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Hello welcome to the Adriana Raschella - - welcome to the program. I'm program. Good morning and

markets rally a China turn

around boosts investor

sentiment on Wall Street.

Steely resolve. Rio Tinto profits dive but profits dive but the miner

remains upbeat. Spending

their way out of trouble,

India's confident consumer.

Those stories shortly but

first at look at the markets.

We could see regional markets

build on recent gains after a

positive lead from Wall

Street. Yesterday Japan's

Nikkei jumped almost 2% after

a rebound in China and higher

oil prices. Australia's ASX oil prices. Australia's ASX

200 closed flat with caution

the overriding factor.

Mainland exchanges turned

around recent losses on signs

of regulatory support for the

market and Hong Kong shares

followed suit bouncing up

1.9%. Wall Street - stocks

gained for the third day in a

row. Investors were

encouraged by recovery hopes

and a turnaround in China. In

major Europe banks helped lead most

major markets higher. For

more on the market action I'm

joined by Julia Lee from Bell

Direct. Wall Street rallied

today? Last week we saw the

US market reach a new high

for 2009 but since then we

have seen the market struggle

a bit but overnight it was

another positive night. You

could have called it a bank

rally because it was the

financial stocks which led

the way up. We saw the the way up. We saw the

financial index, the KBW bank

index up 9%. AIG may payout some of the Government

bailout fund and may be to do

something for shareholders.

Its stock up a massive 21%.

Yields on the 10-year

auctions the lowest in the

last five weeks which helped

support the market. In the

end the did you and the

Nasdaq up half a per cent, Nasdaq up half a per cent,

the S&P gained 1%. The Philadelphia Fed reported manufacturing in the region

expanded in August. What did

that do for the markets? We

saw positive news with the

first expansion in a year. If

we look at the August numbers

any positive number signifies

an expansion and we saw a

reading of positive 4.2

following a reading ever negative 7.5

negative 7.5 in July. We saw

a reading of a rise of 0.6 on

the leading indicators t

fourth consecutive month. The

jobs numbers were worse than

expected and the market

overlooking that and those positive purely Fed numbers

were good news for the market

dollar which declined on the but bad news for the US

news. In the UK mixed data

there? We saw retail sales

out of the UK up by out of the UK up by 0.4% in

the month of July but that

was really overlooked for the Government defconstituent

which came in at a massive $

?8 billion. This is the

highest since records start

back in 1993 and probably one

of the reasons why S&P

lowered its outlook on the UK

Government's credit rating of

triple A from a stable to triple A from a stable to a

negative back in May. Porsche

has its offices raided by

German authorities of what is

going on there? Last year

Porsche tied to launch a bid

for VW and was looking at

getting 70% of its stock. Is

now being investigated for

market manipulation in market manipulation in VW

shares. The CFO its being

investigated so this will

continue for sometime. Lastly

Julia, how is the section

looking on regional markets

today? We have seen a

positive lead out of the US

which should signal a mildly

positive day in Asia. The

Nikkei is down and the Hang

Seng futures are higher,

Australian futures gaining by 285 point t

Australian futures up 13

point. In Australia earnings

will be in focus. We heard

from Westpac, their

third-quater cash earnings

coming in at $1.1 billion.

The market will keep a close

eye on where the Future Fund

may be spending its money

because it sold $2.4 billion worth of Telstra shares but

are hoping for a positive

toned the week. Thank you

Direct. Let's look Julia. Julia Lee from Bell

Direct. Let's look at

currencies and commodities.

Shares in Australia's Shares in Australia's

biggest miner closed 1%

higher in London despite it

reporting a 65% slump in half

year profit. The key laps in

commodity prices late last

year has cut deeply into Rio Tinto's results and the

company is far from convinced

the strong rally in commodity

prices will be sustained but

investors are betting on a

brighter outlook for the full

year. For five years Rio

Tinto road a Tinto road a super-charged

resources boom. Now the

company is navigating an

almighty crash. Rio Tinto's

latest results show net

earnings have fallen by

two-thirds compared to the

first two months ever 208

while underlying earnings are

down by more than half. A

slump in prices wiped out

most of last year's interim

profit while a drop in volume

had an impact but gains from

cost cutting cost cutting and foreign

exchange movements. The

profit number came in less

than analyst expectations.

