added

to the list of potential risks

to US growth prospects.

Economists say as recent global events including the situation

in Japan will buy the Reserve

Bank some time on interest

rates as economic growth is

expected to slow. In the

minutes from its March meeting the its current interest rate

setting of 4.75%. The market

went from pricing an went from pricing an interest rate increase by the end of the year to year to a rate cut. There's been a lot of people who are

having to fall on their sword

and say I was positioned to

expect higher rate increases.

The market has gone completely

against me. I have to get out

of that trade and go the other way. That sort of adds to the

dynamic we've seen today. That dynamic doesn't look dynamic doesn't look like changing in the short

state of flux for some time,

until we get some degree of

certainty about conditions

being under control in those nuclear nuclear reactors. It's hardly surprising then that the

Reserve Bank did not want to

add to its latest board minutes

released reflecting the meeting

held earlier this month before the earthquake struck Japan. I

won't talk about the macro

outlook today. I would rather just answer questions about the

topic under discussion today. Which was the

reflect a weaker household

sector reducing borrowing and a

booming resources sector. If

you think about the composition of growth in of growth in Australia in the period ahead, it is likely to

be investment intense tiff. And

that's certainly embodied in

our forecast. Much of that

investment is likely to be

funded which companies which

are cash rish or tap are cash rish or tap global markets directly. that markets directly. This means

that the growth in the economy

in the period ahead should be

associated with less business credit than has business credit than has the case in the past. Right now, investors are looking no

further than the next 24 hours,

hoping the nuclear threat hoping the nuclear threat will be contained. Origin Energy has

finally announced details of the capital raising to its acquisition of power assets

from the New South Wales State Government. The company is hoping to raise $2.3 billion in

a rights issue which it says

will involve a new level of

fairness for small Origin had already flagged it would tap its shareholders to

pay for much of its $3.2 pay for much of its $3.2 billion purchase of New South

Wales power assets. It's now announced the details. Historically, Origin

has funded acquisitions from equity raisings. We've

our organic growth from our balance sheet and balance sheet and cash flow.

The one for five full yes

underwritten share offer will

be broken into two equal be broken into two equal parts. Half will Half will be offered to wig big constitutional investors, the

other half to small investors.

The price will be $13 which is

a 17% discount to Origin's closing price last Friday. Morning Star Morning Star Resources analyst

Mark Taylor agrees that issuing

new shares to the right new shares to the right for

Origin to go, given it's also

involved in a very capital intensive development intensive development of coal

seam gas in Queensland. Just recently, Origin signed

recently, Origin signed an offtake agreement with

for LNG. It wants to keep the

process rolling and keep things

progressing. The last thing you

want is an untidy

to throw a spanner in the works or slow the proceedings up.

Origin Energy says it's an

equity raising with equity raising with a difference in that for the

first time small investors first time small investors will

be able to benefit quickly even

if they decide not to

participate. We'd like to think

that the terms of the offer and

some additional new features some additional new features in

the offer where retail

investors will be able to trade period are good recognition of

the contribution and importance

we place on our retail shareholders. Those small

investors will be able to trade

# Renounceable rights on the Australian Securities Exchange

from this Friday. The rights will

will be valued at the difference between the difference between the market

price and the offer price,

which means on last Friday's

close, they'd be worth $2.66.

Traditionally small investors

wanting to sell had had to wait

period when the rights had lot

a lot of their value. Mark

Taylor says it's a welcome

development. Nobody is

disqualified or discounted. Nobody comes off second best.

Everyone is treated the same.

If you can't afford or don't

want to participate then you

don't lose any value on don't lose any value on the shares that you do already

own. Sweetening the offer even further is Origin's commitment

to maintain its dividend at the

greater of 50 c per share or

60% of underlying profit. Lead

producer Magellan has been

warned on its last chance after again breaching its

environmental conditions. It

involves lead shipments failing to travel on the approved

transport route over a period of nearly two of nearly two months. Just weeks after Magellan's lead

shipments got back on track,

its lead export operations have

again ground to a halt, and the

premier's warned it's perilously close to coming to a

stop for good. My patience has

all but run out with that unacceptable for them unacceptable for them to change

the route through which they

transport lead carbonate. After just resolving concerns over wrong

leaking lead inside its containers, the company's now been confronted by another

breach. The company's only

allowed to transport the lead

along an approved route where

lead levels are closely

monitored. Instead the route monitored. Instead the route was diverted, in clear breach of the company's environmental conditions. Over more than 50 days between November and

January, 10 training carrying

159 containers of lead were

diverted to another terminal.

Despite the strict vermental Despite the strict vermental conditions imposed on this

operation , it seems no-one even noticed. We received a

call from an anonymous member

of the public advising they had

sane some trains down in the area

area which they believed were area which they believed were carrying containers, carrying Magell an lead. The company

blames its rail contractor and

says the decision to divert

some trains was made by the contractor without our approval,

approval, or knowledge. ARG is

reviewing the matter. The

minister says this breach is serious serious but not serious but not fatal,

yet. That's something I will be

looking at deficiencys in the

contract between Magellan and ARG. The member for Fremantle says that's not good enough. Where is the Magellan will cross before this government takes strong

action? The EPA will conclude its review of the its review of the Magellan metals operation by mid year. And now a look at what's making

headlines around the region.

The 'Standard' reports that The 'Standard' reports that at least 10 banks have raised

interest rates to the Hong interbank overnitrate , plus

.9%, bringing mortgage rates to

1.3%. Thanks for joining Enjoy your day. Closed Captions by CSI