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Good morning. Welcome to the program. I'm Whitney

Fitzsimmons. In President -

market jitters. Renewed

concerns about banks unsettle

US investors. Under fire. Rio

Tinto shareholders voice their

concerns over the Chinalco

deal. And weathering the storm.

South Korea's plans to avoid recession. Those stories

shortly, but first a quick look

at the markets. Financials are

expected to be on focus on

regional markets after profit

news out of the US.

I'm joined now by Julia Lee

from Bell Direct. Concerns

about the banking sect quor have resurfaced after the results from Bank of

America? If we look at Bank of

America's result, they actually

had a good earnings per share

result, but it was the bad loan

provisions by overshadowed the

result. They saw provisioning

for bad loans, they've put

aside an extra $6.4 billion in

terms of reserves for bad

loans. I guess the fear here is

we've started to hear good news

out of the banks but a lot of that is probably because of accounting changes and not

because of an actual

improvement in the underlying

business conditions. Fears that

there will be more quitedowns

from the bank added to the

financial sector's woes. We saw

the S & P financial index drop

11%. Still the sector is up 62%

from 6 March but overnight the terrible performance by the

sector. Let's look at the rest

of the session on Wall Street. What other company results were

of note? IBM was the big one.

If we look at its result, the

earnings per share once again

actually were better than

expectations but revenue and

sales missed expectations. We

saw revenue actually slumping

by 11% and computer sales were

down by a massive 23% during

the session. So not a good

result from IBM. We heard from

Bell Weather Texas Instruments.

But altogether a negative

session on Wall Street. All

components of the Dow Jones

industrial average declining.

Only 20 stocks out of the S & P 500 managed to increase. There's been a deal

in the IT sector in the US.

What can you tell us about

that? A few weeks ago it was

bad news for Sun Microsystems

when the IBM deal crashed

through but it looks like it

has a new bidder in the

company. Oracle surfaced as the

new bidder. Its bid is at $9.40

per share, which values the

offer at about $7.4 billion.

That's more than IBM's takeover

offer at $7 billion that was

good news for Sun Microsystems

shares, surging more than 35%

during the session. How are we

expecting markets around the

region to trade today? With

such a poor lead from Wall

Street, it will be very hard

for regional markets today.

We're seeing the Australian SPY

futures pointing to a 2% loss

and the Nikkei futures pointing

down. We're expecting to see

the Nikkei 22 5 full around 200

points. Banks are expected to

come under pressure and oil

stocks as well are expected to

decline after oil prices fell

overnight. On the economic

front - India's interest rate

move is due. What are analysts expecting? We've already seen

three interest rates cuts from

India since December, so we are

expecting to see rates on as

the Reserve Bank of India waits

for those interest rate cuts to

actually seep into the economy.

If we do see a cut, that would

take India's interest rates to

a new record low but we are

expecting to see official

interest rates remain at 3.5%.

Thanks for the update. Julia

Lee from Bell Direct there. Now

let's look at what's happening with currencies and commodities.

As Julia just mentioned,

Wall Street's tumble was broad

based coming off the back of a

six-week winning streak which

saw the Dow Jones score its

biggest gains since 1938. The

rally had many thinking that

equity markets had found a

bottom but now the uncertainty

has returned. It was an

across-the-board sell-off on

Wall Street today. The market

came down and found - woke up this morning and found that

breakfast was gonna be a

salmonella omelet. We have an

economy that grows on money and

credit and unless banks start

to increase their lending, it's

hard to make the case that

there's going to be a recovery

in the economies. Does this

mean that all the signs of hope

we've been seeing in the

economy of late are moot? Many

investors we spoke to say no,

but that today is a tough

reminder. The reality, we are

still a fragile market. We're

still in a fragile economy. The

administration is still in its

through this together and try infant stages. We have to get

to move it down the line the

Rio Tinto says it's determined right way. Global mining giant

to push ahead with the Chinalco deal despite mounting

opposition from its

shareholders. At the company's

AGM in Sydney, there was

substantial opposition to the

controversial $20 billion deal

with the Chinese

Government-backed company.

