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Good morning. Welcome to the

program. I'm Whitney

Fitzsimmons. In 'Business

Today' - pulling back. Weak

data worries Wall Street.

Banking on results. Investors

buy up financials. And cashing

in on concerts. Live

performance weathers the

downturn. Those stories shortly, but first, a quick

look at the markets.

For more on market action

I'm joined by Chriss we fon

from IG Markets. On Wall

Street, the markets have

reversed recent gains? That's

right. We saw the Dow down

about 39 points, the S & P lost

about .3%. We opened up a bit

weaker on the S & p.s. We

traded down to 994. That 1%

lower in the first hour. We saw

that reading on the private

sector job numbers from ADP.

Worse than expected with

371,000 new jobs being lost

from their economy. People sold

off on that, but that low was

reversed and we saw a bit of a

pick-up, ultimately the market

finished lower, but the factory orders which are very much

looked at for commodity stocks

were better than expected with

growth of .4%. Some of the

commodity names had some good

gains last night like Alcoa,

Freeport, so some good leads

for our markets but the

financials drove the market in

the US. We saw AIG up 62%, Bank

of America and JP Morgan put

some great points into the

market, very good leads for our

banks today. Ultimately, we

finished a bit lower but some

good sectors which have put

some points into our market

today. And of course, the news

wasn't all bad for Cisco

Systems, either? They beat

expectations from a top and bottom-line growth spectrums.

If you look at their revenue we

saw revenue at 8.54 billion. It

was expected to be 8.51 billion

in terms of earnings per share,

we saw that at 31 cents ber per

share, it was expected to be

29. That beat on the top line.

On the bottom line, they beat

as well, but the stock was down

about 1% in after hours,

because they said that revenue

will fall 15 to 18% going

forward. So people did sell it

off in the after hours market.

In the UK, how have banking

stocks performed, particularly

keeping in mind Lloyds of

London's result? Very well. If

you look at the FTSE, it

finished down half a per cent.

If we look at the financial

sector, it was up about 1.8%.

Lloyds finished up a massive

10%. It was to do with their

forward-looking outcome. They

did say the loss was 3.1

billion pounds. That's

absolutely huge, but you have

to remember, they've had a huge

write-off for their acquisition

of HBOS. They've actually said

this writedown resulting from

HBOS is probably the bottom of

their provisions, they don't see provisions being anywhere near this going forward. So

that's why we saw the stock rallying significantly and

stocks like Barclays and RBS

taking that lead and have

significant rallies as well.

We'll have more on that story further down in the bulletin

but let's move on. You

mentioned that you expect

banking stocks to be strong

today in the region. What other

areas will be good performers? We've got the

market to open 4257. That's a

bit down from from we closed

yesterday. The SPY futures

pointed up 3 points but we

expected the material stocks to

do quite well. BHP up about 1.7

based off its ADR. The

financial stocks have a pretty

good lead as well. Japan, we

see that opening 10285. That's

up about 32 points from the

previous close. A mixed

reaction. The leads from Wall Street, nothing to write home

about today. The Aussie is

continuing its rise? Yeah, we

saw a bit of a pullback last

night, just before the open of

the US cash market, we saw the

Australian dollar trade down to

83.62. We've had a nice rally

since that time. We're trading

about 84.11. We've got this unemployment dat that that

comes out at 11.30. If we get

a Petter than expected reading,

could see the Australian dollar 6% is what's factored in, we

find a bit of a bid and could

easily test resistance at 84.50

today. In commodities, how

are oil and gold

performing? Gold was down a bit

last night. It dropped about

.4%. We saw the crude price

trade higher last night. It was

up to just above $72 last

night. It's pulled back a bit

since that time. It's now

trading at 71757. We saw the

fuel demand rise about 3.1%

last week. So people bought

into that last night. It was

unfortunate to see some of the

oil and gas names in the US

actually fall last night, so

not a great lead for the likes

of Woodside and Santos but the

oil price actually was up about

.8%. Chris, thanks for the

update. Chris Weston from IG

Markets there. Now a look at what's happening with

currencies and commodities.

