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Good morning. Welcome to the program. I'm Whitney Fitzsimmons. In 'Business

Today' - slamming on the

brakes. Regional markets look

to China after a sell-off. The

search is over. Microsoft and

Yahoo join forces to take on

Google. And not so fine a drop.

Australian wines' image

problem. Those stories shortly,

but first, let's take a quick

look at the markets.

Despite the 5% plunge on

Shanghai's market, one company

defied the trend on its very

first day of trade. China

Construction Bank jumped 56%

after hitting the board as

confidence in the nation's

economic recovery stoked demand

for the world's largest initial

public offering in 16 months.

The shares in Beijing-based

company which is China's

biggest home builder rose to

around 6.5 yuan from its

initial offer price of 4 yuan.

I'm joined now by Chris Weston.

On Wall Street, we saw a raft of company results. What were

the highlights? If you look at

the US session in its total, we

saw the Dow lose about 24

points and the S & P down about

4 points on the day. Heart Ford

financial, and visa surprised a

little on the upside.

Ultimately we pared back some.

Losses on the day. We closed

pretty flat. The bulls will

point out given the bad news we

saw on markets last night with

the durable goods orders worse

than expected, we saw the China

situation develop, people are

wondering how much left that's

got in it, whether that's going

to be a bubble which some

stipulated and the dollar

stronger and base metals and

crude price get smashed last

night. So the bulls will point

out we could 've been a lot

lower than we were but

ultimately, we closed down

about 4 point and not

particularly strong lead for

our market today. Still in the

US, there are signs that the

recession is easing? Yeah, this

is really what helped pick up

market off its lows. We rallied

about .7% on this news. It goes

hand in hand with what we saw with Ben Bernanke the other

day. We've seen 12 regional

banks saying that the pace of

the slowdown seems to be

declining which is great to

see. We saw the auto sales look

a bit mixed. They said the

retail numbers are relatively

sluggish. But we saw Ben

Bernanke on Friday talk about

the rate of stabilisation

increasing, and this really

trims become what we've seen there. So good signs that the economy seems to be going in

reasonably the right direction

and market rallied on that

news. In the UK, we also saw

signs of a recovery

there? Yeah, we saw mortgage

applications go up to a 14

month high. More signs that the

housing market seems to have

bottomed or is stabilising. We

saw mortgage applications come

out around about 47, just over

47,000 at new applications more

than the preefr month, and more

than what analysts were

expecting as well. We saw house

prices stabilise for the third

consecutive month, I think the

Wales is around about 155,000 average home in the UK and

pounds at the moment. And the

market rallied on that news. So

I think the FTSE finished up

about 19 points higher or about

.4%. To regional markets. We

saw a major drop on Shanghai

overnight. Will Asian markets

continue to fall today? I think

we will have a mixed start to be honest. We're looking for

the Nikkei to open up about 12

points higher, up around 10135.

We're looking for the

Australian market to open at 4,136. That's down about 7

points at the moment. A lot of

the downward revision on the

Shanghai index, the composite,

was done whilst the SPY was

open. We're looking for that to open relatively flat based off

where the S & P futures have

traded since it closed. Thanks

for the update, Chris . Now

let's take a look at what's

happening with currencies and

commodities.

Shareholders have reacted

negatively to a deal between

Yahoo and Microsoft which will

see the two technology giants

team up to challenge Google.

Under the 10 year Delia hoo

will use Microsoft's Bing

search engine on its web sites

and Yahoo will sell ads that

appear next to the search

results. The partnership marks

a victory for the Microsoft

chief after 18 months of rocky negotiations. It's been losing

out in the race to dominate the

Internet. Now, Microsoft hopes

it's found part of the

answer. Yahoo!! A deal with

Yahoo might bring a bigger

audience to a new kind of

search engine. Bing was

launched by Microsoft earlier

this year. Nobody yet talks

about Binging rather than

Googling, but could this deal

change that? The first thing

you notice as you're rolling

the mouse over the video it

starts running straightaway.

Bing has already started in the

UK very well. It's a highly

innovative product. We believe

it's a considerable step

forward in the search market.

And we believe that the scale

that the relationship with

Yahoo can bring really makes us

a serious alternative to the

audience and to advertisers.

But all eyes will still be on

their rival, the giant of the

search business. This deal

isn't just about the kind of

results that we get when we

type something like "cheap

flights Spain" into a search

engine. It's about these, the adverts that are sold along

side your search results. By combining forces with their new

joint search engine Bing,

Microsoft and Yahoo hope to

take away some of that

advertising revenue from

Google. There's a big prize at

stake as more and more

advertising moves away from its

traditional homes and onto the

Internet. So will Google be

worried? Reality is this is

actually a benefit for Google.

There is two items to consider.

