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(generated from captions) This Program Is Captioned Live. Welcome to Business Today up on the program - rising risk

concerns that crude prices will

be boosted by the Japanese and European campaign. Concerted effort.

banks Japanese and European central remains banks intervene but the yen policy remains under pressure. And bank capital shortly, but dampen inflation. Those stories

at the For more on the market action I'm joined by Juliana Roadley from CommSec. trade is about to opposition.

What will be in focus this week? I'd like to say we'd see what happened

but I think the main focus will

be what happens over the next few ongoing events of few hours in Libya and also the

higher in the happy to see some regular levels coming

at fuk through from the nuclear plant

created a fair bit of calm in

the markets. Since then we've

heard now there is contamination water and milk contamination, markets. And then we've also markets. And then we've also

coalition seen the implications of the

ceasefire, and the concerns there about a

ceasefire, non-ceasefire, whether they've actually hilt all of that Aussie markets. The Australian and New Zealand markets the

first markets to I don't know if I don't know if the volume also

be large in their market today. and the US and the US markets are going to react. Be watching for movement

there is especially in the there is especially in be, have a commodity markets which will there is especially in the

be, have a Aussie. How will the rest of be, have a large effect on the

the region trade today? I think

effect as we'll get here in we'll get a bit of the same

Australia and New

bit of calm in the region. bit of calm in the region. As

people try to wait and see what

see the next approach is. If we do

the oil price moving the oil price moving higher and also flight to shares going session, you probably see the

gold price during the trading shares going the same way. In shares going the same way. In

the coming out later in the week. lot of key economic pieces Here in Here in Australia, it's pretty coming

thin on the ground. We but then we have to wait until

Thursday when the Reserve Bank comes through with

year stability review. Be

interesting to see what their

situation at view is on the Japanese

elsewhere in the markets I

suppose you will be waiting for

Singaporean CPI. We have New Zealand handing down their Zealand handing down their GDP later in the week. We also have

- we're supposed to get an announcement from the Japanese

kab N. Hopefully they'll release that this week and

we'll get a few on their opinion of where

is tracking. The markets in

the US were higher on Friday.

Will that continue this

week? It is a wait-and-see

approach in the market at the

moment. No-one knows what the

major events will be over

next 24 hours. On Friday major events will be over the

merger news in the telco sector, two of the T and T Mobile looking to

merge. You also had a lot

money going into the gold There will be a big switch when tonight. We'll leave it there. Thanks for the update. Thank

you. A happening with currencies and

commodities now. A are when markets anticipateed in crude prices

when markets open. Traders are expected to factor in risk premiums stemming from strikes by risk premiums stemming from air aircraft against strikes by US and British aircraft

government installations and ground targets. There are regime and other against Colonel Gaddafi's

regime and other market

pressures will send the oil

price spiralling toward $150 a

He will kill a lot We think that Colonel We think that Colonel Gaddafi

today has lost his mind. Even it's been a week of high drama. by Middle Eastern

It started with Saudi tanks rolling in to Bahrain.

Then things took another turn

on Friday, when the United Nations Security Council voted

to enforce a no-fly zone over

Libya and take whatever

measures were needed to protect Libyans from their military rulers, including air strikes. This resolution

demands an immediate ceasefire. including enforcement of a authorised the use of force,

no-fly zone. Unfortunately,

the age or era of cheap oil is

energy reality. The events in now behind us. We live in a new

the last two months in the

Arabian Gulf particularly only

serve to reinforce that new reality. When the market is in

doubt, it only does one doubt, it only does one thing. There is now a There is now a coalition of western and Arab powers on a war footing against military regime. The war footing against the

situation will take some time military regime. The Libya

have and the financial markets to resolve. The concerns we

have is whether or

have is whether or not this spreads to other beyond Egypt and Tunisia which

does affect some of the larger we have seen already. If it

OPEC producers then it OPEC producers then it is a serious problem globally. Just as Libya remains viely volatile it's still anyone's guess how

events in Bahrain will

unfold. The intervention in

Bahrain brings into play the unfortunate possibility that

Saudi Arabia and Iran are now on a collision military conflict. Jonathan on a collision course to