However looking beneath that

number and having a broader

look through where the

company's position here today

is the number of encouraging

signs came through. Tim Schroeder says those signs

include better than expected

cash flows and a write issue cash flows and a write issue

an as yet sales which reduced

Rio Tinto's debt by $8

billion. The balance sheet is

different to last year and we

have seen that if people look

through the net interest

expense of the company it has

reduced from over half a

billion in the previous half

to around $300 million US in

this half. While Rio Tinto's

financial position is

stronger it is not convinced stronger it is not convinced

the rally in prices is

sustainable. China's export

markets remain fragile and

OECD conditions will remain

constrained in the medium

term increasing uncertainty

about the sustainability of

economic recovery at a global

level. Rio Tinto is trying to

manage tension was China on

two fronts. First in the

unresolved iron ore price negotiations and negotiations and secondly

because of the arrest four

Rio Tinto employees including

the Australian Stern Hu. We welcome the fact the grounds

for their arrest do not seem

to be as serious as earlier

reports had suggested. ASEAN

has said "We respect China's

legal processes and we

believe it is not appropriate

for us to comment further as it runs its

it runs its course" The

ill-feted Alcan position

haunts Rio Tinto. Aluminium

bore the brunt of the

resources downturn. Rio Tinto

expects by the end of this

Year 12% of its smidget

companiesty will be shut down

but aluminium has recovered giving investors some hope the division is set for

recovery. The recovery. The company has

gone to lengths to explain

the repositioning of that

business both from divesting

non-core assets but repositioning the existing

core assets Lyn the division

to be in the first and second

qua tiles on the cost curve

making their more

competitive. While Alcan

remains a laggard Rio Tinto's

iron ore is a stand out with full capacity in the full capacity in the Pilbara.

The company is aiming to have its proposed joint venture

with BHP Billiton in place by

the middle of next year in time for what Rio Tinto hopes

will be a more sustained

global economic recovery. The

still and commercial bank of

China has posted a higher-than-expected second

quater profit. Net income

came in at $4.6 billion up 3%

on the same time last year.

ICBC says the figure ICBC says the figure is

mampbly due to record credit

growth and lower provision

for bad loans as the economy

improves. It is the world's

biggest bank based on market

value. The bamg says net margins recovered in the

second quater and are

expected to keep rising in

the second half of the

year. The world's biggest

mobile operator China Mobile

has reported its slowest ever

profit growth. The company's profit growth. The company's

net profit was $8 billion for the first 6 months of the

year, that is up only 1.5%

from the same time last year.

China mobile has suffered from increased competition

and the need the target less

profitable country areas as

urban markets become saturated. Its results were

hit by the economic slowdown

and an expensive new third

generation network but China Mobile has

Mobile has more than 490

million customers. Australian

insure er QBE has a long

record of surprisinging and

has continued. QBE has

produced a record result

despite terrible market

conditions. Profits at AMP

and ASX were not as impressive but the impressive but the market had

already priced in the bad

news and both companies are

relatively upbeat about the

future. Fires, floods and a

global financial crisis all

conspireing at once could

destroy an insurance business

but for Australia's biggest

surer a perfect storm of

event has vindicated QBE's conservative approach. When you make

you make a report for the - a

record for the first half you

have to be happy and

particularly in the

circumstances that we in but

I have learnt a from

experience that that is the

only way you get to keep your

job. QBE turned in a

first-half profit of $1.02

billion up 19% on last year,

that is well above analyst

forecasts and the market

reaction was swift pushing reaction was swift pushing

shares up 6% by the close.

The result was even more

impressive given the 80% of

ref now has come from ever

ever overseas and exposed the

the wild swings seen in the

Australian dollar in the past

year. Pretty amazing

increases in renewable

business, he has delivered

what he expects, seconded the

yield on the port fold yes

was received with scepticism

and they have delivered more and they have delivered more

than adequate yield and

thirdly the strength of the

balance sheet it has been

reaffirmed. AMP tabled its

half-year numbers. The

financial services group

delivered an operating profit

of $367 million down 16% on

last year. But the lack of

surprises in the numbers

helped the stock gain 3%. The

The result reflects good

earnings diversity with

strong results in Australian

risk insurance and retail

banking, robust cash flows

with market share growth in

super, retirements and

insurance. Earnings for AMP

are heavily geared the the

market and the Australian

Securities Exchange which

regulates the market has

described this year as

everyone's annus horribilis. everyone's annus horribilis.

The ASX reported a profit of

$313 million down 14%. The

decline was driven by a 30

per cent drop in turn over

and a slump in new company

listings but the rally in

markets on March has list

revenues for the ASX. The

growth trajectory of the

April-June quater appears not only to

only to have carried through

in the July to mid-August

period but it appears to be

uplifting a little further in

both the equities market and

the futures market. Analysts

agree. Obviously the

rebounding markets will have

a positive impacts on cash

market activity and we seeing

that in recent months as I

mentioned. Also the increase

in Government securities on in Government securities on

issue should centrally have a

positive impact on contract

volumes. But once volumes and

markets return the normal the

ASX will face different

challenges as new entrants

try to pick off niche parts

of its business. As we heard

earlier Australia's Future

Fund has sold $1.4 billion of

Telstra shares to major Telstra shares to major institutional investors. The

move was well flagged by the fund which still owns more

than 10% of Telstra. The Future Fund wants the reduce

its over wabl exposure to the

telco and create a better

balance in the $50 billion

portfolio. The Future Fund is

an independently run fund set

up by the Australian

Government to finance public sector pensions.

