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Quest Means Business
Military Coup; Thai Unrest Harming Economy; Putin's Economic Forum Overshadowed by Ukraine Crisis; Russian Economy; Doing Business in Russia; Make, Create, Innovate: Cochlear Implants; Ukraine Attacks; IPOs List in London; Advertising in Unlikely Places; Critics Under Fire
Aired May 22, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: A lot of clapping, and the bell is ringing. Not too much to celebrate today. The market is barely changed, just up a few points. When all has been said and done, hit the big hammer to bring close -- ah! Two, three! Ooh, they're getting more and more -- and getting more aggressive. Bringing trading to an end on Thursday, it's May the 22nd.
Tonight, it's a lockdown in Bangkok. Curfews in place across Thailand this hour as the military stages a coup.
Also, Russia's economic forum under a dark cloud of sanctions. Total's chief exec says it's still business as usual.
And an operatic outrage. Sopranos take on the critics in a battle over body image.
I'm Richard Quest in excellent voice. And I mean business.
Good evening. It's the middle of the night in Bangkok in Thailand at the moment, and in that country, a nationwide curfew is in effect. The military has taken control of the government two days after declaring martial law. The country's schools will be closed on Friday. International TV channels, including, CNN, we've gone dark.
The army chief says the coup was launched when it became clear that rival political factions couldn't agree on how to govern.
(BEGIN VIDEO CLIP)
PRAYUTH CAHN-OCHA, GENERAL, THAI ARMY CHIEF (through translator): For the ambassadors, consulates, and international organizations, including foreigners living in the kingdom of Thailand, the peace maintaining committee will protect you, and I insisted that the international relations with other countries and organizations remain as usual.
(END VIDEO CLIP)
QUEST: If this was an isolated example of military takeovers, it would be serious enough, but in Thailand, as you will be well aware, over many decades, the military hasn't hesitated to get involved in causing disruptions and has been the prospect of civil unrest. Paula Hancocks is our correspondent, and she watched it all unfold and brought us this dispatch from Bangkok.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Peace talks over, the main players left. Seemingly normal, until we realize the political leaders were not leaving of their own accord. The military shouting at us, "Get back, it's dangerous!"
HANCOCKS (on camera): We have been asking, is this coup? We've been asking spokespeople, is this a coup? And one spokesman said, "I don't know. You're seeing what I'm seeing." It's a very confused situation at this point.
HANCOCKS (voice-over): Thailand's latest military coup d'etat unfolding in front of our very eyes, the army chief announcing it is necessary.
PRAYUTH (through translator): To reform the social structure economically, socially, and in other ways, to create equality for everybody and for every side.
HANCOCKS: The constitution suspended, except for the chapter on the monarchy. Caretaker Prime Minister Niwatthamrong and his cabinet ordered to report to the military. Television networks taken off air, including CNN.
Military physically took over some Thai networks, and a nationwide curfew was put in place from 10:00 PM until 5:00 AM. That applies to foreigners as well as Thais, including ourselves.
The pro-government protest camp of the so-called Red Shirts, seen here in recent days, was shut down by the military. Troops fired into the air to disperse protesters, and there are no reports of injuries. In the anti- government camp, the so-called Yellow Shirts, the exodus was calm and peaceful.
HANCOCKS (on camera): Even as they're packing up, some of these protesters have been stopping to give me the victory sign. There is a sense of victory here. These protesters wanted the government out. And thanks to the military, the government is out. So there is a sense that after months of protesting, they've achieved what they wanted to achieve.
Paula Hancocks, CNN, Bangkok.
(END VIDEOTAPE)
QUEST: Now, to put this into context, the political conflict is slowing down the Thai economy, and perhaps more worryingly, it's the only major South Asian economy that's shrinking. Look at the numbers and you'll see.
Now obviously, at the top end, you have the very fast-growing Malaysia, up 6.2 percent. Vietnam, 5.4. And Indonesia and Singapore coming in pretty much the same, around about 5 -- 5 and change.
But Thailand obviously not only as a result of the dismissal of the Shinawatra government, but also now of the coup, all these events and -- which have taken place over many months, it must be admitted, that is going to contract by more than half of one percent.
And Thailand's economy, well, you have here a question of tourists staying away, which is particularly serious, as 20 percent of GDP comes from tourism. International booking are down 21 percent from a year ago from the period from January to March. And also, tourism employment is projected to fall 7 percent this year.
Consumer confidence is at a 12-year low, and that factors all into what will be an extremely destabilizing time.
The worry, of course, is whether or not -- whether or not what happens in Thailand does spill over into neighboring countries. And so far, there doesn't appear to have been any indication that that will happen.
The markets in Thailand greeted the news of a coup with a shrug. The Thai SET rose slightly on Thursday. The baht moved lower against the dollar. Investors are welcoming the coup, saying actually it will help create a stable environment.