Australian wealth manager

AXA Asia Pacific has reported a

half year profit that just met

market expectations. While

AXA's local business bore the brunt of the market downturn

early this year, a strong

performance in Asia helped lift

the result and despite the

recent rally on equities markets AXA is warning that the

second half of this year will

be difficult. Since hitting

their low point in March,

global share markets have risen

about a third and are hovering

near nine-month highs. However, institutional investors

continued to see their own

profits come under pressure.

The wealth manager and insurer

AXA Asia Pacific has reported a

13% drop in operating earnings

for the half year to June.

Results in Australia and New

Zealand were down by more than

40% each, but a strong

performance in Hong Kong and

South East Asia helped limit

the damage. AXA's profit after

tax almost trebled compared to

last year, thanks to turnaround

in its own investment

earnings. Asia is a very fast

growing region for us. We have product diversification. When wealth management hasn't been

going as well because of the impact from the global

financial crisis, we've seen

strong growth in our financial

protection business. We've got

a very balanced portfolio. It's

provided us with resilience. It

was a credible result. There

were some good positives in the result. Particularly the

pick-up in equity markets over

the last four or five months

and other investment markets as

well. Which will benefit the

group going forward into the

second half 09 and further into

2010. Inflows into AXA's

Australian business fell 30% in

the six months to June, as

investors remain nervous about

shares, preferring the security

of bank deposits. And while

equity markets have continued

their rally since July, Andrew

Penn says the second half of

the year will continue to be

difficult. In the broader

context, though, Australia has

a very strong superannuation system, people need to save in

the long term for retirement.

And ultimately, a lot of those

investments will end up in

equity markets and other types

of investments are going to

support the Australian

economy. David Ellis says AXA

has focused on cost cutting to

get through the downturn. And

worked hard to retain clients

over the last 12 months.

Investors welcomed AXA's

interim result, pushing its

share price up two and a third

per cent. However there are still lingering concerns about

the $800 million capital

raiseing that AXA undertook

earlier this year. Some argue

it should've been done in late

2008 when the share price was

abovver $5. Instead the company

ask sd is it at the bottom.

Market in March and it was

priced at just $2.85 a share.

Lloyds Bank of London is the

latest to report a huge loss

for the half year. The bank,

which is now 45% owned by the

taxpayer, is blaming the drop

in profits on bad debts and its

merger with HBOS. It's a story

of huge profits, colossal

losses and taxpayer bail-outs.

And this week, we're finding

out the winners and losers. For

now, Lloyds Banking Group seems

to be on the losing side. In a

government brokered deal it

took over Halifax Bank of

Scotland. But in the first half

of this year, it lost ?4

billion. The problems for

Lloyds though stem mainly from the Halifax and Bank of

Scotland-shaped pill that it

swallowed. Bad loans and

investments have cost the group

more than ?13 billion, and the

vast majority of those losses,

around 80%, come from HBOS. The

banks' marriage and financial

troubles are the result of a

bumpy journey for Lloyds N July

last year it posted a profit of

?2.8 billion. Then in September

it agreed to take over HBOS. A

month later and the two banks

were taking a ?17 billion

bail-out from the government.

In February this this year it

asked taxpayers for insurance

to cover ?260 billion of

high-risk loans. But did Lloyds

realise the scale of the

problems at HBOS? In February,

its boss said they did check

the books. We put approximately

5,000 man-days into the

diligence effort. But the dale

was rushed, so how much more

did they want to do? We

probably would've put in three

to five times as much as time

as we put in. The end result

is many shareholders have seen

their investments hit this man

has lost several thousand

pounds. Most Lloyds

shareholders are very

distressed over the performance

of the company over the last

year. And certainly the merger

with HBOS, many people think,

was an absolute mistake. While

some of the money has already

been paid back in June ?2.6

billion of the 17 billion that

the government invested was paid back by Lloyds so long

term and I mean 2012 or thereabouts, when the bank and

the government can sell their

43% stake, yes we should see a

profit. And Lloyds is

optimistic, too. It thinks the

worst of its bad debts are now

behind it, and that things will

get better from here.

