hello, you're watching "worldwide exchange." i'm ross westgate. today the headlines from around the globe, a $1 billion loss and more to come. deutsch bank opens lower after a grim fourth quarter set of numbers eating into profits. and a $3 billion cap hike. and four times the price it sold

the beer for back in 2009. and investor reaction is muted in china as the gdp is above forecasts. >> you're watching "worldwide exchange" bringing you business from around the globe. welcome to today's program. plenty to get through. the u.s. stocks are closed for martin luther king day, but we'll have other things on today's show. the lackluster commodity prices continue this year. will china's growth translate into a turnaround for the sector. analysis at 10:15 cet, about 15 minutes from now. deutsch bank's surprise fourth quarter loss and at 10:30 they expect the stock to underperform amidst regulation and capital requirements. at 11:30 ct we'll head to cairo

to see how the political landmark will play out after the new constitution was voted in. and at 11:50, we'll dive into the market with a look at the famed sports illustrated swimsuit issue. believe it or not, it's celebrating its 50th anniversary. what a marvelous institution. now, deutsch has issued a surprise profit warning posting a pretax loss of more than $1.1 billion euros. the german lender which released its numbers ten days early said earnings had been hit by sharp falling fixed revenue, litigation costs and restructuring. the stock is down 4% in frankfurt. just give us more of those details, more importantly, how this takes us into this year.

>> what they are saying about this year doesn't look promising for the share price development. it looks rather more that we are currently seeing more negative surprises by the bank. they are saying 2014 remains a very challenging environment only 2015 they are aiming at reaching their midterm profitability target. so what is the problem for deutsche bank? at the one side, they are trying to unwind and huge chunk of their balance sheet. previously last year they were announcing they are planning on reducing their risk of asset by 25%. and part of the losses we are seeing now are due to the fact that they are unwinding assets, reducing the balance sheet and they as well are saying their evaluation charges in the noncore asset unit. but i have to say as well, there's a huge chunk as well of

litigation losses and potential litigation losses. they still have two cases with the sec to settle. a source close to the super advisory board was telling me over the weekend, and the longer they wait, the more expensive it is probably getting. at the same time, there's still a looming case here in germany as well as worth $1 billion euro in potential settlement cost. and currently the bank has only a litigation resurface of $2.3 billion euros. still a lot of up security surrounding that share. back to you. >> annette is joining us in the studio, annette, the consent would be that we are not going to get any answer in 2014 either. >> the outlook is cautious. 2014 should be better for banks. 2013 was very hard. we have seen again a weak fixed income training, but the litigation is at the forefront

of investors attention. and as annette said, this is impacting the balance going forth. >> how do they turn it around? all divisions are weaker after wealth management. >> well, i think slowly. and very cautiously. i think if you look at the way they are doing it, the u.s. banks, actually, reported better fixed income in trading and revenue. and if you compare that to what the expectations were for deutsche bank, this is disappointing. i think that's one of the real surprises. yes, you can get litigation, but some say without the litigation charges are expected, as annette said, the provisions are low. so it's the real trading which is disappointing because the u.s. banks reported better than expected trading fixed income. >> let me ask you if that's the first time deutsche bank is losing market share compared to the u.s. peers in the so important fixed income market. >> yeah, it looks as if it is.

we look to see comparable numbers and that's the first thing to look for. the way we really see it is, is losing market share relative to u.s. peers, and that's the disappointment. i think we do expect it to lose a bit of market share here given where the numbers are, so it is a slightly disappointing number for that fixed income, perhaps interestingly is the equity trading, actually, and the equity performance there was better than we would have thought and expected. so interesting, i think, is the way to loo a it. we are looking at the comparables for the jobs to see how it's doing. >> it's up 20% since mid-december because of news concerning ratio and therefore low consensus capital requirements. so with today's news in compareson with where we were before and what wins out by 2015? >> it is interesting, we are still looking at 2015 targets, but they maintain at 3% relative to quarter. that should be taken as mild

improvement. it's okay. it's not bad news. the fact that basel is more relaxed where the ratio is going and where we are going for 2015 further to 2019, that is okay. and the sector as a whole, the european bank sector, has started very strongly and this will perhaps be -- if we look at trading in 2009, 2010, 2011, the banks did very well in january and it begins to fade off at the end of it. and here's a forward warning that the european banks have not done quite as well as expected. >> do you think that as well the fact that it's still not pretty clear whether u.s. regulators plan on, in terms of capitalizing, affiliates of non-u.s. banks, is affecting deutsche bank in an adverse way? >> yeah, i think so. there's a lot of questions there about how it will react to these kind of announcements regarding what the regulators will do. i think there's also the fear of the u.s. regulator towards

litigation, further litigation, and that's toward the european banks. so i think that is an issue and something they will have to address, but there's a lot of complexity and unsureness toward the u.s. regulator. >> and bar clays is a bit lower today. >> yes, similar issues. the expectation is that barclays face income trading will also be weaker on this news. barclays had a good start to 2014, and this is kind of a slightly halt to that momentum because there's a real re-cross of how barclays would have performed and an important part of the business model moving forward. >> annette, we'll catch you later. we'll bring you up to speed with global equities. no report from the u.s. today. the stocks are up on the session high. about even stevens between advances and decliners at the moment. the ftse 100 was up 1.3% on

friday. mixed performance from u.s. equities. and the s&p down three points for the week. the ftse is fairly flat. the tdax is down a quarter percent. and the ftse move is fairly flat. they approved a capital increase around $3 billion. this is the french carmaker that said vehicle sales were down 4.9% in 2013. stefan has more details out of paris, stefan? >> hey, ross. two stories, the first one indeed is the capital hunt, which was approved by the board of the company yesterday. according to that, the french carmaker will invest $50,000 euros in the carmaker and get a 40% stake each in the company.