It's rum world, isn't it, when you get coups in some countries that turn the markets upside down, and you get them in other countries and it's stability wherever you look.
CNN and other international news networks have been taken off the air in Thailand, so with that in mind, you'll see more posts about the country on cnn.com/international over the coming hours. The people of Thailand deserve to know what's happening in their own country.
Here at CNN, we are committed to that goal. CNN International's Facebook page and CNN Twitter account -- CNNI Twitter account, well, you will find more information as well.
Coming up, from the RSVP list at Russia's economic forum, it appears Vladimir Putin has lost a lot of friends in the business world this year. He's not too worried. In a moment.
(COMMERCIAL BREAK)
QUEST: There is a huge elephant in the room at Russia's annual economic forum, and, well, the room is emptier than usual. Business leaders from around the world are skipping the event, obviously because of the crisis in Ukraine. The no-shows are the latest blow to President Putin's reputation, and there have been many recently.
(RINGS BELL)
QUEST: Britain's Prince Charles reportedly compared Putin to Adolf Hitler. Russia's Foreign Ministry has condemned the alleged remarks. Prince Charles, whether he was invited or not, hasn't turned up.
It's certainly not the image that Putin wanted to portray during his own Russian version of Davos. CNN's emerging markets editor John Defterios is at the economic showcase in St. Petersburg. John joins me now.
This is one of those embarrassing things. It's a bit like when sort of your zip's undone or when -- on your trousers and you don't really want to point out this to somebody or whatever. And nobody really wants to say, "Oops, who's not here?"
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Yes. In fact, Richard, it has to be seen as a blow to Vladimir Putin's ego, because this is, as you suggested, depicted as the Davos of Russia.
This is year four for me at he St. Petersburg Forum, and it's fair to say this reached a crescendo in 2013. He shared the stage with Angela Merkel, the German chancellor, to invite Europe to come back into Russia.
And in the front rows, when he took the stage last year with her, most of the global 100 CEOs. Most of them are absent this year for sure. Companies like GE, CitiBank, Alcoa, all deciding to duck out, primarily, Richard, to be very candid, because of pressure from the White House and the US and EU sanctions. They don't want to be caught into that web.
However, the no shows are making a political statement, according to the chief executive officer of Total, Christophe de Margerie. He decided to attend, and he said if he'd ducked out, that would be a statement in its own. Let's take a listen.
(BEGIN VIDEO CLIP)
CHRISTOPHE DE MARGERIE, CEO, TOTAL: There's nothing to be scared. Total is a company which is working all over the world. There are no sanctions, as far as I know, against Russia as far as oil and gas business is concerned. I've been always participating to this forum. I was probably the first non-Russian CEO in this forum.
So not to come would be a political move, because I've always been here. So, as far as -- I want to stay neutral in this foreign debate. But we are in the economy, we are not in the political arena. And what is important is to continue to do our business as usual. But I like to say business as usual, so there is nothing to do with being scared or not scared. Its my job.
DEFTERIOS: Have we boxed President Putin in from the European Union and the US and actually be counter-productive, trying to foster any sort of business or get him to the bargaining table?
DE MARGERIE: Well, I've always been in favor of talks, of links. I don't think you bring anything in stopping discussing. So, that's my personal view. And we are doing the same the way we conduct our business. We discuss, we try to find solutions, and if we don't, we stop. But we don't want to be enemies. Why should we be enemies? We need to live together.
(END VIDEO CLIP)
DEFTERIOS: Once again, Christophe de Margerie talking to me on the sidelines. He was supposed to be, in fact, on the panel, and decided to sit in the audience and contribute from there. But he said, "I cannot not come to St. Petersburg because of the oil and gas well that we see in Russia right now."
And particularly after the bilateral agreement with China signed yesterday, $400 billion over 30 years. What has changed, Richard, dramatically, this is East-East trade at its best. So, perhaps the United States and the European Union are making a statement, and we've heard from Prince Charles and his views right now.
But business is going on when it comes to oil and gas right now in Russia, although the sanctions are starting to hit their growth.
QUEST: On the question in the wider economy in Russia, obviously this is a chance for their ministers -- and I know you've been speaking to them -- to talk about this. But they can't deny the simple fact that an economy that was already slowing is now going into reverse.
DEFTERIOS: Absolutely correct on your part. Four percent growth back in 2010, all the way down to one percent at the end of 2013, and very likely a recession this year.
Surprising fact: Russia ranked number three worldwide in foreign direct investment over the last two years. However, sources on the ground here say that FDI has dropped dramatically in the first quarter of 2014, and we're seeing that in the second quarter of this year.
More alarmingly was the capital flight in the first quarter of better than $60 billion. I caught up with Alexei Kudrin, the former finance minister, who rang the alarm bells on capital flight. He says it's probably going to hit $160 billion in 2014.
Then I caught up with the economic development minister and asked him the same thing, do you have the same fears about capital flight, and he now is opposing what Kudrin says. Let's take a listen.