Hong Kong-based airline

Cathay Pacific has reported a

profit of $104 million for the

first half of the year. The

result is better than a loss at

the same time last year and has

been helped by bets it placed

on the oil price. A 27% drop in

revenues was offset by a $2

billion fuel hedging game.

Cathay Pacific says there are

some signs that the fall in

demand has bottomed but it was

not clear when a sustained

pick-up would begin. The

airline industry has been hit

by the economic downturn and

falling passenger numbers.

Honda motor company has posted an unexpected profit for the

April to June quarter, and

expects things to continue to

improve. Japan's No. 2 car

manufacturer expects to see

improving sales in the second

half of the year, predicting a

sales boost of just under

100,000 vehicles. The April to

June profit was due to the company's booming financial services business. The latest

trade figures suggest that the

Australian economy could

produce back-to-back quarters

of economic growth. The trade

deficit nar trod it to a better

than expected $441 million in

June, with export volumes

rising strongly despite the

downturn amongst many trading

partners. It's been a week of

encouraging data with the

latest trade figures another

sign of the resilience of the

Australian economy. When you

look at the detail of the

monthly numbers, what you see

is that imports were flat, but

exports actually rose by 2%. So

that's not a bad outcome given

what's happening to many of our

trading partners. That rise in

exports was a surprise given

the state of the global

economy, the surge in the value

of the Australian dollar, and

the big price cuts forced on

producers of coal and iron

ore. Which is a sign that the

Chinese economy in particular

is holding up and that augurs

well for Australia. These trade

figures are telling us that

despite a really hefty and what

many people saw as almost

unbelievable increase in export

volumes which pushed the first

quarter GDP numbers up, right

now it looks like we're going

to get another positive

contribution from net exports

in the second quarter. So that

will be a pretty amazing sort

of outcome given the

difficultys that we know exist

around the world economy.

However at 84 urs cents the

Australian dollar is a threat

to Australia's future exports

performance although there are

those who believe its recent

surge is an indication that

global financial markets are

starting to return to normal. When investors around

the world are look for risk

they tend to buy currencies

like the Australian dollar, particularly given that the Australian dollar is linked

into the commodity cycle.

Adding to the positive

sentiment is the latest

performance of services index

from the Australian Industry

Group and the Commonwealth

Bank. The services sector makes

up two-thirds of the economy,

and although activity

contracted again in July, the

trend is up. Upmarket retailer

David Jones which has seen

fourth quarter sales rise .6%

to $512 million. DJs' full year

sales though were down 5.3%.

A factory stand-off at Sangyong in South Korea is

becoming increasingly tense.

Police commandos have dropped

from helicopters to try to end

the sit-in by sacked workers

demanding to keep their jobs.

More than 500 workers have

occupied the main plant of

Sangyong Motors for more than

10 weeks. For a second day,

police battled the

demonstrator, many armed with

metal rods and threw

projectiles. Sangyong is under

court approved bankruptcy

protection, and is trying to

cut thousands of jobs to stay

afloat. Police say about 50

people have been injured in the

latest clashes. The head of BHP

Billiton iron ore says he has

concerns about the detention of

a Rio Tinto executive in China.

Ian Ashby told a mining

conference in Australia the

arrest of Stern Hu was an

unfortunate event. Mr Ashby

said it's important to consider

the welfare of the three

detained Rio Tinto employees

and the impact on their

families. But he says the

arrest of Mr Hu hasn't impacted

on its business in China. It's

not a matter of not being

concerned. But our business is

functioning normally in China.