Major Rio investors have

complained that the Klein co

proposal favours one shareholder over --

the Klein co proposal favours

one shareholder over others.

Round 2 of the Rio general

meetinging and like their

counterparts in London,

Australian shareholders were

looking for answers from their

board. I'm expecting a lively

meeting. A lot of people are very angry over what's been

going on. I'm hoping the board

will be severely censured and

the Managing Director for their

actions. Throw the board out. I

don't think they've done a good job. Uppermost in

shareholders' minds the

rejection of BHP Billiton's

$200 billion takeover bid, the

2007 takeover of Canadian-based

Alcan which caused the

company's current debt

problems, and also, the Rio

Tinto board's proposed

solution, the $20 billion

tie-up with the Chinese

Government-backed

Chinalco. There is no need for

it. There is plenty of cash

available in the world to take

an alternative rather than to

have the Chinese investment.

Particularly when we read of

the backing and the basis of

the Chinese investment. Which

is Chinese Government. Cameras

were not allowed into the

meeting as shareholders vented

their feelings at what one of

them described as the substantial failures of the

management and board over the

last two years. Outgoing

Chairman Paul Skinner stood

firm, arguing the purchase of

Alcan would prove to be a

winner in the long term. A

theme taken up after the

meeting by his successor, South

Africa an Jarne Duplessis. The

Alcan investment will turn out

to be an excellent investment. We acquired some wonderful

assets which we'll never

regret. He also strongly

defended the Chinalco deal but

admitted the Rio board would be listening closely to

shareholder views before voting

on the proposal in the middle

of the year. I would trust we

are not going to put a proposal

to shareholders if you think

there is any chance of it

actually being voted down.

After more than two hours of shareholders airing their grievances about the way Rio

Tinto has been managed and the

situation the company now finds

itself in, the meeting moved on

to the election of directors.

Once again, frustration came to

the surface, with Sir Rod

Eddington being the focus of

attention. Every person who

spoke was opposed to his return

to the board. Besides his role

at Rio, Sir Rod's involvement

with the failed Allco financial

group was high on the list of

concerns. I'm criticising the

decisions that the boards on

which he has previously sat and

sits like the Alcan decision

were not in the best interests

of shareholders. When the

votes were counted, Sir Rod

Eddington had only 65% support

from both large and small

investors in one of the biggest

protests against a director for

some time. Rod, in all my

association with him, has

always spoken up for Australian

interests. And that should be

of interest here. That may be

true, but some shareholders

left the meeting as unsatisfied

as when they arrived. The

directors are not listening to the people. They're not

listening to the public out

there. This meeting left me

feeling that the board is not

listening. That the directors

are unwilling to be

accountable. And that there's a

bunker mentality there. Rio

Tinto's ree mun race report

hardly generated any

discussion, but the "no" vote

was 19%. While the chairman was

denied suggestions that Rio has

been in recent discussions with

BHP Billiton about another takeover bid. To look more closely at the company's strategy and the economic climate resources

companies are facing I'm joined

by our regular commodities

analyst Jonathan Barratt,

Managing Director at Commodity Broking Services. Good morning,

Jonathan Barratt. Welcome to

President. Good morning. We

just heard Rio shareholders

again had an opportunity to

voice their opposition to this

proposed deal with Chinalco.