(BEGIN VIDEOTAPE)
ALEXEY ULYUKAEV, RUSSIAN MINISTER FOR ECONOMIC DEVELOPMENT: Probably we will be in a position to pass it by, so no, no recession. We had the minus drop of 5 percent in the first quarter of the year in accordance with the last quarter of the previous year.
But now, in April, we have evidence of some acceleration of industrial output, about two-and-something percent.
DEFTERIOS: So, what you're suggesting, Minister, is that these sanctions, although they're politically driven, they're not driving the economy into the ground, we've seen the worst of it so far, is that what you're saying?
ULYUKAEV: I do hope that the sanctions -- I mean real sectoral sanctions will not be in place. But anyway, of course it influences the business interests and investors. And investors now are on sort of standby position. They don't know if they really have to finalize. They're just still waiting for somebody -- something new.
But anyway, we have to organize better, better conditions, better environment for investors. To thanks, they return the capital. And risks, we have to minimize risks to them.
DEFTERIOS: Well, you say this, and you're a moderate voice, I know that, within the cabinet. But your president doesn't seem to share these concerns, Mr. Putin. Why is that?
ULYUKAEV: I think he shares --
DEFTERIOS: That's not the public voice we get from him, to be candid.
ULYUKAEV: Because he's all the time saying that we have internal problems. Our investment climate is not good enough for both domestic and global investors -- to participate, to invest with optimism.
(END VIDEOTAPE)
DEFTERIOS: Once again, Alexey Ulyukaev, the economics minister here in Russia, Richard. And I was pressing him, because the word on the ground here in St. Petersburg this year, two distinct camps. The Kremlin making political decisions on Ukraine and Crimea, of course, and trying to represent the ethnic Russians in eastern Ukraine.
At the same time, it's hurting the economy, and Ulyukaev is one of the more moderate voices right now, and it's starting to divide this administration. And this is the big challenge for Russia as it slips closer and closer to recession. Although the minister said they can avoid recession in 2014, in his view.
QUEST: It looks like a glorious night in St. Petersburg tonight. The weather looks absolutely wonderful. Is it as warm and pleasant as it looks, John?
DEFTERIOS: That it is.
QUEST: Good. John Defterios joining me from St. Petersburg. We'll have more from --
(CROSSTALK)
DEFTERIOS: It si the white nights, as they say. It's in May --
QUEST: Ah!
DEFTERIOS: -- in St. Petersburg, yes.
QUEST: Ah! The white night -- yes, I remember that from last year. Absolutely. We'll talk more about that. It's all strange things. Though I can't remember what strange things, but John Defterios will tell us -- well, maybe the strangeness is at the St. Petersburg Forum itself.
The chief exec of SABMiller says sales in Russia and Ukraine are holding up far better than expected. He spoke to CNN's Jim Boulden.
(BEGIN VIDEOTAPE)
ALAN CLARK, CHIEF EXECUTIVE, SABMILLER: Well interestingly, we've had a good performance for the year, so 2 percent overall rise in volume with lager beer up one percent. Good growth in revenue from across our territories generally, nice growth in profits in constant currency and very good margin expansion for our business. Overall performance was good for the year.
It was a more difficult and a more uncertain year, with some issues around emerging markets, a lot of commentary about that. And I guess the toughest area is in the developed markets, the United States, Europe, where the economies are beginning to build their way out of recession.
But your core beer drinkers are also under some pressure. Their disposable income and, really, the competition for a share of that disposable income has made it more difficult, perhaps, than in the years prior to that.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Is it fair to say that when people feel more flush that they move onto wine and they move onto something different? They may not look at lager?
CLARK: No, I wouldn't say that. The drinking repertoire changes, I guess, over time. But the reality is that within lager, you have a wide variety of choice. You have higher price points, more economy brands.
So what we will find very often is that when people feel more flush, they'll move more towards the treat end of the spectrum. So, they'll tend to go out more, they'll spend more time in the on premise, spend more time dining, and so you'll see premium brands, draft brands, growing more quickly.
When times are a bit more difficult, you see much more of the treat and deal phenomenon. Because beer is an affordable luxury, and the treat and deal phenomenon is that when people are at home, they'll buy something a bit less expensive. They might buy a more value beer.
And then when they go out, they still have this need, I guess, to feel special, to say I've worked hard, I deserve to treat myself. So, you find that mix, even in tough times.
BOULDEN: When you have geopolitical issues, like Ukraine, Russia, do you see an immediate impact? Do you expect to see an impact this year?
CLARK: It can come quite quickly, depending on the environment. I would say that more generally, it is government regulation which would have a more sudden and immediate impact.
So, for example, in Turkey a couple of years ago, there was a strong move to restrict trading hours, to restrict advertising and the availability of product. That has a very direct impact. In areas of political unrest, such as Russia and the Ukraine at the moment, it's not always obvious that there would be a direct connection between it.