As cautious optimism

sweeps markets the US dollar

has turned out of favour with

the focus on higher-yielding

more risky assets. Tom Noonan from Thompson Reuters joins from Thompson Reuters joins

us. The US dollar is not

appearing too popular with

investors at the moment? Two

things are weighing on the US

dollar. One is the investor

risk appetite remains at very elevated levels which means

investors are taking the

money at low-yielding US

assets putting them in

higher-yielding currencies as

you mentioned but the other you mentioned but the other thing is that Treasury

yields, particularly the

10-year Treasury yield has

fallen quite sharply in the

last two weeks after the

better-than-expected jobs

numbers 2 years ago it was

down 4.42% now which is

drawing money away from the

US dollar. How is the

greenback doing against the

euro? We are very much in a range-bound range-bound situation at the

moment. We are trading

between 1.41 and 1.44. The

dollar is loseing a bit of

ground against the euro since

last week's close because of

the falling US yields an the

increased investor risk

appetite but a lot of reports

say Central Banks in Asia and

Eastern Europe are on both

sides of the market buying

the euro when it

the euro when it false below

1.41 and a half and selling

fittings up to 1.43 so we are

in a range-bound situation. And the news out

of the US had an impact on

the yen? Yes, in the afternoon the Fed survey came

in better but the yen weaken

add bit. The yen in

the US particular is very sensitive

the US yields so since the 2

weeks, in the pasts 2 weeks

since that job number in the

States the yen has

strengthened 4% against the

US dollar despite investor

risk appetite remaining at

elevated levels which

normally hurts the yen which

is purely down to the US

yield factor. How is the US

dollar doing against the

South Korea yuan? The South

Korea yuan weakened Korea yuan weakened for a few

days. When we had the sell

offs in the Shanghai compost

why it investors were more

cautious about leaving their

money in Asian assets, taking

their money out of the kospe

and the yuan weakened against

the yen and the US dollar but

when the rally finished

higher investors returned the

a by. In the yuan and it strengthened

a by. In the past weeks the

yuan has weakened particularly against the

yen. We are hearing more talk

about recovery. Will that be

bad news for low interest

rate currencies? It will be.

The more this the market has

recovered the higher-yielding currencies like the

Australian and the Canadian

dollars will be far more

appetising to global investors. The investors. The lower interest

rate currencies do berth

during times of drive when

investor risk appetite really

goes to investor risk aversion. That is not happening at the moment. There is still a few

questions whether this

recovery is sustainable so a

lot of investors are staying

on the sidelines until they

see more I'm per call

evidence that the global

economy is on the up trend

but if that is the case and

and it continues the move higher

and sentiment remains strong

that will weigh on lower interest rates

currencies. You touched Tonka

made cran dollar. Can you

expand on why that is doing

so well at the moment. That

is down to commodities.

Commodities prices have risen

strongly this week and have

in the past few weeks and the

crude oil price has jumped up

quite a bit this week which

dollar plus the has helped the Canadian

dollar plus the economic

forecast for Canada because

of the natural resource base

is looking brighter than it

is in the US and other parts

of it world and particularly

Europe so the Canadian dollar has benefited after a weak

patch a month ago it is back

in favour with investors

again. We are seeing pretty

ordinary numbers when it

comes to the public finances

in the UK how is that

impacting the pound? The

pound is - they pound is - they are getting

two-tiered data. The sales

figurest out of the UK last

night were strong so some

sectors of the UK economy are

doing well but the public

barring is a worry

particularly after David

Cameron the Conservative

leader Opposition started to

question the UK's ability the

pay their debt so that is

weighing in the background on

investors whether or not the

UK government will stay UK government will stay solvent in the longer term

and numbers out last night t

fact the that they are $8

billion in debt weighed on

benefiting from the blood the pound. The sterling is

weakness of the US dollar at

the 1.65 level but is underperforming against the

Aussie and the Canada. We

keen to know what is happen

win the Aussie dollar. Where

is that heading? The is that heading? The

Australian dollar remains at

elevated levels above the 83

cents level the higher level

which has been for the last -

for 2009. It looks quite

strong at the moment. It will

depend on the commodity

prices continuing to move

higher. Obviously interest

rates in Australia look to be

going higher before any of

the other OECD countries so

that is giving the Australian

cent dollar underlying support. 85

cent looks like a pretty

easily achieved objective.

