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Business Today -

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Live.

Live. Good morning, welcome to the

program, I'm Adrian Raschella.

In Business Today: Digging

deep, Rio Tinto expected to

slash its profit by half.

Banking secrecy blown - UBS

forced to hand over account

details to American

authorities. And monsoon

economy - sugar

economy - sugar growers suffer

an area rattic climate. Those

stories shortly. First, a quick

look at the markets. Futures

are predicting a operate day for investors after a drop on

the Chinese market encouraged a

selloff of risky assets

yesterday. Japan's Nikkei hit a

three week low. Australia's

stocks market dipped 3% and in China

stocks fell 4% on fears the

market is slowing. Hong Kong

investors followed, selling

down their market, which closed

down 2%. On Wall Street, good

oil data kindled recovery

hopes, with the Nasdaq and Dow

Jones financing 0.7% higher.

For more on the market

action, I am joined by Chris

Weston from IG Markets. A

strong session on Wall Street,

run us through it. It is

positive. We saw the Dow finish

up 61 and the S and P 6 points.

The S&P 500 dropped down to

The S&P 500 dropped down to

980, and had support from the

energy report from the

inventory numbers in oil, which

propeld the market. We tested

1,000 on the S&P 500, directed

it to close at 996. Oil and gas

drove the price of the market,

which encouraged people to

trade in that sector. Exxon

Chevron put the most points

Chevron put the most points

into the index. Mortgage

applications increased more

than expected, which encouraged

people to buy the market.

People overlooked the fears in

China and good points in the

market, setting us up for a

good day today. What can we

expect from Rio Tinto today?

We are hoping for more opt

mistick comments than we heard from BHP. We

from BHP. We have 20 companies

reporting today. Rio Tinto were

expecting their net profit to

be $2.7 billion, down 61% from

the previous period. The

aluminium division is expected

to net a loss, but the prices

have picked up, so we are

hoping for a positive outlook,

which could pro-Pell the price.

Stocks are in a better

Stocks are in a better position

with their joint venture with

BHP, their rights issue, so the

debt should fall 35%. If we get

good comments from the company,

the stock should do well

tomorrow. We had the big fall

in Shanghai. Should investors

be worried about a bear market

there? Technically we are in a

market bear market, if the share

market falls 20%, which it has

done. I think this is a bit of

a correction, a high beta

index, a volatile index, since

the beginning of the year up

90%. I think we are having a

mini-correction, before people

start going there. The market

is volatile. I expect it to

continue going upwards. For the always go in moment, share markets don't

always go in a straight line.

It is a correction. I think it

is worth keeping an eye on the

index. With all in this mind,

how do we expect regional

markets to go today? We

certainly saw the futures track

the equity market on the S&P

500. We are looking for the

Australian cash marks to unwind

around 4,4 12, so

around 4,4 12, so good points

being felt in the materials

space and the energy space. We

are looking for the Nikkei to

open up 0.4%, an opening level

of 10,230. We are expecting

good leads I expect people to

be looking at the Shanghai

Composite Index later, when it

opens at 11.15 Sydney time.

Some good leads on the market

so far. Thanks, Chris

so far. Thanks, Chris Weston. Let's look at what's happening

in currencies and commodities.

in currencies and commodities.

The US and Swiss governments

have ended their longstanding

tax dispute involving

Switzerland's UBS bankching the

deal means UBS will hand over

tax details of nearly 4,500

account holders to American

authorities. They are

considered most likely to have

and avoid used the bank to hide assets

and avoid US taxes. This is

probably the end of UBS' role

as the major vehicle of tax

evasion for Americans with

mobile assets that they could

place abroad. The dispute had

threatened the Swiss banking

system's reputation for secrecy. The Swiss Government

has welcomed the deal and UBS

says it can now rebuild its

reputation. Australian air

billion in lain Qantas has flagged $1.2

billion in cost cuts over the

next three yearsment it comes

as the carrier reveals a

massive 88% slide in profits,

thanks to the double whammy of

swine flu and the economic

downturn. Despite the results,

investors are upbeat about the

future. In the job less than a

year, the new Qantas chief says

some people think he was landed

a certain type of sandwich. Alan Joyce triepd

Alan Joyce triepd to enhance

its flavour. Most airlines are

reporting significant losses.

Qantas in this challenging environment is reporting a

profit. A profit of $117

million for the year to June -

Dunn a hefty 88%. It included a

rare half yearly loss, the

airline's first in six years.