In Russia and the Ukraine, actually, we operate through a partnership with the FS Group, so they have management of those territories. And in reality, the first quarter, they had outperformed their own expectations. So, for various reasons to date,the business has continued to perform well.
(END VIDEOTAPE)
QUEST: No, try to imagine for a moment what it's like to have lived in a silent world, and then to hear for the very first time. This husband and wife team and these tiny devices are helping to make it possible. We'll meet them when we come back.
(COMMERCIAL BREAK)
QUEST: Now, viewed 21 million times, this viral YouTube clip is how many people around the world learned about cochlear implants. It's the remarkable technology that's allowing deaf people to hear for the very first time.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's beeping. So now, technically, your device is on.
(CRYING)
UNIDENTIFIED FEMALE: Can you tell? Oh, it's exciting! Maybe you can put it down for a second. Just get used to the sound.
(CRYING)
UNIDENTIFIED FEMALE: What does it sound like?
UNIDENTIFIED FEMALE: I can hear myself cry.
(END VIDEO CLIP)
QUEST: Oh! Now, arriving at that moment took years of research, and one husband and wife team spent decades refining the technology that was involved. Nick Glass met them for tonight's Make, Create, Innovate.
(BEGIN VIDEOTAPE)
(CLOCK TICKING)
(ALARM RINGING)
(WHISTLE BLOWING)
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): We live in a world of sound.
(BELL RINGING)
(HORSE HOOVES CLOMPING)
GLASS: It surrounds us. It envelops us.
(CLOCK CHIMING)
GLASS: It overwhelms us.
(SILENCE)
GLASS: Except for the few among us who are profoundly deaf.
(CHIME TONES)
GLASS: Joanne Milne from Gateshead in England was born deaf almost 40 years ago. This is the miraculous moment in March this year when she was able to hear for the very first time.
UNIDENTIFIED FEMALE: Can you hear my voice coming through both sides?
UNIDENTIFIED FEMALE: Yes. Yes.
(CRYING)
UNIDENTIFIED FEMALE: From both sides.
UNIDENTIFIED FEMALE: Very high.
GLASS: Joanne could hear after receiving a multi-channel cochlear implant, the device invented by Austrian electrical engineers, a husband-and-wife team, Ingeborg and Erwin Hochmair.
ERWIN HOCHMAIR, CO-INVENTOR, COCHLEAR IMPLANTS: Well, it's the first device to replace a human sense.
INGEBORG HOCHMAIR, CO-INVENTOR, COCHLEAR IMPLANTS: It helps deaf people to understand speech without lipreading and use that in daily life.
GLASS: The cochlea in the inner ear is crucial for our hearing, where incoming sounds are converted into nerve impulses by hair cells.
E. HOCHMAIR: Hair cells are located along this filo, they excite in the normal head, the ear, the nerve fibers, which are coming from each ear and going to the brain. If they have sustained damage, we have to insert an electrode carrying contacts which excite particular sets of nerve fibers, high frequencies here, and low frequencies there.
GLASS: The Hochmairs' first device was implanted in 1977, but their proudest career moment came three years later.
I. HOCHMAIR: That was really a girl by the name of Connie, and this was really an incredible moment. She could understand sentences without looking at my lips.
GLASS (on camera): Do you remember what Connie said?
I. HOCHMAIR: She said, "This is what I always wanted to hear." And it sounded like normal to her.
GLASS (voice-over): Since then, the Hochmairs have built a company, MED-EL in Innsbruck, to market and develop their discovery. Last year, it manufactured over 15,000 implant systems.
GLASS (on camera): MED-EL helps train surgeons for these delicate implants. This is the training room. And in front of me, a plastic cast of the relevant part of the skull. The surgeon has to drill very delicately a tiny, microscopic hole into the inner ear or cochlea, and then, insert just as delicately, the tiny tube of electrodes.
GLASS (voice-over): At London's Throat, Nose, and Ear Hospital, I meet Linda Griffiths, who lost her hearing in her late 50s.
LINDA GRIFFITHS, COCHLEAR IMPLANT PATIENT: It was a mental struggle, and I was getting stressed about not being able to hear people properly. I don't like being in groups of people because I felt left out.
GLASS (on camera): What do you remember about the actual switch on?
GRIFFITHS: An amazing moment. I was euphoric and elated. And then I discovered I could hear all the sounds in the room, things that were being done or said.
GLASS (voice-over): The implant has meant that she could hear her grandson for the first time.
GRIFFITHS: I could actually hear this sweet little voice. It was gorgeous.
GLASS (on camera): Miraculous?
GRIFFITHS: It was miraculous. Really was. Yes.
I. HOCHMAIR: Some patients say it's like a miracle, "I can hear again, I'm so thankful." And some really know that it's the result of hard work and not a miracle.