Above there though it may run

into sticky water. With all

this in mind what can we look

forward to with the yen in

relation to the Australian

dollar? The yen should weaken against the Australian

doll yamplt however we have a

Japanese election in a few

weeks. There is a lot of

speculation that there will

be a new Government.

be a new that there will be a new There is a lot of speculation election in a few weeks. However we have a Japanese

Government. That may give if

yen strength straight and a

change in spending may

improve the Japanese economy

and push up Japanese yields

which will make the yen more

attractive. The Australian

dollar should strengthen

against the yen, in the

short-term the Australian

dollar may weaken against the

dollar may weaken against the

yen. John Noonan from

Thompson Reuters thank you

for your time this morning

My pleasure.

10 former directors and

executives of Australian buildings products company James Hardie have been banned

from board positions for at

leasted five years. Along

with the company they were

also fined over misleading

statements about the adequacy of funding

of funding for asbestos

victims. The impact of the

case is expected to be felt

in board rooms across the

country. At the heart of the

James Hardie case was a press

release about asbestos

compensation which turned out

to be false. Corporate

governance experts say it is

a classic case where

diligent as they should have directors were not as

been. I think this is a wake-up call for directors right across Australia right across Australia that

they must take their duties

very seriously. And their

duty was not to accept at

face value what they were

being told. They obviously

cannot just rely entirely on

what a range of advisors

could say, lawyers, accountants, actuaries,

directors out of this have to

make more inquisitive questioning of the advice

they have received. That is a

very big lesson out of

this. Like many others who

have watched the James Hardie

situation unfold Tim Sheehy

says the bottom line is not

everything. James Hardie

directors seem concerned only

for tint of their major

shareholders Share owners

did play a part by buying the

stock in excess of the

general market and by not

the board of directors in communicating in enough to

relation the their concerns

and what the share owners

ought to have said "You have

a social licence and you are

placing that in grave

jeopardy and we are very concerned". Those

shareholders eventually paid

the price for that position when James Hardie stock

plummeted in 2005 as the

asbestos liabilities

threatened to bring threatened to bring down the

company. Also large. Large

over the James Hardie case is

executive remuneration. Big

bonuses were paid to many

James Hardie executives such

as former boss Peter

Macdonald bonuses which now

seem very inappropriate.

There are those who believe

the board should have taken a

much tougher stand on the pay

issue. Some of the people

who have been determined

today have received

significant bonus its, bonus

thanks would cover the fines,

many, many times for many

years prior to the man fess

tafgts risk they were

creating and they were paid

handsome ly for. That that is

not in share owner

interest. Then there is the

pay of directors or fear of

losing it. There is a view

an independent director is

not somebody involved in the

company in terms of its

management and do not own

shares in that company but if

an independent director is a

professional director an the

share of their salary comes

from directorships there is

not an incentive to trok boat. India consumers appear

determined not to let the global financial crisis ruin

their mood. They continue to

spend even on luxury goods.

In fact at new survey shows

India has the second highest

level of consumer confidence

in the world. A family out

wing one goal in mind, find something dazzling to take

home This is one I think I

will buy. Those words music

to the ears for the company.

The global recession has been

bad for the jewellry

business, gomed declined 22%

in the second quater this ld declined 22% in the second

quater this year. The owner

says the combination of gold

prices and consumer hesitancy

kept him up at night. The

latest survey out bay group

that looked at 28 countries shows India is shows India is the second most optimistic nation in the

world when it comes to consumer confidence right

now. India is the second

just after Indonesia and

actually they are neck to

neck so the Asian countries

are leading out of the top 10

globally. From the markets to

job prospects those surveyed

in India say they are confident the worst is confident the worst is over.

We are spending and we buying

stuff as well. Back at the

counter customers are all

smile. She dips in and out of

two economies, India when she

visits and Canada where she

lives. She says India's

economy is shining. The

shops, the restaurant are

full, everybody is buying, I

do not see any signs of recession recession here. But the

businesses know this has been

a downturn so the Connors are

being cautious not stocking as much product and waiting

to see if the optimistic attitudes turn in the real

profits. Now a check on what

is making headlines around

the region. The Standard

today highlights China

Mobile's second-quater profit

slow down. The 'Financial Times' reports Times' reports German prosecutors are investigating

the former CEO of Porsche

after claims he passed inside

information to VW after its

failed take over. And the

Wall Street journal says big

Russian firms are rushing to

raise funds in a new way to

get deals done in the world's

fastest expanding economy. Have a great weekend. I will see you next weekend. I will see you next week. Closed Captions by CSI