(1) now they can point to

regulars and say --

regulators and see say, we're

not a monopoly and (2) this

will take a lot of time to iron

out. Google said it wanted to know more about today's deal,

but competition was good. In

sounding confident about its battle with Microsoft, it's

staying ahead.

The world's largest steel producer Arcelor Mittal has

reported its third quarterly

loss in a row in the second

quarter it cost $823 million

after sales more than halved on

the same period last year. A

writedown on the value of its

steel stockpiles and redundancy

expensesed a to the loss. The

Chief Executive says the global

steel industry is now showing

signs of improvement. He also

announced the Luxembourg-based

firm will start production at

some plants but warned a

recovery would be slow.

Australia's Macquarie Group may

be more conservative and

cautious than it used to be but

it's also more confident about

the future. Chief Executive

Nicholas Moore has upgraded

forecasts which is an

indication that suggest the

worst may be over for a group

that's highly reliant to the global market and economic

conditions. At their annual general meeting, Macquarie

Group investors were hungry for

some good news. Market

conditions broadly obviously

have improved in our first

quarter compared to the fourth

quarter of last year. In terms

of our underlying business

performances, as we said, all

major businesses with the

exception of Macquarie Capital

are showing improved

operational perform ance

compared with fourth quarter

09. Nick loose moor is

expecting a first half profit

of around $435 million, which

is 28% lower than last

year. The trading guidance is

around about 5% below analyst

expectations so that's a bit of

a surprise. As Nicholas Moore

has to do, he has heavily

qualified that depending on

market cans because we have

such volatile and uncertain

times. Such is the change in

sentiment that investors jumped

on the hint of better times

ahead. They were very

cautiously optimistic but they have said medium term things

are going to improve. So I'm

relying on that. The share

price reflects a profit result

of pretty close to $1.5 billion

and they're talking about half

year earnings of the order of

300 to $400 million. So the

share price is factoring in a

massive recovery. Which I think

is going to take a long time to

happen. For four decades the

bank has been perfecting the

listed funds model that

generated billions in fees and

helped create the

helped create the millionaires'

factory. The model used to be

that you bought assets geared

them up and put them into

funds. That's not happening any

more, particularly with the

reverses going on. The bank

also holds ek team stakes in

its listed funds and offers

management and advisory

services for a hefty fee. Last

week's announcement that the

bank will unwind its management

arrangement with Macquarie

Airports has sparked concerns

that the Macquarie model is

dead. Macquarie is in the

process like all organisations

of looking at its businesses

and its business mix, and

continually evolving them.

We're continuing to do that. In

terms of specialised funds,

they are an important part of

our business as I mentioned,

13% of our income last year. We

are in terms of the unlisted

side of that business, that is

continuing to grow. The bank

is taking a much more conservative approach to

growth, high lighted by the

$4.3 billion in excess capital

currently held by the group.

Honda and Nissan have both

posted dismal earnings to start

their financial years, but the

big Japanese auto makers still beat market expectations and

offered signs that the

crippling losses of the past

year may be behind them.

Honda's result came in at

snaerl $830 million for the

first quarter remaining in the

black, while Nissan posted a

loss of $176 million. Japan's

biggest ship chip maker Toshiba

has reported a sixth straight

quarterly loss. It says the

result is due to weak demand

which pushed down prices of

semiconductors. The company is

now relying on its power

generation and on-line social

infrastructure to offset the

slump in chip demand. Nim on

Steel has made its second

consecutive quarterly loss.

Weaker domestic demand for

high-end steel products and the

increased cost of raw materials

impacted the bottom line. After

months of negotiations, BHP

months of negotiations, BHP

Billiton has agreed on contract

prices for nearly a quarter of

its total iron ore production.

The world's biggest miner has

agreed to cuts of between 33

and 44%, with its Asian

customers. BHP didn't name the

companies involved but it's

understood the agreement covers

some Chinese steel mills. In a

major break from tradition BHP

will rely less on annual

contracts and sell nearly a

third of its iron ore through a

mixture of quarterly contract

prices, index prices and the

spot market. It's yet to strike

a deal for the remaining 47% of

its iron ore. The miner says

those negotiations are

continuing. The National

Australia Bank is moving back

into full service stock broking

after an absence of nearly 20

years. It's paying just under

$100 million for the private

wealth management business of

Goldman Sachs, JB Were and in

an attempt to improve its wep

tais among its customers it's

abolishing the fee it imposes

on overdrawn accounts. Founded

in 1840, JB Were is one of Australia's oldest broking

houses, with more than 22,000

clients whom it advises on $38

billion worth of assets.

