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QUEST MEANS BUSINESS

Porsche's Problems; Bernanke Says Recovery Almost Underway

Aired August 21, 2009 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST: A boost from Bernanke. The U.S. Fed chief says the recovery is almost underway, but it will be slow and painful.

From family feuds to formal investigations -- what on Earth is going on at Porsche?

It's the end of a long week, but I'm still in Hong Kong.

I'm Richard Quest and yes, I mean business.

Good evening.

Ben Bernanke says the global economy is about to return to growth. But the chairman of the U.S. Fed has a warning -- it will be slow and it will be painful.

His European counterpart, Jean-Claude Trichet, of the European Central Bank, says he gets nervous when he hears people talking about the green shoots of recovery. Both men are in Jackson Hole, Wyoming, at a meeting of central bank governors. It's an annual get-together when they try and discuss what's going to happen next in the global economy.

They have much on their agenda and this time talking about growth have set the markets talking, as well.

Maggie Lake is in New York.

She joins me now.

Ben Bernanke perhaps not telling us anything we didn't know, but it's confirmation, nonetheless.

MAGGIE LAKE, CNN CORRESPONDENT: That's right, Richard, that we have - - that we have turned the corner. And when you hear it coming from the Fed, it kind of puts an exclamation point on -- on everything that's sort of markets and thinking.

So, you know, Ben Bernanke certainly did it with as much caution as you could possibly squeeze into these statements.

Jackson Hole, Wyoming, for those of you who don't know, is kind of in the middle of nowhere in Wyoming, but it's hard to insulate yourself from everything that's gone on in this global economy. And Ben Bernanke today saying that prospects for a return to growth in the near term -- so a big more specific on that time line -- in the near term appear good.

But he goes on to say that the economic recovery is likely to be relatively small at first, with unemployment declining only gradually from these very high levels. And that's what a lot of economists are worried about, that we're going to continue to see a deterioration in the job market because it lags. And even when it does start to stabilize, it's not going to come ramping back.

Why they're worried about that is because right now, a lot of the -- the sort of green shoots and the -- the things that are making them all nervous that we were seeing -- the positive signs -- are because of all this stimulus and all these programs that they have put into effect. Once they -- they pull those away, what will sustain the recovery after that?

That's what they're all worried about. Bernanke was not specific in his statement nor did he talk about when and how the Fed was going to start to pull back and exit some of the stimulus programs. I'm sure they were talking about it there, but he did not get into any of those specifics in his public speech and statement today -- Richard.

QUEST: Maggie Lake in New York.

Thank you for that.

With those comments from Ben Bernanke and Jean-Claude Trichet, amongst others, let's factor in what it means for the markets.

To New York, first of all, where the Dow Jones Industrials having just some two hours still or so to trade, the Dow Jones numbers, as you can see on your screen, up 126 points at the moment -- a gain of 1.35 percent. 9500, I suspect, is possible -- possible by the close of business today, but perhaps prob -- not probable.

To European vorses (ph), where they wrapped up with solid gains for the week. Investors were focusing there in Europe on upbeat numbers. The U.S. housing numbers which came out (INAUDIBLE) in a rollicking strong number; also, what Bernanke said.

Shares in British Airways soared more than 7 percent in London. Insurers Legal & General and Prudential were among the big gainers. In Paris, it was banks -- BNP Paribas, Credit Agricole. And in Frankfurt, Ion (ph) claimed 5.5 percent, helping to lift the Dax.

To Hong Kong now, where the benchmarks ended the day lower. Stocks in Asia have had -- I mean, while we've been here -- and not that there's any connection, I hasten to add -- but it has been a bit of a roller coaster of a ride. These are the closing numbers. Let's start with what's on the Shanghai Composite, which is 2.8 percent for the worst. The NIKKEI down 3.75 percent. The Hong Kong Hang Seng is down 3.3 percent.

The key point to realize in these Asian markets is the volatility. And that, of course, as I heard from Ronald Arculli, the chairman of the Hong Kong Stock Exchange, who I was talking to earlier in the week, that's going to be a focus for some months to come.