What do you think of

this? Well, it's I think

another rowdy reception. We had

the meeting in London on the 15th. Sydneysiders ors

Australian-siders had their

chance last night and really I

think it's the board really has

to listen to what's actually

being said. I tend to agree, it

looks like the board has really

bunkered down. Well, many are

of the machine that the tie-up

with BHP would put the company in a better position, though? Going forward it

would've, because you had a

united mining giant selling to

the world. I think it would've

but I think the chance of that happening now are remote for

the next 12 months 'cause under

our law, under legislation in

the UK, you can't take another

takeover bid on a company for

12 months. So I don't think

anything on that front will be

happening for some time. But as

I said, I think it would've

been a great ploy if in fact it happened. Do you think that

means for Rio Tinto then going forward? Look, it's going to be

a bit shaky. When they took

over Alcan, that was the signal

to many of us that they just

paid too much for a company at

the top end of the market, and

that's been the legacy. When

you look at the amount of money

that's needed to be raised,

needed to be raised in terms to

get the company back on an even

keel, it's an astronomical amount, and obviously it looked

to me as if the Chinalco deal

just came through as a white

knight sno. If shareholders do

reject the deal, what options

then do they have to pay down

debt? Well, I think the concern

that a lot of the particularly

the institutional shareholders

felt was that Rio really didn't

go to its shareholders. They

just looked at the deem and

said it makes sense to have -

for Chinalco to increase their

holding. They will pay us a lot

of money and then we will be

able to manage it. So I think

it's a bit of a concern. How

they're going to pay it back if

it doesn't go through - there's

already measures at moment

being put to the market where

they'll issue several bonds, a

5 and a 10-year bond. That

should raise close to 30

billion if it goes through. But

I think it's still a concern

and probably will weigh heavily

on the price at the moment.

Now, Rio Tinto says China looks

like it's recovering in the

next 12 months. Would you agree

with that statement? I'm more

optimistic than many other

people . I know that China has

been buying enough strategic

reserves. We've seen general

commodity prices up between 30

and 50%. I'm more optimistic

that's an economy which will

actually lead a lot of the

other leading economies out of

the recession. So I am upbeat

that China will certainly make

a significant recovery, even

earlier than people are

expecting. And as China plays

a greater role in producing or

the supply side, will the

situation for resource exports

be vastly different? No, I

don't think so. It's a question

which we're all asking because

when you look particularly on

the zinc side where China does

supply a lot of its own zinc,

you can actually see that their

supplying won't make much of an

effect in the market purely

because it has such a huge population. The need for

infrastructure is enormous for

the next 5 to 10 years. So even

what they're supplying I don't

think it will have an indent in

the prices of the commodities.

So you don't think that this

will impact supply and

therefore impact resources? No, I don't. I

think when you see an economy

moving out into more of a

modern economy you're going to

need that resource, that

primary imports. That to me

will probably say commodity

prices at these areas still

represent cheap, but when you

see that economy start to

emerge they'll need a lot more

resource s. So I this will

think - the only thing that

will affect is if we get a

technology shift in the way we

produce things and that could

see prices come under a lot of pressure. But at moment we

don't have any of that on the

horizon. You don't see there

will be a technological shift

then? Not at the moment, no.

The technology shift would

actually shift pricing, pricing

lower, if in fact we can do is

more of an efficient manner but

at moment I don't see that

happening and I still see there

is more demand than supply for

a lot of commodities going

forward. Let's look at how the

resources have been trading.

Profit takers have moved in and

sent oil even lower

overnight? It was quite an

amazing move. Everyone went to

risk aversion trades last

night. We saw equity markets

under pressure. The US dollar

went up. As oil is priced in US

dollars the US dollar price for

oil collapsed around 8%. Broke

through some very critical support levels. Around these

levels we're starting to think

whether or not it can go lower

from here. I guess my feeling

is that as we lead into the

OPEC meeting in Vienna on the

28th, prices should steady

off. And just briefly looking

at gold, how has it been impacted by the risk

aversion? Look, gold, it's

interesting, because gold is

priced in US dollars you'd

expect it to come off but gold

went up close to about $15 last

night and a lot of us are

viewing that there is a double

bottom on gold around the 865 level. So at moment I think

while we have this concern, I

think you will see a flight to

gold particularly over the next

week which could see it reach

back through the 900 level.

Unfortunately, we've run out of

time. We'll have to leave it there, but thank you. No

problems.