American bank gold man sacks

bought a 45% stake in 2003. The National Australia Bank has

been looking to expand its

wealth management operations

and last month announceed the

$900 million purchase of the

Australian life insurance and

financial planning arms of

British insurer Aviva. Chief

Executive Cameron Clyne says

Goldman Sachs JB Were is a

perfect fit with that

acquisition. Over the long run,

wealth management insurance,

financial planning is a key

strategy for us. We're both

pleased with Avivi and JB Were,

we're starting to build the

iconic wealth management franchise in this

country. There are those who

believe NAB should be bolder if

it wants to build a truly

iconic franchise. In the past

they've shown an interest in

AMP. I don't understand why

they don't do something more

significant and have a very

close look and make a bid for

AMP. One of the most irritating aspects of dealing with banks

is the gouging of fees and in particular the excessive

charges for accounts which are

overdrawn. NAB is abolishing

its $30 impost on such transgressions with Cameron

Clyne saying the for rent of

the customer complaints far

outweighs the revenue generated

by the fee.

One of the major issues to emerge from the global

financial crisis is that of

corruption. Both in business

such as Shane Madden's ponzi

scheme and also the more cloudy

and shifty government deals

done behind closed doors. But

as the idea of greed which many say leads to corruption loses

its gloss, could the current environment provide an

opportunity for general

clean-up? It look at this I'm

joined by corruption expert

Professor Adam Graycar from

Rutgers University and the US

Studies Centre. Welcome to

'Business Today'. Do you think

the current economic position

in the world will lead to more accountability and less

corruption? It's a two-edged

sword. On the one hand there

are greater opportunities for

corruption and there's a greater impetus to

greater impetus to do something

about it. Corruption at the

moment costs the world about

$2.3 trillion a year. That's

about 5% of global GDP. The

World Bank estimates that about

a trillion dollars a year is

paid in bribes. This is an

enormous tax on business. It

undercuts markets. It undercuts

services. And so there is n impetus to do something about

it. Now , President Barack

Obama presents a very squeaky-clean image to the

world. How much of an impact

does that have on other

countries in terms of

influencing their own

practices? On his first day in

office he issued an executive

order about probity in

government. This was quite new

for the United States. What

we've got in America is a very

fragmented society. While

President Obama issued this

very important executive order,

just last Friday in New Jersey

the FBI rounded up 44 people

and accused them of the most

wide-ranging set of corrupt

practices. So America is not a

good example. For the rest of

the world. Do you think that

going down in the future then, you will still see this

disconnect in the United

States? America has a lot of

local government where lots of

brown paper bags change hands

with money in them but at the

highest level at Obama's level

he has made all the right

noises, and in a lot of ways,

the society itself has so many

layers, as do many other

societies, of course. Now, you say that the United States

isn't a good example for the

rest of the world so what country would be a good example

then? Some countries have a

reduced corruption enormously.

In the Asia Pacific area, both

Singapore and Hong Kong have

done enormously well. They had

severe corruption problems, 40,

50 years ago, and there's

50 years ago, and there's been

a lot of political will to

change it. The northern

European countries, Transparency International puts

out a list. At the top of that

list are countries like

Finland, like Norway, like

Denmark and also New Zealand is

regarded as a low-level corrupt

society. I will get to the

Asia Pacific region in a

moment, but I'd just like to

look at the Shane Madden ponzi

scheme that was a major

headline and caused a lot of pain. Do you

pain. Do you think that we will

see other cases like that

emerge? We are seeing other cases like that again and again

and again. Now you can debate a

bit about whether that is

corruption or whether Mr Madoff

was just simply a thief, and I

take the latter view. He stole

money that wasn't his. But

nevertheless, the regulatory regimes were weak, the

oversight was weak, the

transparency wasn't there, and the accountability wasn't

the accountability wasn't there. But we will see others

like that, and we are seeing

them just yesterday, on the FBI

emails there was another set of

ponzi schemes that had come up,

not as big as Madoff's of

course. What do you they rig

lators can do though to police

this? I think what we're

dealing with are two severe

lacks. One is a culture of

greed, in a society where getting ahead

getting ahead is very

important. And it's not just in

the United States. But getting

ahead and if you have to cut

corners, so be it. And the

response, there is a dual

response. One is good strong political leadership, saying

this sort of stuff is

unacceptable and reinforcing it

and backing it with

criminalisation, investigation, prosecution, and

prosecution, and sanctions. But

as we know, many people are

arrested. In New Jersey where I

live, something like 150 public

officials have been convicted

of corruption since 2001. But

they keep doing it. We had 44

arrested last week. So it's the

pressing of the leadership that's important and the

criminal isation. We're running out of

running out of time, so I'd

like to move on to the region.