Ian Ashby says the details of

BHP and Rio's iron ore joint

venture in the Pilbara should

be finalised by the middle of next year.

Australia has announced

measures to free up the country's restrictions on

foreign direct investment. The

move appears to be aimed at

calming strained diplomatic and

political relations between

Australia and China. But one

academic argues while it is a

step in the right direction,

the reforms do nothing to address the continued

uncertainties created by the

Treasurer's open-ended

discretion to reject foreign

investment proposals under

current legislation. I spoke to Dr Stephen Kirchner research fellow at the Centre for

Indepedent Studies, about what these changes will do. Essentially what these

changes will do will reduce the

number of foreign investment

direct applications that need

to be reviewed by the Foreign

Investment Review Board. These

will be the smaller

applications that are below

applications above that $219 million. The larger

threshold will still need to go

through the review process. So

hopefully what this will do is

reduce the costs and

uncertainties for potential

foreign investors in Australia,

and thereby increase the amount

of inward foreign direct

investment. But despite

liberalising this regime,

there's still a bit of

discrepancy with the current

laws. Can you explain

these? Well, the regime for the

large err projects will be as

before, and I think the main

problem with the current regime

is that the Treasurer still has

enormous discretion to reject

foreign direct investment

applications, essentially on

the basis of an open-ended

national interest test. And I

think this creates - still

creates a lot of uncertainty

for larger foreign direct

mentioned the uncertainty investment proposals. You

there. That brings me to my

next point. Will that

uncertainty jeopardise future

foreign investment then? I

think so. If you look at the

data you find that Australia's

share of global foreign direct investment is less than its

share of GDP. Which suggests

that we're under performing in

terms of attracting foreign direct investment. Whereas if

you look at countries that have

more liberal regimes such as

New Zealand, their share of

investment is larger than their global foreign direct

share of GDP. So I think

there's evidence to suggest

that our relatively restrictive

regulatory regime for the

larger FDI applications is

adversely affecting direct

investment into Australia.

Let's look at this recent case

with China's interest in

Chinalco and also or China's

China - or Chinalco's interest

in Rio Tinto, rather. Do you think that the rejection of

that has discouraged other

particularly from the potential investors

region? Well, that outcome was

the result of a commercial

decision on the part of Rio

rather than an outcome due to

foreign investment policy.

Although you could argue that

the government's prevarication

on that transaction probably

did contribute to the

commercial outcome to some

extent. That's right, because

the government was quite public

weren't necessarily supportive in sort of saying that they

of the deal. That's right. I

contribute to perceptions that think what it does is

foreign investment in Australia

for the larger projects is the

outcome of a political process

rather than the impartial

application of the rule of

law. What successful regimes

could Australia then take

advice from in terms of foreign

investment rules? Well, if you

look at the regulatory regimes

around the world we're at the

more restrictive end of the

spectrum. So we sort of line up

with Russia, China and India.

The countries that have more

liberal regimes are the

countries that we more typically compare our selves

to, for example, the United

States, the United States, New

Zealand and the UK. So really,

Australia should be moving its

foreign direct investment rek

latory regime more in the

direction of those countries

rather than the restrictive

regime that we have at the

moment. What sort of impact has

the rumblings of protectionism

around the world also had on

foreign direct investment. I

don't know that it's been a big

impact as yet, but certainly,

just as there's a move towards

increased protectionism in

respect of trading goods and

services, I think there's

anecdotal evidence to suggest

that there's a move towards increased protectionism with

respect to cross-border capital

flows as well. And so we've

seen that in terms of some of

the higher-profile transactions

around the world. We're nearly

out of time, but just before we

go, can you explain to us how important foreign direct

investment is for Australia's economy and therefore how important it is for government

to get it right? Well, I would

argue that foreign direct

investment is not as important

as it should be for the

Australian economy. In terms of

capital inflows we're very

reliant on short-term portfolio

flows, and I would suggest that

we would be better served if we

shifted the mix more in the

direction of long-term foreign

direct investment and one way

to do that would be to further

liberalise our regulatory

regime for foreign direct investment. Unfortunately,

we're out of time. But thank

you. Thank you.