they would partly subscribe to the capital high to keep a 14% stake or so in the carmaker. peugeot-citroen saw an increase in the market. that explains the negative reaction today on the market with shares down 5.4%. the second news we have peugeot is reporting this morning, very poor national results for the last year. sales in units declined by 4.9% last year mainly because of the sharp contraction in europe. europe has dropped 7.3% last year. it's more than five times the contraction of the european market. the only positive announcement is the good performance in china. peugeot posted a 26% increase of its sales in that country. outperforming the chinese auto market. ross? >> stefan, catch you later. anheuser-busch has confirmed a deal to reaware south korea's

oriental brewery. the price is $5.8 billion. amp sold the brewery for just $1.8 billion back in 2009. that deal increased the firm's exposure in the beer market. the stock is up a percent. tesco, fairly flat, marginally high. the reports in the u.k. say this could be waiting a bit more mother care that was put on hold. however the recent share price in mother care might rekindle tesco's takeover plans. mother care up 3.8% after a big sell-off from the latest results. soft bank is looking to merge with t-mobile in the u.s. the plan would leave the u.s. market with three big wireless carriers. soft bank's believed to have financing in place for the deal. we'll show you what's going down with currency markets. we'll kickoff euro dollar

1.3556. a little stronger today. dollar yen is weaker at 116. we were floating about the 105 market most of the week. sterling still around the 1.64 market. that's where we stand in europe. we'll bring you up to speed with what's happening in asia. what has happened? xi sichuan is with us. hi, li sixuan. >> it's a public holiday in the u.s. and the nikkei slipped to a one-week low with the dollar/yen falling below the 104 level earlier in the day. nintendo among the top losers diving 6% after a profit warning on friday. and over in china, liquidity woes hit chinese stocks after a surge in the benchmark rate.

the shenzhen lost .88%. over in hong kong, the hang seng lost .90%, but south korea outperformed today. technology shares rallied on bargain hunting, and australia lod lost a modest 0.2%. expanding by 7.7% last year, although gdp exceeded the market's target, they suggest momentum may have tightened amidst credit supply. we have more from beijing, a little bit better than we thought, eunice. what's the breakdown? >> it is a little better than we thought, but at the same time it is still indicating a slowdown.

the previous quarter thought 7.8%, so 7.7% is below that. the way people are breaking it down is, sure, 7.7% is stronger than we expected, but the fixed asset investment figure, the industrial production number also were slightly lower. and that's one of the key issues, we are seeing less spending or at least at the end of the year on the infrastructure spending, on investment, and going forward what people are saying here, the vast majority of economists, is that in 2014 we'll see further slowdown. there's expectation that the government would come in as it has been signaling to crack down on credit. also a lot of people believe that the new leadership is going to get more serious now that they have been talking a lot about economic reform to really shift the economy and rely less on investment, more on consumption. that's not going to happen overnight, but at the same time the direction is there. that's why most people believe we'll see a slowdown in 2014. having said that, though, ross,

at the same time, there are a couple of outliars out there in terms of economists who do believe we could see some strength. and where would we see that? with global growth. there's a lot of people, not a lot, but several people who say the global recovery could really help to boost the economy here. and that could be a factor that could tick the economy to possibly even 8% or more. according to kind of a small number of economists here. >> all right. thank you for that. we'll catch you a little bit later, eunice. good to see you. plenty more to come on that news. also, if the results of hungry nation are digging china out of the slump or not, we'll have more about that after the break.

you're watching "worldwide exchange." >> china's economic growth is slow to 7.7% in the fourth quarter. the reading was higher than expectations, though. other data shows factory in growth output lost steam in december. and while retail sales figures highlighted domestic demand, we are joined now to talk about less infrastructure and less investment spending, but the

number was still a tick higherment and the government stated a 7.5% target. so how are we supposed to think about this figure? >> well, the risks in the banking sector and the property market, these factors including supply constraints, such has the restructuring of the economy, all this is going to constrain how quickly the economy can rebound. nevertheless, i don't think it's a matter of hot lending or further shop deceleration in china's growth. instead, the fact that the leadership maintained 7.5% gives us the view that there will be target of stimulus infrastructure projects, which could prop the economy up 7.8% growth in 2014. i think china will be a bit slow off the clocks, but growth will suddenly stabilize. >> it's a bumpy outlook. it's a bumpy recovery, but you're confident it won't be completely derailed?

>> yeah. we've got enough reason to believe that this is like you said, second gear is a bit bumpy and jerkier, but it is not going into reverse gear. one of the things about the entire restructuring of the economy, sure, you come to the supply side and credit is a bit of a cough stranstrain and thin increasing wages take a toll on the economy, but there are low hanging fruits from the financial liberalization to bring in the leeway. we have enough projects on a selected basis like the railway that will help boost it slightly. it won't be a disappointment either. >> how do you risk profit or a banking blowout? >> these are good questions and perhaps the most lingering ones

to keep investors awake at night. one of the things we think as a mitigating factor is there are a lot more efforts being made to get a sense of how much shadow banking activity there is by taking financing and on top of that bumping up -- there have been distortions in this, but bumping up the market race means they are trying to rein in the risks. and besides the central government's deep and that should mitigate the risks in the run-up of the bank. likewise, the market factors will continue to move but they are doing it very carefully not to upset the entire system. >> where does this lead us in this view of china to prices of commodity currencies and the story for the resource sector? >> that's a great question. one of the things is comedy has