E. HOCHMAIR: Well, for us, it's still a miracle.
(LAUGHTER)
(END VIDEOTAPE)
QUEST: Now, that is what you'd call a true Make, Create, Innovate that has affected people's lives in a truly meaningful way.
After the break, when we come back, we'll have the news headlines for you. We are -- and in Ukraine, there's been a spike in violence ahead of this weekend's crucial presidential election. The accusations are flying. Remain here with us.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
Thailand's new military rulers have ordered the former prime minister, Yingluck Shinawatra, and three other relatives of her brother, Thaksin Shinawatra, to report to authorities. The military has seized full control of the government in a full-scale coup on Thursday and installed the head of the armed forces as the acting prime minister.
Ukraine's prime minister is calling for an emergency UN Security Council talks after at least 16 people were reportedly killed in attacks in the eastern part of the country. So far, there's been no claim of responsibility by pro-Russian separatists. We'll be in Kiev after this news summary.
Russia and China have exercised their veto powers at the UN Security Council. They stopped a resolution that would have asked the International Criminal Court to investigate possible war crimes by all sides in Syria. All of the other members on the 15-seat council approved it.
China's president, Xi Jinping has vowed to punish those responsible after a deadly attack on an open-air market in northwestern Xinjiang province. Thirty-one people were killed when two vehicles plowed into shoppers. Explosives were then thrown into the crowd.
Extraordinary pictures: in southern China, these bystanders saved a baby's life. Quite remarkable. The whole thing was caught on video. The 1-year- old infant apparently climbed out of a window while looking for his mother. The child fell and thankfully these two were there to catch him.
Absolutely (INAUDIBLE).
(MUSIC PLAYING)
(END VIDEO CLIP)
QUEST: Earlier in tonight's program we told you how Russia is trying to carry on with business as usual despite the crisis in Ukraine. In Kiev, the Ukrainian capital, the Ukrainian prime minister's calling for an urgent meeting of the U.N. Security Council accusing Russia of escalating the conflict.
Jim Sciutto is live for us in the capital tonight.
What purpose, Jim, does a U.N. Security Council meeting have? Bearing in mind, Russia can veto any resolution it doesn't like.
JIM SCIUTTO, CNN CHIEF U.S. SECURITY CORRESPONDENT: Well, the only purpose would be for competing speeches, really, from the Russian side and the side of the U.S. and European Union, perhaps, and Ukrainian ambassador to the U.N.
But we've just heard that there will be no special meeting of the U.N. Security Council; the Ukrainian ambassador to the U.N. will hold a special press conference tomorrow. We're told the diplomats did discuss the issue and the violence here in the Ukraine behind closed doors in private meetings. But there will be no special session.
And as you say, even if there had been a special session, not a lot would have been accomplished there.
QUEST: With that -- with that in mind, and you're loud and clear, but we heard earlier in the program the questions of Russia continuing as normal.
Your perspective on how this crisis is being effective or is affecting the capital?
SCIUTTO: Well, I'll tell you, the last few days there have been something of a fragile calm, particularly in the eastern part of the country, where you know there's been the most disturbance, the most violence. But then today you have the deadliest attack of the year, 16 Ukrainian soldiers killed in a brazen attack on a Ukrainian military checkpoint.
We're told that a truck pulled up and that these pro-Russian separatists, it is suspected, rose up and shot these Ukrainian soldiers in cold blood and blowing up one of their armored personnel carriers. You have that kind of brazen violence going on.
Now you walk around the Maidan here, the main square in Kiev, today, and there's a bit of a carnival atmosphere. It was a sunny day. There are people out, taking selfies of themselves in front of the -- some of the barriers that remain; there are people selling drinks and root beer from stands around where the tents are today.
But even with that atmosphere and the calm here, just below the surface you have worry. We saw that there was one of the tents there that still houses armed militants, who, when we asked how they would respond to the election on Sunday if they didn't like the result, they told us they would respond with violence. They pointed to their guns.
So you still have fears here that the kind of violence we're seeing in the east might spread beyond.
You know, people here, you know, it's not long ago people were dying in the streets here, too, so they remember that very well.
QUEST: Right. But you have President Putin saying that he has withdrawn his troops from the eastern border with Russia, something which NATO says hasn't happened. You've had sanctions and a ratcheting up of sanctions in the United States and in the European Union.
You've got this referendum on Sunday, which begs the question, where does this go next?
SCIUTTO: It's a great question. I mean, the first hurdle -- the election really on this Sunday, it's a major hurdle, but it's really just a first hurdle because the first test is do you get a decent turnout in this election on Sunday despite the violence you have in the east and the closing of polling stations?
Do you get a decent turnout?
The next question is do all the parties involved here, which aren't, sadly, just Ukrainians, right, the Russians, the Europeans, the Americans, do they see the results of that election as legitimate and credible? Do they respect the results, particularly the Russians, who've been causing so much trouble in the east?