Australia's doing its best

to convince Pacific island

leaders to support its

emissions trading scheme but

that's of little interest to the low-lying islands which

could be devastated by climate

change. They want Prime

Minister Kevin Rudd to boost

his targets for carbon cuts

influx of climate change warning there will be an an

refugees as sea levels rise. He

is mingling with Pacific

leaders. But Kevin Rudd's words

are directed at an audience

much closer to home. A

challenge which requires strong

political leadership to bring

about real change. Next week

the Senate will vote on his emissions trading scheme. The

UN likes what it sees. The

numbers that Australia has put

on the table at the moment are

impressive, are ambitious. But

Pacific leaders and

environmental activists want

emissions cutting of almost

double the government's most

ambitious target. They shut

down a coal export terminal for

five hours to make their

point. Before our islands are

inundated by the rising seas,

they will be unable to support

life. The residents of the world's tiniest nations have

nowhere to go to escape rising

seas. They want refugee options

on the table now. For them, for

us, choices such as

resettlement must be seriously

considered. But no matter how

pressing the challenges of

climate change, Fiji is the

perennial dilemma that Pacific

forum leaders can't escape.

Kevin Rudd didn't want it to

hijack the rest of his agenda.

But no-one told the premier of

Nuie. He's challenged Fijians

to topple the Bainimarama

regime. Perhaps citizens of

Fiji must now rise to the

challenge the undemocratic rule

of the military regime and

restore democracy. I would emphasise in absolutely

clear-cut terms the importance

of a peaceful solution.

Problems that show little sign

of going away before next year's Pacific gathering. Economic times may be

tough but one industry is

thriving, and are desperate to

get out and forget about it

all. Tickets to live music

events are going through the

roof and some are cashing in. The global financial crisis

appears no issue for fans at

this concert in Brisbane for US

rock star Pink. Her mammoth

15-week Australian tour is

almost a sellout, even with

ticket of tickets costing up to $140. That's good! It's worth

it. Well worth it! We're all

going through tough times.

Everyone needs to have a bit of

fun. AC/DC first hit the top

almost 30 years ago. And

they're still pulling the

crowds. Early next year the

Aussie rockers will do their

first tour down-under in almost

a decade. The first three hours

of ticket selling, we did over

500,000 tickets. Which is a

record for a tour in

Australia. ACDC have 11 shows

planned and expect to turn over

a minimum of $60 million. Pink

is playing at smaller venues

but there is a lot of them. She

is doing 58 Australian

gigs. Bands have realised that

they're not going to make as

much money as they used to out

of CDs so they've turned

towards making money from the

concerts. Despite the economic

climate, ticket sales are rock

solid. Industry figures show

the global live performance

market rakeed in more than $21

billion last year, a 50%

increase over the previous

three years. There's concert

tickets out there for hundreds

of dollars, and you'd think people wouldn't be buying them,

but they are. And they're

buying them by the thousands.

I think people are looking for

escapism, to do something else,

to get away from having worries

about jobs and so forth. The

children aren't eating for a while, but that's

OK! (LAUGHTER) Dirty deeds -

but not dirt cheap.

Looks like fun! Now let's

look at what's making headlines

around the region. The

'Standard' reports on Hong Kong

Electric's 16% profit fall. The

'Financial Times' says the US Securities Exchange Commission

wants new funding methods and the 'Wall Street Journal' looks

at the diplomatic effort to

free US journalists. That's all

for this edition of 'Business

Today'. I'm Whitney

Fitzsimmons. Thanks for joining

me. Enjoy your day.

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