Payne lived in Bahrain for Payne lived in Bahrain for nine

years and has studied the

century. He says the Sunni Middle East for a quarter of a

dominated Saudi Arabia's intervention in Bahrain is a

game changer. And raises the question of question of whether Shi'ite

nation also now strike back. The primary point of leverage the Iranians have to is to

create a pot tps create a pot tps blockade to

the south of Arabian Gulf. We

should be ever mindful of the reality that 20% of the world's

oil supply travels daily

through this area. The unun rest in a growing number of Middle East and African flashpoints isn't just tearing

at the social and political

fabric of these nations. It's

markets with the price of crude

oil spiking from $93 a barrel at the start of the year to

more than $11 5 last week. Our fundamental analysis indicates

that the oil price should be

around $85 a barrel based on looking at the fundamentals of supply, demand and inventories.

You have this added Middle East

risk premium that we any is

adding $15 to $20 a barrel. The question now is how high oil prices will go growth. Even before the United Nations voted to impose a no-fly zone over Libya some prices above US $150 a barrel. That kind of prediction

very realistic in That kind of prediction is

very realistic in the short to

meet yum term. You would see

some commence rate demand. Obviously the so-called

advanced economies basically muddling through and

recovering more recently. Could

there are threshold of pain there are threshold of pain be

at 150 like it was last

We think it will be in the

We think it will be in the area

of $120 before you have an impact on activity. While

demand for oil in demand for oil in fragile western economies might be hit

hard as prices climb, it's

likely to be more resilient in developing nations. Last year, China's oil consumption grew by

nearly nearly 12%, Russia by 7% and South America 5.5%. We're looking at in market relying

more and more on the barrel provided by OPEC which in the end is a cartel. I guess the issue is if the Saudis or Iran or some of the larger producers are affected then it becomes

more of a problem. At the

moment there is spare capacity Arabia but also in so other countries making up the

difference for Libya. There is

no supply shortage at the moment. Although Australian

business and consumers can now

expect to start playing much

more for fuel, Gordon more for fuel, Gordon Ramsay says the tensions in Middle

East are at least good for local oil explorers and producers. LNG certainly looks

attractive. If we jump to the situation in means for LNG prices going

forward. But we don't think the

market is factoring a $105 oil price into valuation s in the

stocks here. We think from a longer-term perspective they're attractive. But whatever

attractive. But whatever the

outcome in the Middle East, the current crisis current crisis reaffirms for

some the urgent need for both developed and developing scmes to seek out new energy sources. We can't be held

hostage to this area, which

happens to be home to two-thirds of the proven oil

reserves in the world. But for now, the oil market and the

global economy remain at the whim of some highly volatile forces.

The G7 says it's ready The G7 says it's ready to

act again if currency market

speculation persists in Japan.

The currency dropped over the weekend as the Group of weekend as the Group of Seven intervened in to calm the soaring yen. Speculators

Speculators had pushed the Speculators had pushed the yen higher on concerns insurers higher on concerns insurers and investors will redeem assets to

pay for reconstruction in

Japan. Despite speculators fearing a high level of

repatriation of funds which is common after common after large natural disasters there isn't much evidence of this economist of Namura economist of Namura Australia

spoke to the ABC about why he

believes Japan is believes Japan is wealthy

enough to pay for the


efforts. Substantial savings, the way in which we see the reconstruction occurring, there

would be a lot of help from the

government and our assumption would be that the would be that the fiscal spending, the special budgets

which will be coming through which will be coming through in

the fiscal year 2011 will be about double what they were

after the Kobe earthquake so after some after the Kobe earthquake with some delay, we had the additional budgets running

through. It was worth about $3

trillion Japanese yen. This

time around we would think that there would be something of the order of about 6 trillion yen coming through from the government. That will be

largely funded by bond issues

which we feel would be absorbed comparatively comfortably comparatively comfortably by the local

are in a good position to be

able to reconstruct. It's been nine days since Japan's devastating earthquake and tsunami

tsunami and soon the focus will shift from rescue to recovery

and rebuilding. The nation has suffered

suffered extensive damage to its infrastructure in both

north and east, which north and east, which is anticipated to delay economic growth. It's in this area that Australian businesses may be

able to help Japan in the rebuilding efforts. more I spoke earlier to Peter

Anderson the CEO of the Australian Chamber of Commerce and Industry. Welcome to the program. Thank you. If we just look at the Japan situation, look at the Japan situation, do

you anticipate there will be a

lot of Australian businesses

involved in the rebuilding effort there? It's effort there? It's an appalling situation in Japan.