But then of course the test is really for Ukrainian leaders. They can elect a new leader. But do those leaders -- does that new president change the system here?
And I spoke to a lot of voters today out on the Maidan and they said if this election only changes the faces, that won't be enough. We have to change the system. They know the corruption.
And you remember, Richard, after the protests here 10 years ago in 2004, you had a new popularly elected government come in and they blew their chance in effect, right? There was corruption. There was difficulty in bridging the political divide. So really, this election is the first of many tests to come.
QUEST: Jim Sciutto who is in Kiev -- and Jim, I hope you're staying right the way through to the election, or at least long enough to help us understand what's been happening as a result -- as the results come in.
Now U.S. markets ended the day slightly higher. In the last hour, HP announced up to 16,000 job cuts, part of an ongoing restructuring plan. Second quarter sales missed analysts' expectations. The important thing is that the number of job cuts on top of the 30-odd thousand that were announced at the end of last year, so more job shedding at HP.
The European market ended mostly higher on Thursday. The strong manufacturing data -- that's in the United States -- China's decline is slowing and -- you heard from the CEO earlier in the program, up 3.5 percent on those full year profits and steady in development economies.
When it comes to issuing shares, the animal spirits are bubbling over here in the London market. You might well say IPOs are galore and the corks are popping tonight as investors are toasting four major announcements in just the past day.
Wizz Air, which is Eastern Europe's biggest budget carrier has revealed plans for its shares on the London Stock Exchange. B&M, the discount retailer owned by the former (INAUDIBLE), its own offering that could buy you the company at around $4 billion, also piling in. The property website Zuupa and the advisory firm River & Mercantile on the other side, not everyone is brave enough to enter the IPO jungle. The clothing chain Fatface scrapped its plans, citing weak demand.
Joining me is James Butterfill, global equity strategist with Coutts.
Good to see you, sir. Thank you for coming in to talk to us.
Now why London, why now?
JAMES BUTTERFILL, GLOBAL EQUITY STRATEGIST, COUTTS: London is quite transparent market.
(CROSSTALK)
QUEST: (INAUDIBLE), why not?
BUTTERFILL: (INAUDIBLE) last year, for instance, we saw $14 billion worth of deals done; the average deal price rose 17 percent year -- for the four years. So I suppose many CEOs have been sitting back, thinking, well, maybe the conditions are right now. I mean, certainly if you look at U.K. and the U.K. economy, it's quite an attractive time to do it.
QUEST: If it was only U.K. companies coming here, I might agree with you fully on that. But it's not. You have Wizz Air, which is a Budapest and Swiss-based company. You have Russian companies coming in. You have some Chinese companies coming.
What's the attraction of London and the IPO market here?
BUTTERFILL: In the city, you've got adept book builders who raise the prices, who go out, meet all the investors and try to encourage them to buy. They're got strong sales force. I think that's one of the key attractions to London and why companies want to list here.
It's also one of the most -- in terms of tax, it's the most competitive tax regime in the G20.
QUEST: These are all good reasons and they do cement London's role -- and I have to sort of say, we've got the word London right above me head over there, so maybe we're being a little bit home country here, but they do cement London's role as the -- as the financial commercial capital of Europe.
Would you agree?
BUTTERFILL: I would agree. I mean, certainly the deal numbers reflect that. The deal numbers in the U.K. have more than doubled any other country within Europe. I mean, not quite matching the United States; we've seen $58 billion worth of deals in the United States this year. But U.K., so we're just under -- just a tad under $14 billion. So that's very encouraging.
But there are signs that the markets are getting a little bit frothy. So take Saga (ph) for instance; its price range is $185 P to $220 P. It looks like it might come in at $185 P. That would trade it on a -- on a 14.5 times --
(CROSSTALK)
QUEST: -- the market, 14.5 is the market.
BUTTERFILL: Well, the market's actually 13.5. But sector wise, the valuation is very quite substantially better. It is a little bit on the pricey side. And I think that's why Fatface -- Fatface is worried that it wasn't going to be able to achieve to 110 billion pounds that it needed.
QUEST: As always a good equity strategist just when the party's getting going. Besides (INAUDIBLE), it might be time. But it's all getting a bit raucous.
Good to see you, sir. Thank you.
When we come back after the break, the Internet of things is coming. Google says you'll soon see adverts in some very unlikely places. QUEST MEANS BUSINESS in the unlikely world, in a moment.
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QUEST (voice-over): Ah! You join me in the kitchen. Welcome back to QUEST MEANS BUSINESS, which I get on with a bit of light dusting.
Google has revealed what it thinks could be the future of where we might see adverts. Think about it. Google says in the future, there could be an advert on your refrigerator. How about an advert on the microwave oven? Because in the Internet of things, Google is now justifying what the difference is between mobile, tablets and say, full range computers. And in doing so, Google now says that you'll see adverts is all sorts of unusual places. Pair of glasses will have the Google advert for you. And then there's always the prospect of the Google watch.