Qantas was hurt by both the

Qantas was hurt by both the

financial crisis and swine flu,

which saw a slump in passenger

numbers and in its freight

business. A flood of flights

from Hart-pressed competitors

didn't help either. The saving

grace was the group's profitable frequent flier

business and low cost carrier Jetstar. The future looks

bright for Jetstar,

particularly in Asia, but very

hazy for the group as a

hazy for the group as a whole.

Our revenue fore dafter claims

there may be one swallow is out there at the moment. Whether it

makes a spring or summer is too

early to say. It is an

uncertain outlook. There are

signs things are stabilising,

both from a passenger demand

and fare policy. Whether that

is God news for employees

remains to be seen. Alan Joyce

is planning to cut costs by around

around $1.5 billion over the

next three years If things

gottors worse, who knows what

could happen. Of course, every

option has to be on the table.

All-up, results were better

than expected. Both virgin and

Qantas shares Rose by 3%. The

ink is barely dry on Australia's biggest

Australia's biggest export

contract, the Gorgon gas deal.

Origin Energy and Woodside say

they will have trouble meeting

demand and plan to ramp up

production. Gorgon deal has

Rye vl producers upgrading

their own ambitions. Even

though it seems there is a huge

amount in Australia, the rest of the world

of the world is void of

projects. There is 380 million

tonnes of LNG production demand

that we will see by the end of

the next decade. We think the

industry will struggle, even

with all these LNG projects

from Australia coming on. There

is plenty of room for

everybody. We don't look at it

as too competitive. Woodside

has a good relationship with

its customers and expects any gas

gas Woodside can supply will be

snapped you have. The blue toe

field off Western Australia is

being developed on time and on

budget. We had the vision blue

toe was more than one tray, so

we built extras, preparing

ourselves for trains 2 and 3,

and we think there is a train 4

and maybe a train 5. The first

project, which is 72.5%

complete, is going very

complete, is going very well.

Morning star resources analyst

Mark Taylor says the Gorgon

deal is is a positive

development for the industry,

although other producers might

be ruing the loss of a

potential customer. It might

mean they are competing for

labour and expertise in LNG

development, so it is a pretty

crowded space. There might be

some players scratching their heads

heads and saying, where will we

find the people with the

expertise to build our

project? While the demand for

gas is on the rise, the

collapse in the oil price from

last year's record high saw

Woodside's interim profit fall

12%, although the underlying

result was in line with the

market expectations I think

they performed very well on the

they performed very well on the

operating costs, unit costs

came down quite a bit. There

was a much smaller petroleum

rent resource tax component,

which helped them. Overall, a

pretty good profit. Origin

Energy tabled its full year

results. Net profit was skew d

by a one-off $67 million gain

from a Queensland

from a Queensland venture.

Underlying profit rose 20%,

meeting the consensus

forecast. The mix was

surprising. The retail division

was weaker than expected. That

was made up for bit generation,

exploration and production divisions. Origin's managing

director is optimistic about

the year ahead and points with

the year ahead and points with

the development project to

convert gas to LNG. It is

expected to start producing in

2014, and deals associated with

it could dwarf the led

line-grabbing $50 billion

Gorgon deal. We are targeting

an initial two-train 7 million

tonne-plus. To support that -

that is nearly three times the

that is nearly three times the

deal announced - you would need

$150 billion of revenue. These

are huge projects with huge

revenues. With a $5 billion

war chest thanks to the con-Co.

Phillips investment, origin is

looking to expand its energy

portfolio once renewable energy

legislation is passed by the

fip fep. China's Bank of

fip fep. China's Bank of

Communication has posted a

second quarter profit, beating

expectations. It has recorded

$1.1 billion in net income.

That is largely due to record

credit growth and an increase

in fee based services.

Outstanding loans have risen by

30%. The bank is positive about

future earnings ass the Chinese economy shows signs

economy shows signs of a

turnaround. It has been tough

going for Boral, which has been

dealing with a slump in residential construction as

well as the collapse in US

housing. Earnings were down 42%

last year. Investors are

optimistic that the bottom in

the housing market is now in

sight. Exposed to the crash in

housing markets, both here and

in the US, rod Pearce tabled his company's

his company's fifth straight

year of declining profit, which

were down 42% on 2008.

Clearly, economic conditions or

macro conditions are very tough

for Boral and it's really not

the company's issue with regard

to operations, it's just the macro environment that is against their business at the moment. Investors agreed and

were satisfied with the

underlying result. It came in slightly ahead

slightly ahead of expectations.