seen a huge sell-off because of the deeper effects in lieu of the hot stock value, but we think the chinese risks are overdone. there are two many tail risks of hot lending being priced into property prices, i'm sorry, commodity prices, so what's going to happen is they will find a flaw sooner and higher than expected. so china needs to keep a certain level of activity, even with 7.7% growth to liquidate into good commodity. we think they could revert back to 90 to 95 levels rather than collapsing to 80. >> all right, good to see you, senior economist at missoulu bank. as expectations return around the sector, they will

stay focused on what really matters, and that's deliverable earnings growth and the defensive balance sheet. do you agree that some stabilization will happen at some point this year? >> yeah, i think looking ahead and as we consider to look forward are the downside risks seem to be diminishing and it's more about the upside risks. when you look at the cross of the commodity spectrum, a key would be if the chinese firm remains relatively firm going forward. otherwise we are seeing metals such as zinc and nickel. copper we are seeing in stable markets. overall, we just feel that the big shocks that we have seen in the last two or three years have

been dusted and are suddenly conducive. >> clearly there's been a lot of pressure on the mining companies, how are they going to deal with it? they don't have to focus on the supply efficiencies. >> they have been focusing on that to a great degree. that's a key message from the players, they are talking about reducing the capital budgets and overreturning value to shareholders. the majors have a higher quality asset on whether these tougher commodity prices, and also just the structure of the industry in many areas means that companies, because of the focus on the higher grade level cost production, basically is at the expense of volume, which is also supportive of commodity prices. >> this is the worst performing sector since last year, so what's going to be the out in the two stories here, this is sort of the backdrop as what individual companies do

themselves. are you confident this year won't be a repeat of last? >> it's originally pointed out to me that we've had three years in consecutive decline for the mining index, which is, i believe, completely up heard of. and it has been justifiable so far. i think mining companies are in better shape. they are making sure their balance sheets are being rebuilt. they are working really hard to bring down the net debt position. >> which is your preferred major. >> it is. we feel particularly with the upside potential in the iron ore price, they have the real chance for upgrades as the year progresses. >> large cap growth, what are the characteristics they both share? >> first quantum is a standout copper producer. they are looking to more than double production over the years ahead without including the major cover panama project they are working on. they have a mining team that's

excellent and consistently delivering projects to time and to budget. and we feel they offer a very attractive option, particularly in copper, which is one of the better quality commodities in our view. >> so petra diamonds. >> we see fantastic growth from this company. they are going through peak development and we will see better operational efficiencies. they will also benefit from higher volumes and the underlying fundamentals from the diamond market look attractive. >> thank you for coming in, the investor at investec. amazon is looking into using a drone to deliver parcels. amazon's next plan is anticipatory shipping. a system to cut delivery times by predicting what buyers are going to buy before we have even done it. the pre-shipment method would

see the company send them to a general geographic area before specifying a final address once an ord er has actually been mad. amazing. and brazil the looking into bitcoin. they are looking to avoid the 20% value added tax currently imposed. this comes as tax authorities try to minimize the risk of tax evasion and money laundering. so is it time for regulators to set global standards for bitcoin? it may be a good idea if they can do it. let us know, e-mail us at worldwide@cnbc.com. tweet us@cnbcwex o or @rosswestgate. deutsche bank is seeing a

slowdown. we'll have more on that after this.

headlines from around the globe, a $1 billion euro loss and more to come after deutsche bank has low quarter profits. and peugeut is sinking on

cap hike report. and china is holding above forecast. we are an hour into the trading week. pretty flat, really. deutsche bank shares are down this morning. and no u.s. markets are trading today. on the currency markets, the dollar has been firm against the euro. we are down to 104.16.

we have had chinese growth today a little bit better than expected, but there's still concerns about that. what's your view of the equities evaluation as we start to go through earnings season? >> i think we have done what we have done in each of the past few years is we've had earnings expectations start out strong but then disappoint over the course of the year. so the revisions have started out 12%, 13% up and ended up being roughly flat. the difference this time around is in 2013 you saw massive multiple expansion, mostly let by qe across the globe, which is pretty much exactly what happened in 2009 when you saw the markets move higher ahead of the expectations of the earnings group. then in 2010 you had the strong earnings group, but the markets were only up 7% or 8% because the expectations were already there. now the risk this time around is that unless you get that strong earnings growth, then there will be some big disappointments

across the markets. >> and we get into the 30 companies in europe that report this wake, we have 70 companies reporting in the u.s. >> yeah. >> it's always less about what they say about the quarter than what they say about the future. >> the outlook is key to their survival. we know they are going to mention the emerging market slowdown and the currency weakness because they have mentioned these the last two reports and they were the first to warn on that, which has been a theme across most of the earnings reports. and a lot of them have continued to say that the currency headwinds will effect them. your previous guest mentioned that, it was because of the tapering in the emerging markets weakening. >> stay there, nick, because we want to talk about the stocks we have heard today. deutsche posting a pre-tax loss of more than $1.1 billion euros to the final quarter last year. earnings have been hit by

litigation costs and restructuring. anetta has more, the outlook doesn't get any better. >> at least not in 2014, yes, that's what they are saying. 2014 remains the year of challenging market environment, reform and restructuring the bank is saying. and that is, of course, because the bank is widening down a huge chunk of its balance sheet in the non-core asset unit. then a is costing a lot of money, partly to blame for the loss in the fourth quarter. at the same time, the bank has a lot of litigation issues still outstanding. they are still looking into settling at least two cases with the sec, which gets more and more costly the longer they wait to settle it. and someone close to the supper advisory board was telling me over the weekend that the bank is struggling to close both of them in 2014.