(BEGIN VIDEO CLIP)

RONALD ARCULLI, HONG KONG EXCHANGES AND & CLEARING LIMITED: We're looking in the stock market good -- the property (ph) market in Hong Kong good. But the economy, Hong Kong depends quite a lot on external factors. Obviously, mainland China's growth helps. But still, the fundamentals overseas, here in America, in Europe, you see green shoots and, you know, that's about it. You know, the fundamentals hasn't really come back yet.

(END VIDEO CLIP)

QUEST: Bob Parker, chairman of Credit Suisse Asset Management.

Bob joins me now from London.

Good evening to you, Bob.

You've said many times that when it comes to investing, probably the best game in town is Asia -- Southeast Asia and emerging Asia.

Do you still subscribe to that after the sort of week we've had?

BOB PARKER, CREDIT SUISSE ASSET MANAGEMENT: Over the medium term, over the next one to two years, most definitely, yes. I think the economic growth prospects for Asia remain very positive, indeed. I think Chinese growth over the next year is going to be in excess of 8 percent and the Indian growth could easily exceed 8 percent over the next year.

And, therefore, you're going to see, also, an improvement in corporate profitability from the region.

QUEST: Well, Bob, when we heard Ben Bernanke say today that growth would be underway now, if not soon, but there would be -- recovery would be slow and painful, was he telling us anything in that that we didn't already know?

PARKER: I think he's highlighting the risks to growth in the developed economies -- that is to say, America, Europe and Japan -- over the next three to five years. And there are going to be a number of problems in the developed world. You know, whether it's consumers increasing their saving, reducing their borrowing; whether it's governments, particularly America and the U.K., struggling with very large budget deficits.

And, obviously, the key question for Ben Bernanke and other central bankers is what's the exit strategy from this very easy monetary policy that we have. And, clearly, that exit is going to be very slow. But it's going to have to take place.

QUEST: We've talked, you and I, whenever we've been in London, about this idea of imbalances between the U.S. with its large budget deficits and trade imbalances, and China. But there doesn't seem to be, from what I can see over here, any inclination to redress that imbalance, at least from the Chinese side, any time soon, Bob.

PARKER: I think you've seen some interesting statements in the last two to three weeks from the Chinese authorities indicating that they want to try and rein in some of the explosive loan growth that we've seen in China over the past three to six months. And the Chinese authorities have, I think, been remarkably successful in boosting their economy. And let's not forget that the Chinese economy was very weak in the fourth quarter of last year.

So I think the Chinese could well be the first government, actually, to pursue that exit strategy of reducing that easy monetary policy.

And I think the other thing to watch is the Chinese policy of trying to boost domestic consumption and reduce the reliance on the export sector. And I think one indicator to watch is actually the currency.

QUEST: Bob, now, before we get finished, as you go into your weekend, after a bit of a volatile week, and (INAUDIBLE), are you slightly more -- more optimistic or less optimistic of the way things are going at the moment?

More or less?

PARKER: I think more. I think that you're going to get some good economic data over the next few weeks. You're clearly seeing cash coming back into global equity markets. I think the down side risk in equity markets is now low. And I think as we go into September, we're going to see higher equity markets.

QUEST: Bob Parker, always a treat and a pleasure.

I'll see you back in London in a couple of weeks.

PARKER: Thank you.

QUEST: Bob Parker of Credit Suisse Asset Management joining me this Friday evening.

Next week, I will be in New York with Maggie Lake, as NiLongKong (ph) continues. We've slightly reversed the letters. We're doing HonNiLong (ph) -- Maggie, I -- I will be bringing -- I will be bringing with me quite a lot of the optimism that I've discovered and felt while I've been here in -- in Asia.

What are you going to have for me in New York?

MAGGIE LAKE, CNN CORRESPONDENT: Well, you know, Richard, I'm always the voice of caution. But you're going to find on Wall Street, they're going to echo what Bob was just talking about. There is a feeling that (AUDIO GAP) have room to run here. They're looking out into the distance and for recovery.

So they're not really sort of paying so much attention to the caution we just heard from Ben Bernanke. The market on fire today because of existing home sales being up 10 percent.

We're going to take a look at property in the New York region. And there is something else we're going to watch, which is how the rich are faring. A very interesting article in "The New York Times" today. After a 30 year run, the rich aren't getting richer anymore, they're getting poorer. We talked to a couple of nightlife and celebrity columnists here to get their take on how the rich in New York are faring in this recession.