From the images on our TV screens and over the knelt, we've seen a we've seen a massive destruction of infrastructure

in the north east and parts the north west. Australian

businesses have deep ties with

Japan. We had an infrastructure mission in Tokyo the

that the quake hit. So there is

a lot of experience by Australian business people and Australian companies with

helping Japanese companies and

the Japanese government on infrastructure issues. There

will be some business opportunities that

friends speak to work their way

through the immediate aftermath

of this terrible disaster and start start rebuilding their infrastructure. Who what role do you see businesses playing, do you see Australian businesses playing, what businesses playing, what sort

of vital role do you see them playing and what specifically,

what areas? The primary role

is going to be played by

Japanese interests. Our roles, though, have important supplementary roles.

The Japanese government has had

quite considerable experience

with the concept of private partnerships. And in a

direct sense, some major

Australian businesses may be

able to participate in the

direct reconstruction through

partial funding off the public private infrastructure programs

the Japanese government may put in place. Do you also in place. Do you also see direct investment comes from

Australian businesses as

well? It's possible. We

certainly will be directly

investing in that supply chain, because the provision of raw

materials from Australia, for

example, will be the building blocks for the production of some of the manufactured

product that's used in the development of both economic

and social infrastructure that

needs to be restored. But we

also have a good reputation for

high skilled professionals in the building and the building and construction

industry. Many of whom industry. Many of whom are already already working throughout

Asia. And it's quite likely

that they will be in a

to combine with Japanese

interests to assist the

development of those plans for

infrastructure development,

because as we know, the type of infrastructure,

country like Japan is country like Japan is looking at is cutting edge

infrastructure, which is

infrastructure that deals with

some of the most some of the most high tech technologies that we have in

the knowledge world been able

to develop. So it will be an

opportunity for Australian

business interests, but it will

also be an opportunity to work

with a very sophisticated

technological country like Japan. If we just look broadly at the region, there is an infrastructure deficit around deficit around Asia. Could you just explain what you mean by that, please? The infrastructure needs of the

Asian region, both economic infrastructure such as ports,

rail, roads and the social

infrastructure needs, schools,

hospitals and the like, are expanding faster than expanding faster than we are

able to supply demand. And that

is because the Asian continent

is a fast-growing continent in

terms of both population and

also the aspirations of people to to lift their standards of

living. So as we're living. So as we're seeing, increasing movement from agricultural sectors into urban sectors, as we're seeing increasing movement increasing movement in people's living standards from lower

income to middle income, then

we're seeing much we're seeing much more demand

on our urban and our infrastructures. You're saying that there needs to be investment also, though, investment also, though, in

human infrastructure through skills development as well as the physical type of roads and

buildings, etc.? This is a really interesting issue. I think something that Australia

is able to make a real

contribution on. Our notion of

infrastructure in our country

is not just investing in buildings and facilities, but

also investing in the through our education and

training system. And we know

that there are also some very

substantial steps now

taken in even the emerging

countries in Asia countries in Asia with educational development educational development and

attainment, and so investing in

knowledge is going to be a critical critical part of developing the infrastructure capacity of our Asian Asian region Asian region because investing in knowledge is going to in knowledge is going to give us some of us some of the segues into

dealing with huge challenges

such as the energy supply

challenge. We know that dealing with the issue of carbon

abatement is fundamentally a technological issue, developing

the technology that can create lower emissions lower emissions through

production and exchange. And that means that investing in

human infrastructure is going to reap a substantial dividend if governments and the governments and the private sector to do so in the coming

years. You also say that tightening

tightening of capital markets and access to finance post the

GFC warrant a review of foreign direct investment rules. Can

you just expand on you just expand on that

comment? Capital is global. Capital moves across Capital moves across borders.

And we know that individual countries

in and of themselves, are by

and large not able to meet the demand. This means that

capital from outside country

borders is required to come

into a country to develop the necessary infrastructure needs.