and that is getting more and more expensive. at the same time, there is still the cares case in germany that may cost the bank $1 billion euro, and that's a lot of money. looking at the litigation reservice that the bank has right now, up 2.3 billion year. so looking at the divisional profitable or performance, quite revealing that the investment bank only reached a pre-tax profit of $95 million euro. this is literally nothing for deutsche bank. and this is of course due to the surprise fall of more than 30% in debt trading revenue. the assets at wealth management unit, which is a problem case and is still undergoing the restructuring, could reach a pretax profit of $199 million euro, which is still okayish, but the bank itself as well is saying they are still

repositioning the unit. and one last word on private and business client, the unit with the biggest pretax profit of $219 euro. with that, ross, back to you. >> annetta, thank you for that. she just said the massive fallen revenue and the fixed income. >> it shouldn't be a surprise they with r one of the weaker ones. so the fall in the fixed income hasn't been offset by the equities like morgan stanley. >> this stock low has been up 20% since december. >> yes, but it still has lagged the sector, the broader bank sector over the course of the past year, and especially the european dominated banks is one of the weaker per forrmformersp. a lot of people know about their needs and the potential shortfall there, but the rest of the sector is up essentially more. >> annetta was earlier saying because of the fixed incomes, you can get a straight read

through to the likes of b barclays. >> fixed income is slowing in the u.s. you've seen it as well. and there are unrealized gains. >> where does that leave us? if you wanted to play recovery, the sector said it was banks, right? >> the spanish-italians have already had their big run, so you have to be more cautious on the banks. i think if you were to pick a space, i think the swiss regulators have been much more harsh on the likes of ubs and credit suisse and told them they have higher capital requirements and put them to task in terms of sorting out their balance sheets. so they are probably the safest place at the moment. >> in the sector, the question is, you have to take a view on whether you still want to play the best recovery sector on the story or whether you need to be slightly more defensive.

>> i think i would rather be much more defensive. if the market is -- the market right now is expecting european growth to recover. and if you're -- if you've got the slowing growth in china and you've got the european markets recovering, then you want to pay much more domestic into businesses. >> and that's the banks and other sectors. we certainly want to talk about persia. it's board approved a $3 billion capital increase, this according to reports. the company is revealing a dramatic drop in car sales. stefan has more now, what is the share price reaction? >> very negative because of the substitution price, ross, according to the capital increase would be around 7.5 to 8 euros per share. that's the main negative pressure on the stock today. yesterday the board approved the broadlines of the capital hike, $3 billion euros, but also gave the dates to the ceo to leave

the negotiations with the chinese carmaker and with the french government. according to this report, the french states would invest $50 million euros and the carmaker would get a 14% stake in the company. the peugeot family would face a significant dilution, but barclays would get the capital increase in order to keep the 14% stake in the company. so that's one part of the story. the other one, ross, is the financial results for 2013, peugeot said they had 4.9% decline in sales from last year because of the sharp contraction in europe. sales in europe dropped 7.3% last year, which is more than five times the contraction of the european auto markets in 2013. the only positive announcement being from china where peugeot outperformed the markets with a 26% increase of sales in unit. that's more than the 19%

extension of the chinese auto market last year, but all in all, the capital hike and the price of the subscription is negative. and that's the market reaction, we are down 5% on the stock. >> stefan, thank you for that. nick, autos, we have all known about their capacity in europe, and autos were the best performer last year, presumably because the germans were doing fairly well. >> exactly. and you had the big short squeeze in the company. the scariest thing you want to hear is i'm from the government, i want to help. and what the french are doing is creating a situation where they have much more control over how to help peugeot trim their capacity. >> the autos are up as a whole,

i don't know what peugeot was, but are they going to outperform over last year. it will take a lot to have similar gapes, isn't it? >> i think so. now that this comes in, yes, it will show up their capital base, and yes, the 2013 numbers are showing they are going a long way to get to their target of more than half the sales outside of europe. but the fact that it's at the expense of europe falling as well isn't great. and they've still got to fix a profitability. >> yeah, the sector is up 11%. nick, good to see you, as ever. nick is joining us from btig. nintendo shares are down after the firm slashed their sales forecast on friday and said it will likely post a net loss for the current fiscal year. here's more from the nikkei in tokyo. hi, makiko. >> share prices tumbled over 18% at one point during the trading

day. the gaming company finished 6% lower and also became the most traded stock in terms of value on the tokyo stock exchange. the firm initially forecast a group profit of $35 million for the year ending march and investors were hopeful, especially with the weaker yen giving exporters a boost. but market watchers say it may have been a lofty goal to begin with considering how much power smartphones and other mobile devices have gained in the gaming market. the firm is struggling as its wii u game conceal was hit with weak sales and the handheld is facing a slump overseas. the company still has room for margin as it holds $8 billion in cash reserves to play with. and eyes will be on the business strategy conference scheduled for next week. that's all from the nikkei report, back to you. >> makiko, have a good evening. soft bank is keen on deutsche bank stock in the u.s. the two companies have started direct talks. soft bank has been wanting to

combine sprint with t-mobile to rival verizon and at&t. they will transfer ownership of the 67% stake to t-mobile to a dutch holding company adding to speculation about a possible sale. separately, they said they already have financing to buy t-mobile u.s. explosions rocked an an anti-demonstration protest that left 37 injured. protesters are trying to bring down the government of the prime minister who they accuse of acting as a puppet for her brother. and in india embarrassment for the ruling congress party. the duty government minister has testified in the probe of his wife's death. an autopsy found that his wife's death was sudden and unnatural.

her demise comes days after she took to twitter to reveal her husband's alleged affair with a pakistani journalist. they were married in late 2010. it was the third marriage for both of them. now on the agenda in asia, we get fourth quarter up nation numbers out of new zealand. the bank of japan kicks off a two-day policy meeting. and they look into the final three months of last year. it was an overwhelming yes for a new constitution in egypt's referendum. we'll be joined from cairo with the very latest. i need proof of insurance. that's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. ah, actually i think my eyes might ha... next! digital insurance id cards. just a tap away on the geico app.