Ooh! Excuse me. Imagine an advert being served up on your watch by your typing. Do carry on.
It's all about the new world of what's likely to be in advertising and Google thinks it knows the answer.
Samuel Burke is with me.
Just how far is this advertising extravaganza going to go?
SAMUEL BURKE, CNN CORRESPONDENT: Well, Richard, it's going to go very far but not quite that far. All the analysts saying don't expect to see advertisements on thermostats, for example. We know Google bought that company.
But really, Richard, when was the last time that you saw a Google ad that really bothered you, that was actually annoying?
QUEST: That's not the point, Samuel. The point is Google in this SEC filing has basically said it no longer distinguishes -- for instance, it says it thought tablets would be more like mobile, but tablets have turned out to be more like PCs or desktops.
So it's saying the definition of mobile and for fixed-line is not as clear- cut.
BURKE: Absolutely. That means that we're going to see ads probably in cars. We know that they're looking at an Android system for cars. Yes, probably advertisements in Google glasses, like you pointed out and even on watches.
But if you actually think about Google ads, they're not very intrusive. They really don't push into your life that much. Google is actually one of the --
QUEST: No. No, Samuel. No, no, you keep -- you keep bashing back at -- that is not the point. I don't know why you're being so obtuse about this.
The point surely is not whether the advert is obnoxious and intrusive. It's the mere fact that it is even there.
BURKE: And it will be there at that -- if that -- with that point, you're right. But you have to think about the Android operating system for example on mobile phones, Richard. Here they have an operating system that's in 80 percent of smartphones worldwide and people barely even notice the Android ads there.
So, yes, there are going to be ads in all types of new places and that we've never imagined and in fact, on platforms which we don't even know yet, platforms past Google Glass, past a watch. But the ads will probably not be that sparkly, let's say. They're very good at tucking them away just as they have done on the Android phones.
QUEST: You're being extremely Millennial this evening, Samuel, in your justification of this.
Finally, when will you look at this forward nature? The evidence of whether we are clicking through, the evidence of whether we actually respond to these ads? What do we know about that?
Right now the evidence is actually very bad for a lot of companies, including Google. The click-through rates on mobile are actually a lot lower; people don't remember the ads as much when they see them on mobile. And they actually aren't making as much money from mobile ads as they were on desktops.
So they have to find ways not just in getting ads in every space imaginable, Richard; they actually have to make sure that we pay attention. And so far, that has been an uphill challenge for a lot of companies, especially Google. That's the real challenge, getting us to pay attention.
QUEST: Samuel Burke, who, for the right price, will happily let you put adverts just about everywhere in his apartment.
Now to the weather forecast, Tom Sater is at the World Weather Center.
Tom?
TOM SATER, AMS METEOROLOGIST: Richard, you've had one bout of rainfall; you've got another round coming in, severe thunderstorm watch for New York City. We'll talk more about that in just a few moments.
But let's run through what we do know in many areas of the world.
First of all, the waters are receding in Bosnia-Herzegovina and Serbia; three days of national mourning takes place weeks and months of cleaning and restructuring and getting their lives back together. We're still watching not only the temperatures rise, which could add to the threat of an epidemic or a disease bacteria, but a rise of the water levels on the Sava in Belgrade, expecting the crest to hit there on Sunday.
This is our next storm system. We watch it rise to the north; in fact, we've already seen two days of some severe weather, yesterday, just to the west of Paris and now all the way from Northern Africa across Sardinia, Corsica up through Germany.
Here's the weather pattern right now. We've got some pretty warm temperatures. In fact, extremely warm, really, when you talk about two days this week, St. Petersburg hit 33 degrees; warmest temperature ever for the month of May. And now the severe storms. They're making their presence known with some damaging winds, some hail, too; here's our threat as we get into the overnight period and into your Friday morning across Central Europe in the Low Countries. So again across France, you get into Germany as well and we're already starting to see some of the thunderstorms trying to lose some of that daytime energy and that heat and just become in the way of a moderate or heavy rain pattern.
But again, have some pretty good rain, move up through the London area, Paris kind of getting a break today. But the numbers yesterday, 45, 16 mm and we're still seeing some around 29, even 36 in parts of the U.K.
Now let's talk temperatures; they're not as warm as they are eastward, but 23 in Amsterdam, Paris 21, when your average high today is 19 degrees.
Here's where the warmth kicks in. Look at these numbers, Berlin 30, average is 19. Another warm day in store for your tomorrow, hopefully some rain will cool you down. In Warsaw 28, speaking of Warsaw, you had some heavy rainfall, the viselo river didn't quite make it to the crest forecast. But that ridge is now and that crest is making its way away from the city. Berlin 27, 28 in Vienna for Friday, Bucharest 26.