There are several nations that

are known for being corrupt,

such as the Philippines and Indonesia. You mentioned that

Singapore and Hong Kong have

done a very good job at

stamping out corruption, but where else would you say that

corruption is the worst? The

larger the country, the greater

the levels of corruption

because people are often remote

from decision-making. Singapore

and Hong Kong are a small island states and control can

be exercised much more effectively. Countries like

Bangladesh and India have very,

very severe problems. India

does have corruption,

anti-corruption agency, but

it's not as effective as it

might be. Same with in the

Philippines. Indonesia is

making progress, and it has

made - it's got a long way to

go but it's made considerable

progress in the last five, seven years. We're nearly

seven years. We're nearly out

of time, but I just want to

touch on China. You mentioned

the larger the country the

harder it is. The central

government and the provincial

governments they operate quite separately which makes it very difficult to police and stamp

out corruption there, doesn't it? Yes, that is correct and

this is the American story and

the Chinese story. It's a

federal system or a diverse

system and again, it's levels

of political leadership at all levels that are really important.

important. The central

government does have a lot of

rhetoric, it has a Criminal

Code, but we do know that

officials in the provinces away

from the centre are able to run

their provinces as their own

private businesses. And again,

this is a matter of political

and cultural determination.

Unfortunately, we've run out of

time. We'll have to leave it there but thank you. Thank you

very much.

Australians are very proud

of their wine industry, but

like so many other areas, it's

been hard hit by the global

downturn. One of the reasons

may be that Australian wines

allowed themselves to be

portrayed as cheap and

down-market in order to gain

market share overseas. Wine

lovers come up with all sorts

of words to describe

wine. Rich. But if you want to

describe the struggle

Australian vineyards are

currently facing, ask the

general manager of Broken Wood

Wines. It's the perfect storm.

The global recession and powerful supermarket chains

negotiating lower prices to

carry wine resulted in a 9%

drop in exports last year. The

drop in exports last year. The first decline for Australian

wines in a decade. The image of

Australian wines like Yellow

Tail as the accord affordable critter labels has also hurt

the industry. Eventually the

consumer globally got sick of

what the Americans called

factory wines, wines that are

produceed to a price rather

than aiming for the stars. You

might think the value wines

would do well in a recession,

but Australian wine consultant

Roy Morfeild says the opposite

is true. Price margins are

already narrow so low prices

are not sustainable when sales

slow down and the general public associates Australian

wines with cheap rather than

upmarket. It's our middle market that's our real strength

in Australia. If you take

Australian P&O yo noir, you

could take on the rest of the world --

pinot noir, you could take on

the rest of the world at our

price. He also says Australia

missed the boat on exporting to

China and India, potentially

huge markets. He says

Australian wines were still

marketing to the US and Europe

while Spanish, Italian and

French wines were making

inroads into Asia. It was a

profitable strategy until the

global financial crisis hit.

Meanwhile wine exports to China

from all over the world have

risen almost 40 fold since the

year 2000. Now we're at a point

where the industry really needs

to reinvent itself and start

talking about the things that

have made us great in the

past. Several vineyards are

now pruning their marketing

strategy to reposition their

labels in a new light.

Police in the Indian city of

Chennai have broken up a gang

producing pirated CDs and DVDs.

Acting on a tip-off, police

raided the building where the

pirated discs were being

produced and caught the gang

red handed. Four people were

arrested, including the owner

of five shops. Police seized

audio CDs and DVDs of

Hollywood, Bollywood and Tamil

movies worth thousands of

dollars. In the United States,

they believe in the free market

and free speech, but sometimes,

the two don't sit comfortably

together. In North Carolina, a

kiosk called the free-market

voyeur sells stickers, posters

and knick-knacks which promote

a right wing point of view.

Some want it closed. Others

rallied to defend the

owner. The free market! Support

free speech!

They stood alongside of a

busy road outside of the

mall. Don't close the

successful! While making sure

shoppers who were coming and

going know what's really going

on. You could be next. Who's to

say what someone else considers

offensive? This some IRS 1040

toilet paper. Some consider the

items sold at the Free Market

Warrior kiosk offensive while

officials told the owner in an

email his material isn't

neutral enough. He has nothing

that's discretionary at all. It

says thanks mum and dad for

choosing life on a bib, how cho

that hurt anybody? His

supporters say it doesn't and

some have vowed not to shop at

the mall. We believe that he

should have the same

opportunity to speak his mind

with his merchandise in the arena ideas. I think it's wrong to put a man out of the

business just because he got a

sign that says something

against Obama. While some

signs are anti-Obama, others

reference 9/11 and the election. Some call the

material conservative and provocative. Others call what

the mall is doing plain old

unfair. That's free speech!

That's our right! Now let's

look at what's making head

lines around the region. The

business pages of the

'Standard' leads with IPO fever

in Hong Kong in Shanghai have

sparked fears after bubble forming. The 'Financial Times'

reports on the deal struck by

Microsoft and Yahoo and the

threat it poses to Google while

the 'Wall Street Journal'

examines why the sell-off on

the Chinese market sent a jolt

through other regional markets

from Mumbai to Sydney. That's

all for the program today.

Thanks for joining me. Enjoy your day.

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