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voters overwhelmingly approved a constitution in egypt's referendum, the highest turnout in years. the next step in the political aspect will be a joint election. yusef, what does this now mean for the country? what does this take us? >> well, first of all, the results are a considerable endorsement for the army-backed

transition. they reached the kind of turnout they were hoping for. this was the crucial indicator at 38.6% of the 53 million or so eligible voters. that giving the army the vote of confidence. and now that the referendum has passed, a new draft of it within 30 to 60 days, parliamentary or presidential elections should take place. so it's going to be a pretty fast transition here over the next few months. now, we have yet to here the formal announcement. and on the back of that it will be interesting to see whether the army chief is going to show interest in running for the presidency himself. it is rumored that if he were to do that, he would have to resign at his current post as the head of the army. the international reactions have been positive towards this election or the referendum from the european unions. katherine ashton did say she regretted the violence that took place over the last two days,

but this is an important step forward. john kerry said the vote is a milestone, but it's just a step towards democracy. more steps will need to follow. this last bit of the transition is indeed going to be critical. the oil-rich gulf countries have shown overwhelming support. remember, they are the ones already dishing out billions of dollars in aid and are propping up this military-backed transition from the very beginning. the stock exchange which is open at trading to the upside this morning, again, factoring in still some of the decisions from earlier this week, including the outcome of the referendum and the decision by the central bank of egypt to hold rates. yesterday was trading slightly to the downside. today again back in the green continuing the strong rally we have seen since the beginning of 2014. ross? >> all right. yousef, thank you for that. more to come from you later in the program. beer giant anheuser-busch is

going to reacquire south korea's oriental brewery for $5.8 billion having sold it for $1.8 billion back in 2009. the deal will increase the firm's exposure to the asian beer market that is growing rapidly. shares of the beer have increased 12% in the last 12 months, they are up another half today. british retailer tesco might be sold to mothercare according to sunday's times. it was going to be sold six months ago and put on hold because of the recent fall in share price for mothercare. it may rekindle tesco's eye. tesco shares are been down the last six months. the mothercare shares are down 39%. and united biscuits is having formal talks with a chinese equity group over a possible takeover. the maker of the biscuits currently owned by blackstone

who bought the british manufacturer for 1.6 pounds in 2006. now reports suggest it is unlikely united biscuits will change hands in the next couple of years. it is only thought to be sold when the owners decide to sell. the owners of former one have reportedly topped the chance with $20 billion in so-called dried powder. according to the report in the financial times, the european firm has more when it comes to spare funds. many are running out of time to complete paperwork on new eu legislation. the directives call for greater transparency as well as stiffer rules on pay and reporting. the new survey suggests the industry is dragging its heels as the july deadline approaches. joining us is paul north, head of product management, who has

been looking at the subject. paul, great to see you. thank you for coming in. they have until, what, july this year, july 22nd, to comply with the alternative investment fund managers directive, why are fund managers dragging their heels a bit? >> well, i think there's a number of reasons there. first of all, there's a lot of detail in the regulations. speak to, you mentioned enumeration policies, but there are many other details about how they operate their funds. plus, they have many other regulations they are trying to deal with at the same time. this is a busy time working in the compliance risk departments of a fund manager these days. >> how many funds have yet to make applications? >> we did the survey at the midpoint, so there's a year for the firms to comply. at the end of the year, we had 19% that had committed -- >> 80% haven't yet. >> still to go, yeah. which is beginning to cause some concerns, obviously.

that's a lot of paperwork to complete, submissions to make, arrangements with depositories to make. so there's a lot of work building up over an increasing time scale. >> you say there's lots of issues here, what are they thinking about the costs of complying and how they meet those? because there is some incentive to pass them off. >> indeed. and there are real costs associated with this. in the survey we think the main costs may be around $300,000 per firm. that runs into many millions of dollars. they are looking at passing it on. some already decided that they will. i think most are still deciding on that, over 46% said they are still waiting. >> does that bring forth the total expense ratio? >> it will make it more expensive for the investor or reduce their return. so that's a real concern for investors going forward. >> have firms decided whether they want to do that or are they

still thinking about it? what does your survey suggest? >> some have, most are still thinking about it. >> what about closure? is this going to lead to some people saying it's not worth the hassle? >> indeed. we have seen some firms already closing funds. i think they may argue that the funds were uneconomic anyway, and the extra emphasis in costs around these regulations have forced the hands of some companies, but we are seeing a small reduction in the number of funds in the industry. >> just a final point, they don't want to -- they are deciding how to comply with it, is there a sense that there will be -- what happens if you don't make the date? there are quite a few that don't. >> it is not entirely clear what happens if you don't make the date. i think the regulators assume that you will and are insisting that you do. you may find that investors won't invest in your fund if you can't demonstrate compliance by

the date. it will be harder to sell your funds. and ultimately we have seen the regulators being quite honerous in imposing funds. >> there may be a fudge. >> hopefully they are pragmatic about it in the long run, indeed. >> what's the biggest problem for fund managers in trying to comply? what's the biggest issue? >> the things they point out are costs, technology and resource, getting this done in time. >> yep. which is where the increase risk comes from as well. is it going to be more overlay of this without the regulations as well. >> oh, absolutely. there's more coming this year to work on. i mean, if you look at the retail side of the market, we have five of the retail regulations coming, so we may well be back to talk about two and three in the future. >> we'll see you then, paul.