That pushed shares up 4% by the

close. They have done a lot

of hard work in reducing their

total costs, both variable and

fixed. That stands them in very

good stead to, offer a low

base, improve their profits for

the fiscal 2010 year. Revenue

will be lend in Boral's biggest market of

market of Australia by low interest rates and the

government's stimulus packages,

which includes an improved

first home owners grant and

public housinging and defence

courts. We

A. Are certainly near the

bottom of the cycle. Housing

finance figures are the best

guide to the rate of demand.

They are extremely strong

increases. A lot of inventory

management from stock already

on the ground has been had, now there will

there will be a restocking

process. There is a lot of

construction to come through.

Rot Pearce agrees with the sentiment but says it will take

a little longer for the

benefits to throw through to

his business. For the next six

months, probably what we have

seen. Recovery should come later in the financial year,

rather than in the first half.

Rod Pearce won't be around, as he is stepping down at the end

of the year.

of the year. His replacement

will be announced before the

annual general meeting in

October. China has lashed out

at Australia, despite

yesterday's news of the $41

billion gas deal. The English

language China daily has

accused Australia of leading an

anti-China corous and siding

with a troift, terrorist - a

reference to the recent visit

reference to the recent visit of Rebiya Kadeer. Geoff Raby

has been abruptly recalled to

Canberra for consultations. Telecommunications giant Telstra may have been excluded

from bidding on Australia's National Broadband Network but that n't

that n't stopped its long-term

plans of spreading its wings

offshore, focusing on ace yeaa.

Since its birth six years ago,

Telstra international has

established a presence in 45

countries. I am joined by Drew

Kelton, Telstra international's

managing director. Could you

give us a summary of your progress in the Asia

progress in the Asia Pacific

region? It's been an exciting

journey for the last six years.

We have established

operationsin all major centres

around Asia, from Beijing in

the north through to mal-Asia

in the south, mostly focusing

on offering services to

enterprise customers and

business customers who have

needs in the intra-Asian region

and focusing on utilising our core

core asset strength, which is

cable infrastructure and

network assets in the Asian

region. That, in culmination

with our operations in the UK,

US and Australasia, we see

ourselves as a major feeder and

distributor of services and

business in Asia. It is

exciting times. We are playing

in the emerging market space,

which is great for the

company. A lot of Telstra's

company. A lot of Telstra's

operations are focused in

Australia. How strong is the

push for it to become a

recognised global player? It's

an interesting one. The global

player discussion usually comes

from the very large incumbent telecommunications companies in

the emerged markets, the

incumbent market, such as the

US and Europe. We see ourselves

much more as a regional

much more as a regional focus

specialist rather than a global

player. We call it the regional

specialist with global reach,

rather than wanting to

penetrate the somewhat highly competitive markets of North

America or Europe Our model is

to be to be a partner of

choice, both for customers leaving Australia and customers

in Asia, and also to be a distribution partner for

distribution partner for either

other telecommunications

companies in north merge and

Europe. Global is an overused

word in the telecommunications

sense I think most companies

have succeeded by being very

specialised, our focus is to be

the regional specialist.

Remember do you see the growth

markets in Asia? Like all the

emerging economies, the growth

emerging economies, the growth

markets are driven by areas

like populous and consumer

spend. Of course, China and

India are the logical ones

because of the dynamic size. We

are seeing interesting growth

in Vietnam as an emerging

market and places like

Indonesia. If you look at the

volume game which drives

traffic, which drives

opportunity, both from a

consumer and business perspective, the

perspective, the biggest

markets we see for growth would

be China and India. We see

interesting niche markets. I

noted on the program earlier a

commentary around Qantas and

Jetstar, we see an opportunity

with great partnerships, with

the likes of Jetstar, in going

to more emerging opportune

market in Asia. Do you have

big plans when it comes to

going for the consumer space?

Telstra is already

Telstra is already well

established in certain markets

for consumer. We are

predominantly the major

mobility player in Hong Kong

with our CSL asset and we have

invested in our search

properties in China through the

Sol fund business. They are

extensions of some of our

incubation models of mobility

and search. The bulk of our

current view, in terms are opportunity, is in the

opportunity, is in the business

to business and enterprise

market, rather than the

scurment market. When it comes

to the Asian region, what are

some of the barriers to entry

you have experienced? We have

everything from complex

regulatory systems to differing

areas of emerging technologies,

through to culture. The

approach we have taken is quite

approach we have taken is quite

simple: Our core asset is the

infrastructure around Asia. We

get to a beach head where cable

infrastructure stops, then we

operate with a partner of

choice for distribution in a

country. We act as the glue, if

you will, aciald Asia, then

operate with a local partnerna

inn that country. That

eliminates some of the complexities around

complexities around regulatory

licensing and the complexities

of doing business in in-country

markets. That is change, which

is exciting. I imagine you

would be facing stiff

competition from other

Australian telcos keen to get

into the Asian region? Our

competition comes from all

over, from companies from

Australia going outwards and countries

countries in Asia trying to

coal their own market. We are

in a strong position because we

have invested into core assets, but competition comes from all over, not just Australian

companies, unfortunately. Due

Kelton, thanks for your time.