And that means that countries

are going to have to look more

liberally at some of their foreign direct investment

rules, particularly countries. They are going to

have to take less of a nationalistic position on

foreign direct investment and

much more of a pragmatic view

about whether or not investment

that comes from outside of

their country is able to their country is able to be channelled into productive

infrastructure and a good

return on investment able to be

provided to the private sector

interests that can do

that. Peter Anderson we'll

leave it, there but thank you so much for joining the program. Thanks very

Insurance company the American International Group

says its charters unit expects

claims from the earthquake in

Japan and other Japan and other major disasters

in the region to cost the

company around $900 million company around $900 million in the first quarter. The figure

includes 700 million in pre-tax claim costs from the earthquake and tsunami but there is exposure through AIG's general

insurance operations in Japan. Those costs could run to $575

million, mainly from its

participation in the Japanese government's earthquake insurance pool for private homes, which holds about $500

million in AIG reserves. The

company says it's impossible to

estimate the losses from the

housing industry at the moment.

Most recent predictions put

insured losses from the

earthquake and tsunami between 12

12 billion and 25 billion. 12 billion and 25 billion. The federal has dismissed reports he's

about to reject a proposed

merger between the Australian and Singaporean securities exchanges. exchanges. The Foreign Investment Review Board received

received the proposal more than

a week ago and has four months to consider it. Federal

Parliament must also approve

the deal and the coalition and

Greens have suggested they will

vote against it. Weekend

newspaper reports claim the

Federal Government and the

regulator are set to reject the merger.

has told the ABC he has not yet

made a decision on the deal. China has lifted bank reserve

ratio requirements for the third time this third time this year,

indicating policy makers see

inflation as a bigger threat

than any fallout from Japan's

earthquake disaster. The

Central Bank announced Central Bank announced the

ratio will increase half a

percentage point from this

Friday, and the move will see

capital reserves held by

China's biggest banks lifted to 20%. The tightening move will

soak up as much as $53 billion,

as Beijing tries to control

credit growth and stop inflation hitting 6%. Some economists are predicting the

People's Bank of China could

hike interest rates again in the next few weeks. A fresh

food scandal has erupted in

China after the country's largest meat processor largest meat processor was forced to apologise forced to apologise when an illegal additive was reportedly found in some of products. 22 people have been

detained, including three

senior officials. It's the

latest food safety scan tal to shock China . 20 people have been detained over been detained over allegations

they fed pigs with illegal additives. Pigs that have been fed with additives that fed with additives that make their meat leaner have entered

the market. The additive can be poisonous, leading

dizziness, heart palpitations

and profuse hearing the news we have an

emergency meeting and made

urgent arrangements. 50 pigs

out of about 1,500 have tested

positive to the drug, used by

farmers to bulk of you livestock. First I'm very

angry. It's not the first time that this additive has that this additive has been

used. It's happened before. Why does it does it keep happening? I'm

not hugely worried. I'm still buying development company, the

country's top meat processor

has announced as one of the companies named in the scandal. Shares in the company until official findings are official findings are released.

In a separate statement, its parent company expressed parent company expressed deep

apology for the incident. A look around the region. The 'Standard' reports that 'Standard' reports that local markets have lagged behind US

and European increases as the

disaster in Japan continues to dampen sentiments but bank

results out later this week are

set to boost local indices. The 'Financial Times' reports that

US banks are set to face more scrutiny on below market loans.

And Mizuho bank may face system breakdown left millions

of Japanese unable to access

funds or receive funds or receive salary

payments. That's all for payments. That's all for this edition of the program. If you want to look back over any of

our interviews, please visit

our web site. We our web site. We look forward to your feedback. Thanks for

joining me. Enjoy your day. Closed Captions by CSI

This morning, skepticism

over Muammar Gaddafi's call for both sides to

But the President made that

call just hours after vowing to crush his enemies. The people

of Libya have been given all

sorts of weapons. Also today, the good news.

Japan was so desperate for. Two people pulled alive from the

rubble, nine days after the

tsunami. tsunami. And Prince William's royal tour moves from Queensland to Victoria's flood-affected north. Prince

William has been like a ray of


Good morning. You're watching ABC News 24. I'm Joe