QUEST: You're seriously going to have us crying into our diamonds, Maggie Lake.

And be safe. Be safe. Be careful. Make sure the lattes are on you and I will see you in New York on Monday.

There aren't many programs that take you to three continents in the space of five minutes, but that's QUEST MEANS BUSINESS. It may be the Friday, but we are not slowing down.

The news agenda demands our attention and Fionnuala Sweeney is at the CNN News Desk in London.

FIONNUALA SWEENEY, CNN CORRESPONDENT: Richard, a cheering crowd in Libya ignites anger in the West. Britain is condemning the hero's welcome for convicted Lockerbie bomber Abdul Baset Ali al-Megrahi. The only man convicted in the 1988 bombing of PanAm 103 was greeted in Tripoli by supporters throwing (INAUDIBLE) and waving flags.

British Foreign Secretary David Miliband calls al-Megrahi's homecoming "deeply distressing." Al-Megrahi remained out of sight Friday.

Election officials in Afghanistan say most ballots have been tallied on site in the country's election and they're on their way to Kabul to be verified. Incumbent President Hamid Karzai and rival candidate Abudullah Abdullah are both claiming the lead, but Abdullah is also alleging voting irregularities and says the president's campaign is involved in fraud. They'll go to a runoff if neither gets more than 50 percent of the vote. Preliminary results are expected on Tuesday.

Two officials of a Chinese manganese plant have been detained. That factory is suspected of being the cause of lead poisoning in 1,300 children. This comes just days after a smelter was shut down after 800 children tested positive for lead. The issue is sensitive in China, where families are restricted to having only one child. Angry parents who live nearby (INAUDIBLE).

There is actually no survivors and hope of survivors in a hydropower disaster. That's from Vladimir Putin. Russia's prime minister visited the dam in Siberia, where 47 people were killed after an explosion earlier this week. More than two dozen workers are still missing, feared dead. Mr. Putin also promised families of the victims would get financial compensation.

Those are the headlines -- Richard, back to you in Hong Kong.

QUEST: Fionnuala, many thanks.

We'll be back with you in about 15 or 20 minutes from now.

So, what were the investigators looking for when they raided the offices of Porsche?

We'll have a good educated guess in just a moment.

QUEST MEANS BUSINESS.

We're in Hong Kong.

(COMMERCIAL BREAK)

QUEST: German prosecutors are scrutinizing the evidence that they have seized from the offices of the Porsche car company in raids that took place 24 hours ago. Authorities raided the Stuttgart offices on Thursday, investigating whether former Porsche executives manipulated the share price of Volkswagen.

Now, the company has tried unsuccessfully to acquire the larger company by purchasing more and more V.W. shares. You'll be aware, of course, it was a most unsuccessful attempt, which eventually just about drove Porsche over the cliff.

Today, Volkswagen was one of the biggest gainers on the central Dax, up 4.7 percent. And the graph there shows you that spike in share prices that caused all the trouble when they actually tried to do this short squeeze in the market.

Will Duff Gordon is director of strategy at Data Explorers and he joins me now from London.

And, Will, what was it fundamentally that they did that was wrong and is it wrong everywhere?

WILL DUFF GORDON, DATA EXPLORERS: Good question. The -- the issue here is why did -- what -- why was it so difficult for investors to understand who owned Volkswagen's shares and get a level of transparency that they would, perhaps, expect in -- in other markets.

Porsche surprised the market in October, 2000 -- about the 26th of October, 2008 -- with the announcement of the size of the cash and carry call options that they'd -- they had purchased in the market, which kind of caught investors by surprise and there was that unprecedented leap in the share price.

QUEST: But short squeezing the market, which, of course, is -- is, at best, disreputable; and, at worst, is -- is illegal in some markets -- the -- isn't it likely that this is going to tinge or hinge on whether or not it was illegal or just simply unethical?

GORDON: Well, you couldn't -- it's not yet known and no one can prove -- and that's what they're trying to maybe prove now -- is did they manipulate -- did they try and kick off the short squeeze?