- Drew Kelton.

Macquarie Group will lift

its presence in China by

starting two infrastructure

funds worth nearly $2 billion.

The funds are a joint venture

with China's second biggest financial conglomerate

Everbright Group. They will

invest in toll roads, railways,

airports, reign wrong and water

projects in China, Hong Kong

and Taiwan. One fund will be

for Chinese nationals around the other

the other for foreigners, as

the Chinese Government seeks private sector investment to

complete Beijing's stimulus

package. A worldwide shortage

of sugar has sent prices

scarring more than 80%. Brazil

and India are the two largest

producers but the crops have

received either too much or too

little rain. The situation has

hit India the hardest as it is

also the biggest consumer of

sugar. At one of New Delhi's

oldest sweet shops, the pace is

fast. Today is the-in did you

festival and it is not complete

without giving and receiving

sweets It is a very important

way to express your feelings.

Sugary sweets are important for

religious festivals. Even the

cows get something sweet. It's

no wonder India is the largest

consumer of sugar. People

drink tea with sugar, they

can't do without sugar. India

is the second biggest producer

of slug ah behind Brazil, so if

supply is low in either

supply is low in either country

the world hits hit. Prices hit

a 28-year high, and prices may

remain high, because a drought

in India will lower yields from

sugar cane fields. Last year

sugar outputs fell due to fewer farmers producing sugar. The

government is expected to make

up the difference by importing

millions of tonnes of sugar.

Back at the sweet house, the

Back at the sweet house, the

crowds continue do buy but the

owner are feeling the pinch

from high sugar prices It is

eating into the profits. The

margins are limited. We go by

market prices. The shop is yet

to raise prices but may do so

if sugar prices don't come

down. A consortium of big name

food companies in the United

States say they are running out of slug

of slug ah and wants the US

Government to do something to

ease costs. Sugar isn't just a

sweet treat, but can turn into

a sticky political mess if a

solution isn't found. General

Motors Chevy Volt, unveiled

last week, is the latest in a

series of electric cars about

to hit the market. They are

being championed as saviours of

the environment. Just how

efficient and convenient are they?

they? In the beginning,

electric cars out sold allors.

Henry Ford's cheaper model T

changed that, but a century

later the electric renaissance

is on. From ache Ron, the home

of the 3 wheeled Myers, to

Spokane, where they make the

tango perfect for splitting

grid lock No preventative

maintenance. Britain has

maintenance. Britain has a

line of trucks called Smith.

Warren buffet invested in BYD.

Coming soon, Norway's think

city. The exterior is made of

plastic. The safety structure

is in the frame. This has a

high strength steel frame.

Next year will bring the Nissan

leaf at $30,000 and the Chevy

Volt for $40,000. Whether it is

the it isler roadster or

the it isler roadster or BMW's

mini-E, the first thing you

notice is the quiet. The second

thing is the instant power. I

love that torque. Now that

several hundred are on the

road, the so-called pioneers

who pay $850 to lease them are

discovering the hasling of the

charge Full of hurdles, unless

you are on top of it. The best batteries are expensive

batteries are expensive and

limited to 100 miles and they

take 23 hours to charge on a

standard wall socket. A higher

voltage box will fill it up in

three hours, but the cars are

easier to get than the cords

and boxes. The utility is

completely prepared for what is

required to install an electric

dryer, but an electric car is

somewhat different. A company called better place has

called better place has plans

to build a chain of automated

battery swapping stations.

Everybody is jumping to the

game, to show the public she is cars aren't science fiction,

they can be part the future.

An future when extension cords

will replace gas cans, a change

that is well worgt the growing pains. Let's look at the

headlines in the region: The standard reports the bank

standard reports the bank of

communications has pasted first

half earning of $17.63 billion

Hong Kong. The Financial Times

leads with the UBS deal, saying

it has blasted a hole in

Switzerland's famed banking

secrecy. The 'Wall Street

Journal' reports on stocks

dropping on the Shanghai

exchange, while copper prices

also tumbled. That's all for this edition

this edition of Business Today.

If you would like to look back

over the interviews, please

visit our website: We look

forward to your beadback. I am

Adrian Raschella, thanks for

joining me, have a great day. Closed Captions by CSI.