In the U.S., we've got storms . It's got a fire right now, a wildfire just out of control, zero percent containment near Sedona and Flagstaff, Arizona. We still have the threat for severe weather, and here is it, from D.C. to New York, maybe a three-day rain pattern, getting a break Monday, I believe, which is Labor -- or, excuse me -- Memorial Day in the U.S.
But after we watch the chance of severe weather, it'll start to calm somewhat. But we had a few of them really pick up in areas of yesterday, the tornadoes, the large hail, 4.5 cm diameter hail. But a little bit of a break for you. Enjoy your Memorial Day on Monday, Richard.
QUEST: Absolutely.
Of course, I shall be on the way back just as the rain arrives. Tom Sater joining me from CNN Center.
Coming up next, critics using harsh words to describe this opera singer. And they're aren't talking about her voice. They're talking about her body. We'll be right back when the (INAUDIBLE).
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QUEST: "Dumpy," "stocky" and "unsightly," well, some of the words used to describe Tara Erraught, a soprano sensation in the U.K. and Ireland, a recent review of her performance in the "Financial Times" reads, "Tara Erraught's Octavian is a chubby bundle of puppy fat." That's what the critics are saying.
Well, we'll let you decide for yourself.
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QUEST: Oh, I say, that's rather splendid. Were you outraged by the harsh and seemingly irrelevant criticism of the singer's body? Many in the opera world are with you, including my next guest, the mezzo soprano, Jennifer Rivera. Let's just say she knows how to raise her voice a bit.
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QUEST: Oh, Jennifer, you join me now live from New York.
Have you been getting hot under the collar at these criticisms which, frankly, they're basically -- I mean, we can dress this up any way we like, but they're basically saying she's fat.
JENNIFER RIVERA, MEZZO SOPRANO: Yes, I have been. First of all, I mean, if you look at her, she's a beautiful, charismatic opera singer. But mainly I've been getting upset because, you know, opera singers are not models. We're not Hollywood actors. I don't know what we're supposed to be compared to.
But you know, we spend years learning our craft and this woman is in the beginning of her career and to be criticized harshly like this in that language, it was very frustrating.
QUEST: Why do you think they did it?
I mean, let's face it, the idea -- and I realize I'm treading on some very thin ice here -- but the cold -- I mean, even the phrase, "the fat lady sings," opera singers are known in many cases as buxom. So why -- I can see you're bristling already. Better be careful.
But why do you think they did it?
RIVERA: On the one hand, you know, opera, as an art form, is trying to get away from that generalization because opera singers come in all shapes and sizes. And there is no one size and shape. You use your body to learn to sing. We are singing and our voices are unamplified. We're the last art form that is using an unamplified voice. And it's like an Olympic sport, singing to that many people without a microphone.
So you use the body that you're given. And some people are thin, some people are a little bit bigger. But this young woman is a gorgeous woman and a beautiful singer and I don't think the words used to describe her were fair.
QUEST: But again, why did they do it?
In this day and age, where we are so perhaps hyperconscious -- some would say politically correct -- not to make those prejudiced judgments on body image issues, why?
RIVERA: I think in this case, it has to do with the opera itself. She's actually playing a man. It's a common mezzo soprano thing to do, is to play a trouser role, it's called. And so you know, people have an image in their mind of what a young teenage boy looks like from traditional opera productions of this from the past. And that might be one reason why so many of them made this comment.
But I think that it has to do with the way our society is going right now. We're so obsessed with weight and being thin it's like people can still, you know, make comments about people's weight and get away with it because you know, that's the way we are -- that's where we are right now in the world. And it's unfortunate.
QUEST: Right. Finally, when you're doing a sort of a male role or one of those sorts of roles, do you aim to, if you like, emulate masculinity or do you play it feminine with an interpretation, if you like?
RIVERA: No, you absolutely are impersonating a teenage boy. And it's part of your ability as an actor to do that. But as I said in the previous interview, teenage boys come in all shapes and sizes. There's nowhere written in the libretto that says that she is a certain size or stature or weight. And as long as she has the charisma and the acting skills to pull it off, there's no reason to question what size her body is.
QUEST: I quite agree. And we look forward to having you back on the program to give us a tune in the future. Thanks very much, Jennifer.
RIVERA: Thanks for having me.
QUEST: Lovely to see you (INAUDIBLE) pleasure. (INAUDIBLE) sing for us. Well, we'll have a "Profitable Moment" after the break.
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QUEST: Tonight's "Profitable Moment": dumpy, stocky, unsightly, chubby bundle of puppy fat, that's no way to describe a first-class world-class opera singer who's doing her best, even if she is playing a teenage boy and it might look a little bit odd. It's no different to some of you who write to me and say I look gawky, lanky and a bit strange and I've got funny teeth and sound like I'm gargling with glass. Well ,that all might be true. But it doesn't detract each night from our conversation of business and economics as we put the financial world to right, nor should it detract from this marvelous opera singer's beautiful voice. In fact, we're paying good money to go and hear. So there.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
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