And that is why we have a federal intervention here, on top of the investigation for (INAUDIBLE). What we've been doing at Data Explorers is -- is following the level of short selling in -- into Volkswagen sanctity (ph) for it's too complicated, there's too much uncertainty, don't go near this.

But you can -- no one can say that they manipulated the market and they created a short squeeze. But it is true to say that what they announced caught people by surprise and that led to a chain of events that led to an enormous change in the share price.

And what -- we talked to a lot of hedge funds. And what they would like to see is, you know, some better disclosure. Otherwise, they won't invest in Germany much longer.

QUEST: Since it's a fascinating idea, isn't it, that you could have a major economy within the European Union that does allow this sort of activity through a lack of transparency. And perhaps that is what we are seeing by the authorities taking such strong measures over this.

GORDON: Yes. And what -- that the investment management community, I guess, would like to see is that it's not a -- it's not a show investigation, quote, unquote, and that they really are serious about, you know, bringing people to account for -- for what they did or did not manipulate or do.

No one is saying anyone is guilty at this stage, but -- but it is very, very difficult to -- to be at -- to be serious about investing in Germany when one of the biggest companies, that's extremely over valued based upon every conventional measure, continues to rise and then becomes, you know, and then rises, you know, 600 Euros in a day.

It's pretty -- it's pretty difficult. And it's turned a lot of people off. So this is an extraordinary -- it's turned into a criminal investigation, but perhaps, you know, that is what's required.

QUEST: Well, mate, thanks, indeed, for joining us from London.

It's a story that we will follow closely on QUEST MEANS BUSINESS.

What exactly did take place at the Porsche Motor Company with Volkswagen?

When we come back in just a moment, he might have turned around a major Chinese bank. He doesn't speak Mandarin. He knows a lot about numbers. Frank Newman is the boss of Shenzhen Bank. He is in a unique position. He is the only Westerner to run a Chinese institution of this nature at the moment.

(COMMERCIAL BREAK)

QUEST: Now, that's what you like to see, lit up -- lit up like a Christmas tree. It took a bit of perseverance, but finally, of course, all the lights on here -- or at least a good portion of them.

China has poured hundreds of billions of dollars into the economy of Asia through its own lending and very surely it can't continue. Something that I put to the chairman and chief executive of Shenzhen Bank.

Now, he's in a unique position. He's a Westerner running a Chinese- owned bank. He told me (INAUDIBLE) in such a role.

He's Frank Newman.

(BEGIN VIDEOTAPE)

FRANK NEWMAN, SOUTHERN DEVELOPMENT BANK: You're right, sooner or later, something has to change. What happened is exports went down, a government program acme in and made up for that -- that gap, with -- with investment projects and -- and a whole bunch of (AUDIO GAP).

Exports will come back to some degree, but maybe never quite as much as they were before. So what has to come up is consumer spending. Everyone knows that.

The question is how do you get more consumer spending?

QUEST: So consumer spending is one of the ways that everybody is looking at. But that means for the Chinese people to spend more, which means you've got to start lending more. I mean that's the only way -- there's no -- there's no other way to do it, Frank.

NEWMAN: Yes. We'd be happy to have them take more loans from us. But first, it would be good if they had more income. Right now, there's a lot of corporate saving in -- in China, too.

QUEST: But you see, yes, because you have to go in. You say they need more income before they can start spending, but you're already putting in place an impediment to actually getting more money into the economy.

NEWMAN: Yes. But -- you know, this is an interesting question and all around the world, there's pressure from governments on banks to lend more. That, in a way, is putting the hearse -- the horse before the -- the cart before the horse, because you need actual reasons for spending the money before the banks lend them.

QUEST: The reality is that despite lip service to this problem, as everybody is saying, the global imbalances between the U -- the consumptive U.S. and the saving China, there really is not going to be any change in that any time soon.

NEWMAN: Well, right now it's actually working for everybody. The Chinese like to sell stuff to the U.S. more than they buy. The U.S. is happy to have low cost goods. The financial system automatically balances. It -- it's fine.

At some point in time, China is going to say it's enough.

QUEST: How concerned are you about the state of the markets at the moment?

And particularly, of course, the -- the Shanghai market, which, of course, has risen very sharply -- fallen sharply...