thank you for coming in. paul north at the ny melon. there was one-click buying back in 1999 for amazon, but now amazon's next big plan is anticipatory shipping. this is a system which cuts delivery times by predicting what you're going to get before we even buy it. oh, yes. the pre-shipment method would see the company send items to a general geographic area before specifying a final address once we have actually decided to place an order. spooky but it's true. and the u.k., meanwhile, is revering how it taxes the currency bitcoin over fears traders will look to more favorable jurisdictions to avoid the 20% value added tax, which is currently imposed. the review comes as tax authorities around the globe try to harness revenue from the virtual concept while minimizing the risk of tax evasion and

money laundering. as a result, what we're asking you is is it time for regulators to set global standards on bitcoin? is that the way to go? can you do it? let us know and get in touch with us by e-mail, worldwide@cnbc.com. tweet, twitter @cnbcwex or direct it to me @rosswest gate. could we have standards for global currencies? think about that. still to come, china may be slowing, but growth has outpaced forecast, at least for now. find out why our next guest thinks a squeeze on interback will trickle the effects. we'll have more after this.

hello. you're watching "worldwide exchange." i'm ross westgate. china gdp expands at the lowest pace in 14 years. investor reaction is muted because growth is still above forecasts. a $1 billion euro loss. more pain to come. deutsche bank opens sharply lower after a grim set of fourth quarter numbers with litigation and restructuring costs eating into profits. and ab buys back the oriental brewery for four times it sold the group for back in

2009. and the french carmaker's board approves a $3 billion euro capital hike. >> you're watching "worldwide exchange" bringing you business from around the world. >> if you are just joining us stateside, there's a holiday in the u.s., so why are you up so early watching us? if you are, enjoy your martin luther king day. china's growth slowed to 7.7 in the fourth quarter. growth in factory outlook lost steam in december while retail sales saw domestic demand. the country's home prices were up 4% last month, a touch slower than november's pace of .5%.

eunice is in beijing crunching the numbers for us. a slowdown on investment spending, a little more than we were expecting, so where does this leave us now with the thoughts on the year ahead? >> well, most people and most economists, should say are expecting that 2014 is going to see a further slowdown. it's a continuation of the momentum we saw at the end of last year whereby the government has been cracking down on some of the credit. of course, there was a lot of credit in the system late last year. there's been a continuation of a crackdown going into next year, at least that's what the expectation is. also, into this year, people are expecting the leadership to really want to push ahead with a lot of those economic reforms that they were detailing at the end of last year to try to shift the economy from an investment-led model to a consumption-led model. of course this will take a lot

of time, but at the same time the discussion and the direction really has been to try to shift the model and people are expecting to see some of that come into play. so the backdrop of that is going to be possibly a slower economy because there's going to be more of an expectation that they would be shutting down older industries, industrial industries or factories, which would mean that would suddenly see a slowdown in terms of your growth figures. and instead there's going to be more of a push to try to put into place some structures that could help the economy further go along on a sustainable route for the long-term. ross? >> thank you for that, eunice. we'll see you at the break. joining me is diana, head of research at long box stock research. good to see you. as we make the change from investment-led spending to more of the consumer-driven market, it's going to be bumpy. how bumpy is it going to be?

>> it's going to be significantly bumpy. i think while the market is getting wrong at the moment, this push for financial sector reforms in china would mean a mild slowdown in growth that's manageable. on the contrary, because of the huge excesses building to the economy over the last eight years, financial sector reform is absolutely crucial, but in the first couple of years it will be accompanied by well below trend growth in the financial districts. >> what kind of growth are you talking about? >> below 5%. >> okay. well, that is a significant slowdown. >> well, bear in mind that actually china has already seen quite a major slowdown since the financial crisis. we calculate our gdp for china, which by the way uses entirely the official data, but it shows

a longer cycle which makes more sense when you compare it with the policy -- >> sorry. >> which is to say that in the first half of 2013, quarterly annual growth was just 2.6% of gdp. >> which highlights the problem. if they are facing that kind of growth rates, won't they do more to stimulate the economy? how could they, you know, get more growth in? they have a lot of fire power. >> if they go for the old style throwing money at states and investment and racking up credit now in a very different global environment than before, then china will have a massive economic and financial crisis within two or three years. they have no choice but to go down the route of paying for reform, which in the short-term is going to be, well, to say the least, unpleasant and very

difficult. but then sets them up for good catch of growth afterwards. >> that was my next point, do they have enough reform from what was planned to release the animal spirits to open able them to have catch-up growth? is this a temporary phase and how temporary would it be? >> well, i've covered china for 13 years, this is the first time in those 13 years that i'm getting the sense that the authorities are really determined to push ahead with these financial sector reforms. and that is crucial. of course, it's the job that is very difficult. so they could get things wrong or they could get cold feet and pull back. but china doesn't have any other option but to push ahead. >> so what's the feedback loop going to be from china then into the developed world in the west? here's the u.s. now starting to steam along, doing fairly well, if we get those sort of growth rates in china, is it going to knock them off course a bit or

not? >> not at all. because actually some of the adjustment that is now restricting china, in other words, over the last five years, the u.s. dollar regained its competitiveness, and our estimate is overvalued on a trade rated basis. so weaker chinese growth does not impact our strong growth forecast for the u.s. because, in fact, the u.s. growth will be predicated on americans producing more and more at home of what they consume. china will be very bad news for chinese growth weakening and financial reforms and other export-led ems, especially in asia, but it doesn't impact negatively the u.s. story. >> the u.s. economy will be big enough to sustain itself in some ways, is that what you're saying? >> it is closed economy, so if it is driven by domestic kind of production revival, because now

they are a relatively cheaper labor and also the cheapest energy. >> we had the industrial output the fastest in three-and-a-half years on friday. they could taper a bit faster, so what is the fed going to do with this? the markets have in their mind, we go, 10 billion, 10 billion, 10 billion, do you think it will go quicker than that? >> i think they will go quicker. they can't maintain this metronome tapering, especially if we are right on the growth forecast coming out of the u.s. we have to realize that the u.s. economy is the only major economy in the world that has now adjusted from its imbalances that led to the financial crisis. and with much less fiscal tightening this year, it will grow at well above trend without necessarily sparking inflation straight-away. so we don't expect policy

increases in 20 14, but our view is they will be tapering by the faster view this summer. >> thank you, diana. that's the news about china. how is that impacting trading in asia? >> most asian markets ended lower this monday. and the nikkei slipped to a one-week low hurt by a stronger yen. nintendo among the top losers diving 6% after a profit warning on friday. over in china, liquidity world hit chinese stocks after a surge in the benchmark's seven-day rate. the chinese fell below the level .20% lower. over in hong kong, the hang seng lost 1% today, but south korea outperformed. technology shares rallied on some bargain hunting.