Australian Prime Minister

Kevin Rudd has admitted the

country's on track for a

recession this year. After

months of avoiding the R word,

Mr Rudd conceded the region's

fifth largest economy couldn't

escape the effects of a weak

global economic condition. The

worst global economic recession

in 75 years means it's

inevitable that Australia, too,

will be dragged into

recession. Back in February,

official forecasts predicted

the economy would slow to three

quarters of a per cent for the

financial year ending in June

2010 but the Treasurer Wayne

Swan has warned growth

projections would be

substantially worse than those

figures. The focus now is on

protects jobs. The challenge

for government is to cushion

the impact of the recession.

Reserve Bank Governor Glenn

Stevens is expected to give an

update on the Central Bank's

assessment of the local and

global economies later today

General Motors has flagged it

will cut around 1600 jobs this

week. The mainly white collar

positions will be axed as GM

attempts to make bigger savings

as it operates on US Government

aid. The company has also

confirmed it's in talks with

six interested parties to sell

its stake in its German brand

Opel for $645 million. It has

until June 1 to avoid a

potential bankruptcy.

Meanwhile, Chrysler has 10 days

to cut its debt and labour

costs and forge an alliance

with the Fiat group or it won't

get any more bail-out funds.

It's currently in concession

talks with the Canadian Workers

Union. Both car makers are

surviving on a combined $17.4

billion in government loans and

say they need more to say this?

Business. It's not just

American car makers which are

pinning their hopes on a new

generation of smaller, more

fuel efficient models. Toyota

released its first petrol

electric hybrid, the Prius,

more than a decade ago and

recently total sales hit the

172 million mark. But rival

Honda is determined to capture

a greater share of the

expanding hybrid market.

If you think the global

economic slowdown has put the

brakes on the world's top auto

makers, think again. The race

to watch is the ecorace between

Honda's reengineered hybrid

model the Insight and current

king the Toyota Prius. We got a

sneak peak at the Prius

prototype set to roll out

worldwide soon. The prototype

feels very similar to the prior

generations. The difference is,

according to the engineers, you

actually feel like you're

driving a more powerful car,

but this vehicle's actually

more fuel efficient. Toyota

says it's 10% more fuel

efficient, even with a jump in

en jib size from 1.5 litres to

1.8 litres. It's all in the

engineering says the chief

engineer. He adds he's not

worried about the new

competition. It's in a lower

price range, we'll compete by

increasing competitive models and size and quality. We have full confidence in our

quality. But the new kid on the

block is ready to rumble. It

seems to you they're worried

about the new challenge? I

think so. Honda also took us

on a test drive of the Insight.

Beyond the obvious stylistic

similarities Honda's chief

engineer says the Insight is

simpler, smaller and aimed

towards the market that doesn't

want the bells and whistles the

Prius offers. For Honda it's a good opportunity, says the

chief engineer, but also for

the hybrid market overall. You

definitely feel like you're

driving is a compact car here.

It's slightly less fuel

efficient than the Priu, is,

about 8 to 10 miles less, but

the big difference is in the

price. What the base model

price notice US just below

$20,000 it's expected to be

cheaper than the Toyota by at

least $2,000. Honda says in

Japan sales in the first two

months are three times higher

than expected, in part because

customers like this one was

torn between the Prius and the

Insight and may give up the

extra green of the Prius to

save some green in her wallet. It really changes

between the way you drive.

Compared to that price is more important. Analysts Shea this race is a glimpse into the future of the auto makers

because after the recession,

it's these cars that will lead

them on the road to recovery.

One of China's biggest

manufacturers is planing to

raise $1.6 billion in what

could be the world's biggest

initial public offering this

year. In a document sent to

investors, Zhongwang Holdings

says it will offer 1.4 billion new shares. Investment in China

and Hong Kong's IPO boom

fizzled last year as the global

financial crisis reduced demand

for new equities. But analysts

say the IPO market is picking

up because stock markets are

settling down and China's

economic stimulus package is

working. China has been told to

clean up its act in the coal

sector or face dire

environmental consequences. The

International Energy Agency has

outlined steps to cut pollution

in the country. It says without

strong action, CO2 emissions

could rise in an unsustainable

way. It wants tougher regulations, more foreign

investment in energy, and a

price on carbon emissions.