NEWMAN: Yes.

QUEST: ...and risen sharply. If it falls out of that, then the rest of this region will go to sleep.

NEWMAN: Yes. It -- it's clearly very volatile. We were talking about this a little bit before. But the fundamental values are -- have to be better than in other parts of the world. The reason is the risk is actually not as great in China as it is in other parts of the world and the growth factor is much greater.

(END VIDEO TAPE)

QUEST: Frank Newman with his perspective, as seen from both sides of the fence.

Now you've got -- we've all heard of dressed down Fridays. There is nothing new about that. But when dress down Friday starts to include jeans, you might very well ask are standards falling?

Susan Lisovicz is at the New York Stock Exchange, on the floor of the Exchange -- Susan, I -- I'm deeply concerned you're taking a down market.

SUSAN LISOVICZ, CNN CORRESPONDENT: Ha, ha, ha, ha. Hey, look, I mean, you know, I just want to remind you, Mr. Quest, that on Monday, there were concerns about volatility and the change -- a big sea change in investor sentiment.

And guess what?

This is the fourth straight day of rallies and the three major averages are at their highs for the year.

So I guess the bulls still have a little bit of life in them, don't they, Richard?

QUEST: They most certainly do. The bulls have life in them. But I wouldn't necessarily say they're off to the races yet. I'm a little more cautious than perhaps you are -- Susan.

LISOVICZ: Well, the volume is light. This is a Friday in the summer. But, you know, there's reason to move higher today. Existing home sales up for the fourth straight month, the biggest part of the U.S. housing market and the monthly gain in 10 years, as well as Ben Bernanke a little bit more optimistic today, saying we're on the verge of growth.

So not just leveling out, but on the verge of growth. So that's taking the market higher.

I should also say that traders are in a good mood today because, for the first time in more than 200 years, there's a change in the dress code.

You're aware of that, right, Mr. Quest?

QUEST: I was. And this is what's deeply concerning me. Here's me in a proper -- properly attired, morning, noon or night. And if I'm not mistaken, I think you have something known as blue jeans now on the floor of the Exchange. Very troubling.

LISOVICZ: Well, listen, I want to -- I want an expert to talk about it, because -- because the New York Stock Exchange has probably the strictest dress code of all of Wall Street. It's never allowed anything but dress shirts, blazers and dress -- dress slacks.

And Teddy Weisberg, you -- you've been here for 40 years and you're wearing blue jeans. Check it out.

TEDDY WEISBERG, NYSE TRADER: Right. Forty years.

LISOVICZ: Check out these blue jeans.

WEISBERG: 1969 brand Gap jeans.

LISOVICZ: Free.

WEISBERG: Free. Of course, free. And that's the year I came here. Forty years ago, I became a member.

LISOVICZ: And out of all those years, the dress code has never been relaxed.

Why do you think that is?

WEISBERG: I mean I'm not sure why it is. Actually, it's sort of refreshing that there's still some place you can go where there is a dress code. So I don't -- personally have a problem with it. And it was a -- it was a chore to put these jeans on today, but yet -- yet I did it. And -- and, actually, they're quite comfortable and I'm glad I did.

LISOVICZ: And, you know -- hey, you know, Richard, you know, nothing goes down easier here on Wall Street than something free, especially if it's free beverages or free food or, in this case, free jeans. So The Gap is a listed member. They're ringing the closing bell. They reported their earnings. They're having a tough time selling blue jeans overall.

But guess what?

When they're handing them out to 1,200 traders for free, people like Teddy Weisberg, well, they're happy -- they're happy to wear blue jeans.

WEISBERG: I mean I -- somehow or other, I don't think that makes me look very good, or my fellow members. But, yes, we're happy to wear them and, you know, they reported their earnings today and they weren't wonderful, but better than expected. And the stock is actually trading near the high for the year. So, obviously, they're doing something right.

LISOVICZ: OK.

There you go -- Richard, any comments?

QUEST: I'm just distressed, Susan, that you're talking to our viewers in jeans yourself.

LISOVICZ: Oh, well, yes, actually. I'm wearing my own pair. They are -- they are -- the last time I wore these blue jeans, Richard, was when I was horseback riding. So for me, this is a holiday, because I can wear a pair -- I can wear something other than the strict dress code.