as for individual movers, we talk about chinese property developers, and most gained ground following heavy sell-offs over the last week or so. the latest data showed property sales picked up steam in 2013 jumping 26% from the previous year. and housing prices in four major cities hopping up over 20% for the fourth straight month. so for now, ross, people are eyeing this. and beijing is going to roll out a nationwide housing registry system and a property tax theme. back to you. >> thank you for that, li. the trading day in europe just slipped away from session highs we were at an hour or so ago. decline is at five to four on the stock. ftse 100 was up last week, it is currently flat down three points. deutsche bank dragging that down. more on that in a few moments. the cac is flat and the ftse mib

is down .13%. anheuser-busch is confirming a deal to reacquire south korea's oriental brewery for $5.8 billion. they sold that to kkr for just $1.8 billion back in 2009. it's a pretty good business. the firm will increase the exposure to the beer market. reports say british retailer tesco could be taking another look at this firm. a bid was considered six months ago and put on hold. the receipt share price is slumping in mothercare and could rekindle tesco's takeover plans. and deutsche telekom now flat. soft bank reportedly looking to merge sprint corporation unit with deutsche telekom's t-mobile in the u.s. that will leave the u.s. with

three big cell phone carriers. soft bank has funding for that. as far as the markets are concerned, the dollar is stronger today. initially we are down to a three-and-a-half month low. the dollar/yen back to .104 but fairly stead by. and euro/dollar at 1.35. deutsche bank is issuing a surprise profit warning posting a pretax loss of more than 1.1 billion euros for the final quarter 2013. they released their numbers ten days early to say earnings have been hit by sharp falling fixed income, litigation costs and restructuring. annetta has been watching this in frankfurt, we have been seeing barclays a little weaker today. there's a read-through from that. how long before things start getting better? >> that's a good question.

actually, if you believe in what deutsche bank is telling us 20rks 14 remains a challenging year. and by 2015 they are planning on meeting midterm profitable targets. so there's still a lot to be done before the management can actually declare victory here. because we are still having a lot of litigation charges potentially hitting profitable off the bank, not only two sec cases, a source close to the super advisory board was telling me it remained to be settled this year. also, a huge court case in germany probably worth a settlement of 1 billion euros waiting to be settled. so there's a lot to be done for the bank on that front. at the same time, the bank needs to reduce its balance sheet. and also they were promising to reduce 25% of their

risk-weighted assets. as we all know, that is costing money and we are seeing that as well in impairment charges for the fourth quarter, which is weighing on the shares as well. the fantasy four 2014 remains very limited, i would say, ross. with that, back to you. >> annetta, thank you for that. if you think deutsch desk e bank is having a bad day, find how why persia is at the bottom of the stock 600. stefan will give us details after this. i need proof of insurance. that's my geico digital insurance id card - gots all my pertinents on it and such. works for me. turn to the camera. ah, actually i think my eyes might ha... next! digital insurance id cards. just a tap away on the geico app. could save you fifteen percent or more on car insurance. everybody knows that. well, did you know that when a tree falls in the forest and no one's around, it does make a sound? ohhh...ugh.

geico. little help here. over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪

you're watching "worldwide exchange." >> public debt weighs on chinese growth as gdp expands at the slowest pace in 14 years. shares in deutsche bank fall. and another week, another beverage acquisition. inbev reacquires oriental beverage that it sold in 2009. in corporate news today, persia's board approved a broad outline of a 3 billion euro capital increase. this as the company reveals a dramatic slide in car sales. stefan has more for us out of paris. stefan, you are looking at the underlying picture for this firm. not appearing to get any better.

>> no, and first of all, the capital increase, ross, we knew about the potential size of this capital increase, 3 billion euros, so the report is not a big surprise from the investor point of view. at least not in terms of dilution. now the question was not the price of the capital increase, and according to the latest report, the subscription price would be 7.58 euros per share, which is a significant discount compared to the closing price on friday where it was 11.38 euro per share. that explains the negative reaction today on the french market. we still don't have all the details, nothing has been officially announced by peugeot, but according to the chinese carmaker, they would both invest 750 million euros and get a 14% stake each. meanwhile, the peugeot family would face a significant

dilution but would still subscribe bodily to the operation in order to have at least or around 14% or so in persia. so that's one part of the story. the other is the commercial results for 2013. peugeot posted a 4.9% decline in unit sales from the last year because of the weak performance in europe. as a result, the international sales outside of europe rose to 42% last year up from 38% driven by a very good performance in china. peugeot managed to outperform the chinese market with a 26% increase in sales. and that, ross, is to compare with the 19% expansion of the chinese auto market. back to you. >> stefan, thank you for that. still to come, an estimated $57 trillion will be needed to finance infrastructure developments through 2030. and the s&p believes a 500

billion annual hold is going to remain. so who is going to fill it? we'll discuss that when we come back. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

world leaders are heading to the swiss resort this weekend. it's that time of the year again

for the world economic forum meeting. a key topic, where to find funding for the much needed infrastructure projects that are needed around the globe. according to a report, some $57 trillion will be needed to finance infrastructure developments through to 2030. ratings agency s&p released a new paper which estimates the institution investors have the capacity to provide $200 billion per year, but it would still leave a $500 billion hole, which would still need filling. joining us is doug peterson, president and ceo of mcgraw-hill financial, thank you for joining us. how are you estimating this enormous gap between what's required and the funding that's available? >> there's this gap that's arising because governments have continued to fund less and less of their infrastructure. banks have been making up about $300 billion of this gap. but they have capital constraints and have been very flat for many years now.