China has already said it's

making cleaning up its

coal-fired power sector a

priority and has implemented

new standards and shut

inefficient plants. Buffeted by

the global downturn, it's

feared South Korea's economy

will contract by 2.4% this

year. But the government is

pushing through a range of

stimulus measures, including an

extra budget and there are

recent signs of stabilisation.

Around the kitchen table in South Korea, there's an old

saying. After the rain falls

the ground gets tougher. The

same goes for the nation's

economy says the Finance

Minister. Over lunch, the

minister told me after a few

rough months the economy is

starting to show signs of a

recovery. Factory production is

up, the balance of trade is

healthy and the government sold

$3 billion in bonds overseas.

50% more than they had planned.

Yet he said the nation isn't

out of the woods just yet. TRANSLATION: It's too

early to be optimistic about

the situation, because we see a

mixture of positive and negative factors. Therefore, from the government's

perspective, we think that we

still need to closely monitor

the world economy. Is this the

bottom, do you think that the

economy is bottoming

out? Transthe common view is

that the world economy will

bottom out at the end of this

year or early next year. Since

the Korean economy relies

heavily on external factors I

think it would be difficult for

our economy not to follow that

trend. Overseas there's still

concern about South Korea's

external debt, that the country

is too exposed to the credit

markets and that it mightn't

have enough currency reserves

to pay back the debt. Are those

fears justified? TRANSLATION:

We have 206 billion US dollars.

And if you look at the debt

that is mature or becoming

mature in the next one year or

so, it is 150 billion. So even

if we needed to pay off all of

that debt at once, we would

still have sufficient reserves

to cover that. Also, I think international confidence in our

ability to pay has been well

shown through the global bond

that we recently issued. What

keeps you up at night? What are

you most worried about? TRANSLATION: We depend

a significant portion on

exports. If a crisis breaks out

outside of Korea, that will

directly impact on the economy.

So one of the things I worry

about the most is how we can

grow our domestic market to

reduce our vulnerability. I've

noticed in some of the

restaurants, on the menus, next

to the word kimchi or next to

the word beef, it says "Made in

Korea". Are you concerned at

all that protectionism could be

on the rise in this economic climate?

TRANSLATION: I don't think that

this will be something that

emerges. Because for a country

like South Korea, that depends

highly on exports, trade protectionism is something that

we actually want to overcome.

It's spring in Beijing, and

there are hopes the new season

will herald an improvement in

China's troubled art market.

It's been a tough year for art

professionals in China. Prices

fell about 28% last year after

a decade where the country's

contemporary paintings were hot

property. According to the

industry web site Artron, many

galleries have been forced to

cut staff, reduce exhibition

space or even shut their doors.

Interest from the US in

particular has dropped off and

artists are appealing to new

markets. I think the Chinese

collectors and many other

collectors from Malaysia and

from Thailand, we have

customers coming from these

countries, too. You know, they

will still buy art. You don't

have to rely so much on the US collectors. Maybe look for

other sources. (Laughs) China's International Gallery

Exposition is in its sixth year

and features work from over 20

countries. Now let's look at what's making headlines around

the region. The 'Standard'

reports a Hong Kong Court of

Appeal judge has criticised the

plan to privatise PCCW calling

it outrageous. The 'Financial

Times' says the market for

mergers and acquisitions has

sprung back to life as deals

toting more than $27 billion were announced. The 'Wall

Street Journal' looks at the

$7.5 billion tie-up between

Organisele and Sun

Microsystems. And that's all

for this edition of President.

If you'd like to look back over

any of our interviews, please

visit our web site. We look

forward to your feedback. I'm

Whitney Fitzsimmons. Thanks for

joining me. Enjoy your day.

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