QUEST: Whoa. Whoa. Whoa. Whoa. No. Whoa. Whoa. Whoa. When we're talking about Susan Lisovicz horseback riding, it's time for me to say, Susan, have a good weekend.

LISOVICZ: We'll talk about the bulls.

QUEST: When we started our trans -- yes, we're -- we're -- the poor woman.

When we started our transmission here on Monday, this is the site that you were able to enjoy. And I'm afraid to say it was rather bereft of any light. You can see now there was no -- there was almost no light.

That's the sight that you saw on Monday, just one or two little lights.

Now, however, of course, we have a lot more light, as you can -- ooh, dear. I seem to have aged it. Now you can see there's a lot more light on our sea front here in Victoria Harbor, because we managed to get them to switch them on.

And earlier this evening here in Hong Kong, there was a fiesta of light -- a light symphony, as they play music and all the buildings do their little jig.

We'll be back in just a moment.

(COMMERCIAL BREAK)

QUEST: Good evening.

It's a Friday evening.

I'm Richard Quest.

QUEST MEANS BUSINESS.

This is CNN.

Over the course of the week, we've heard from a great many experts about their financial position, the business environment here in Asia. Well, perhaps most of them have had one thing in common -- they've all been over 40 and probably a great deal older than that, at least in some cases.

Now, we need to give you some perspective, because this is actually a young, vibrant and extremely aggressive trading environment at the moment.

So I'm very pleased to have two people who are on the other side of 40 to join me.

Alexander Tancock is here. Geoffrey Chen is with me.

Good evening, gentlemen.

Both of them have a jolly sight more common sense than me for wearing short sleeves. It's hot.

GEOFFREY CHEN, FUND MANAGER: Yes, it is.

QUEST: Right. Tell me, you -- you're in business and it's wind power business...

ALEXANDER TANCOCK, HONG KONG BUSINESSMAN: Yes, absolutely. We do wind farms, mainly in China, which is, at the moment, the biggest wind energy market in the world. So very exciting times.

QUEST: Why is it so good amount?

I mean, they're importing a lot of oil, they're importing a lot of everything else.

And do they feel the need to diversify into wind?

TANCOCK: Yes, I think they get it. You know, on the environment, energy security and on the economic front, wind power kicks all the right boxes (ph). People talk about green shoots, well, this is a green business and it's growing and it's growing very fast in China.

QUEST: What about yourself?

You're financial services and you are also an entrepreneur -- in entrepreneurial activities.

CHEN: That's right. Well, obviously, in our industry, there's been a little lot of job cuts. And what I've found actually talking with other people in my industry and that there is this opportunity -- this crisis actually is an opportunity to retool.

So lots of people, typically in fund management and banking, have actually ended up doing other things -- green ventures like Alex; charities; even (INAUDIBLE).

So it's very open and people are very aggressive.

QUEST: Now, see, that's the point. What I really -- why I was really pleased to have you both on tonight -- and we've had a lot of people, you know, talking about the numbers. And we can talk about the 3 percent or the 8 percent or this (INAUDIBLE) or the other. But it's the optimism I want to hear about from you.

CHEN: Well, I've (INAUDIBLE) Warren Buffett. And he always has something to say, which is this. He says tough times don't last, but tough people do. And I think that's the mentality that Hong Kongers have. Hong Kong is a tough place (INAUDIBLE).

TANCOCK: Yes, I mean we're just, I think, very excited about going forward. You know, like Geoff says, you know, we look to the future. We're next to China, the most exciting economy in the world. And, you know, that's something for us to -- to be happy about and excited about.

QUEST: But do you believe that what's taking place here in Hong Kong or in Asia, with intra-Asia, can survive on its own without, if you like -- suppose it's -- look, it's the old decoupling argument.

Has Asia decoupled from the rest of the world economically yet, do you think?

CHEN: Well, I think that's a tough question, but I could just give you my own example. I'm launching a fund this year. And my investors are Chinese. My partners are Chinese. I'm investing in Chinese securities. China is where it's going. So decoupling (AUDIO GAP) but it's (INAUDIBLE). And from my point of view in finance, I've seen a lot of interest, a lot of money coming in and it's all from China so.

QUEST: And when you're looking to -- into your wind business and is your money coming from China?

TANCOCK: Yes. The money is from China. The supply chain is going from China. Everything is moving to China. So everything we do can be done with Chinese money and Chinese equipment.

QUEST: Do you think that the U.S. (AUDIO GAP), that we just are -- you -- you've got a wry smile as I say that.

CHEN: No, I mean (AUDIO GAP). I mean I think (INAUDIBLE) is definitely...

QUEST: Oh, it's not Hong Kong.

(CROSSTALK)

QUEST: So you do believe there is a concept of NiLongKong (ph)?

CHEN: Yes, I believe, you know, there's -- there are many financial centers globally. But I think the up and coming one is Hong Kong and Shanghai. I think China is where the growth is and where the energy is. So I'm very positive. So I don't want to say bad things about our funds in New York and London. But I do think Hong Kong, Shanghai, other cities -- not just Shanghai, Beijing, Guangzhou, all these cities have a lot of growth, a lot of (AUDIO GAP) there's a lot of benefits and positives to being in this part of the world. And, you know, we're certainly caught up in (AUDIO GAP).

QUEST: ...to go and set, to go and live in Europe or the United States?

Are you going to take it?

CHEN: I'll take a holiday. I'll take a free holiday. But, you know...

TANCOCK: Yes, you go to Europe for holiday.

CHEN: Yes.

TANCOCK: You stay here for work.

CHEN: I think that's right.

QUEST: Gentlemen, thank you very much, indeed.

Diplomacy writ large.

Thank you very much, indeed.

That is putting it diplomatically. And, you know, that is what (AUDIO GAP) people will tell me time and again. You go to Europe or the United States for a holiday. You stay over here when it's time to do business.

You may wish to follow the sort of back behind the scenes mountains (ph) that we get up to at QUEST MEANS BUSINESS. We have our own Facebook page.

Girl In Charge has been posting pictures. Big Bust Sarah (ph) has been monitoring things and keeping us all in check.

Just search "QUEST MEANS BUSINESS" on Facebook and you can read. It's a blog. It's the bit that's not official. It's the bit that we have a bit of fun with. It's a bit where we tell you what's really happening.

When we come back in just a moment, you want a free lunch?

Well, if there ain't one going, instead, how about some noodles?

And, also, rethinking a very old way of eating -- the chopstick and what it really means, when we come back.

(COMMERCIAL BREAK)

QUEST: Now we've all eaten Chinese food of one description or another. Most of us have become quite adept at using chopsticks. (AUDIO GAP) for a couple of decades. Imagine my surprise that I actually discovered I had been doing it completely wrong for all that time.

How did I find out?

I went for a traditional Chinese lunch. There was nothing fancy about this. It was slurping noodles.

(BEGIN VIDEOTAPE)

QUEST (voice-over): Forget the Shanghai Composite and the Hong Kong Hang Seng, if you want to know what's going on in the economy, go to lunch. And in Hong Kong, that means noodles.

Lau Tsung Tie's (ph) homemade noodles have been a staple for decades (AUDIO GAP) for these cheap midday snacks -- at least, recession-proof.

(on camera): So how much (AUDIO GAP) do people spend, on average?

FAT CHEONG LAU, RESTAURANT OWNER: U.S. dollars, around three U.S. dollars.

QUEST: Around three U.S. dollars.

And fewer customers or the same customers spending less?

LAU: No, more have customer, but spend little.

QUEST: In Hong Kong, there's no such thing as (AUDIO GAP) using them. For instance, green vegetables, which are a little tricky to get hold of and potentially fatal to the shirt. It is fascinating, because (AUDIO GAP) when you start the discussion on how you use chopsticks, everybody has a different way of doing it. My way is something like that. Put the finger on there. But (AUDIO GAP) just like getting a (INAUDIBLE) there are some things that simply shouldn't be shown on television -- me eating noodles being one of them.

(END VIDEO TAPE)

QUEST: And that's actually now (AUDIO GAP) I should be doing it. (INAUDIBLE) how to use chopsticks. Of course, I'll never get anything interesting like rice into my mouth. I'm still not very accomplished or adept at them.

END

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