and it's really going to be institutional investors, insurance policy companies, pension funds, sovereign wealth funds and others that are going to need to make up this gap. >> you're suggesting in the report that they don't have thefire power to make up the gap, or are they not yet switched on to, do they need to be more switched on than they are already. >> first of all, they need to be more switched on. second of all, there's conditions critical to make it more attractive for them to come into the sector. >> conditions such as governments underwriting projects or guaranteeing prices? >> guaranteeing incentives could be one way to attract people into the sector. as you look at the difference phases in infrastructure projects from the guarantee of a construction project in the long run, but just as one example, the regulatory regime for insurance company that is being resolved now, has in the provisions that would actually inhibit insurance companies from investing in the long term investment. >> at the end of the day, this

is what regulators want, insurance funds to invest in long-term assets. so you have a long-term infrastructure project. one would think that would work for them. so what is it in the regulation that may inhibit that from happening? >> after the financial crisis, people are still looking at what would be the potential losses. and many infrastructure projects have the characteristic to have a very long tenure, and they are sometimes also involved in risk and what will continue the payments over time. so the insurance regulators have put in place an approach that has and inhibits long-term investments. but this is a time where long-term investments like infrastructure actually are quite attractive in many ways. they have a higher return of the liquidity in them, but in many long-term studies we have done, it shows the default rate in the long run is lower on infrastructure projects, and the

recovery rate is higher. lower than corporate bonds. and the recovery rate is higher than corporate bonds. >> okay. so there eticly, the government regulators need to get their heads together a little bit. >> the government regulators need to work together. as you see, the previous report was about china with their growth. china's strong economy has been driven over many years by a very large portion of their economy invested in infrastructure. 8.5% of the government expenditure in china over the last years has been in infrastructure. in the u.s. it's at an all-time low of 1.7%. but going back to your point, it's very critical that infrastructure be prioritized because not only does it help drive growth, it helps drive jobs. and it's the type of invest that time provides a sustainable base. >> where is most of the infrastructure spending --

geographically, how spread around is it? where is the biggest pile? or is it pretty evenly spread? >> because of the size of infrastructure, it's still pretty evenly spread around the world between the u.s., north america, europe, the eu, eurozone and then china. japan is part of that. developing countries also play a role, but because of the size of the economies and the populations of the northern hemisphere, that's still the major part of the world where you'll see infrastructure investment. >> good luck with the report. nice to see you, doug, joining us from mcgraw-hill financial. still to come, as iran gets back the uranium enrichment program, we'll look at the changing political landscape shaping the year. this as we countdown the world economic reform. see you in a few minutes.

i'm ross west gate with the headlines from around the globe. china's gdp expands at a 14-year low. and deutsche opens lower today after a grim set of fourth quarter numbers with litigation and restructuring costs eating into profits. ab inbev buys back oriental

brewery for four times the price it sold the group for back in 2009. and persia -- >> you're watching "worldwide exchange" bringing you business news from around the globe. >> all right. if you're just joining us, welcome to you. you might have woken up in the states and don't have to work today because of the martin luther king holiday. so have a pleasant day there. u.s. exweties mixed on friday, last week the ftse 100 was up 1.3%. this morning fairly flat as you can see. xetra is down a third of a

percent. deuts deutsche bank is driving that down. cac is fairly flat despite the steep performance in persia. and the ftse mib is off .10%. so lots of thought to this fresh week. here's a recap of what some of the guests have said on cnbc today. >> this is a goods trade to go. i don't expect any shocking growth data coming out of china, but what you have basically to monitor is definitely the rate's dynamics. you continue to see changing rates over there. >> this is part of the market that has traded very expensively over the last two years. so all i'm looking for is just a bit of normalization there, for france to get that back, which i expect to happen. and for germany to cheapen up back to something a bit more

normal. it is currently unjustifiable in my opinion. >> the one thing that my experience tells me is that markets don't sell-off because they become overvalued, they sell-off because of some other event. and historically when you've had the sort of performance we had in 2013, typically the momentum carries on through the first half of the year. so i'm looking for another maybe 5% to 10% for u.s. equities. meanwhile, iran is hosting the most sensitive uranium activity according to the nuclear watchdog report by reuters. the iaea said the country suspended 20% in enrichment and is diluting its stockpile. in return the u.s. and the eu are expected to suspend economic sanctions against iran. they already invited the

government in tehran to take part in preliminary syrian peace talks due to take place this week. and so joining us to discuss whether iran could be one of the biggest risks this year, tina fallon at citi, good morning. >> good morning. >> what is going to happen? it seems to me a long way between here and the future in terms of dealing with iran. we started a process which is good, but how on earth do we know where it's going to fin snish. >> well, it's true that the path from here is very unclear, but i do think that this interim deal represents a genuine break through. we are not going back to the pre-agreement status quo, right? iran needs this deal. you mentioned the u.n. report. the u.s. government, the white house also needs this deal. so there's real momentum behind it, but plenty can still interfere with its progress.

>> yeah. clearly what it has meant is no attack on iran's nuclear facilities from the west. what are you going to be watching most closely as we progress now over the next six months? >> well, you mentioned whether this would be a risk for 2014. the next six months, the clock has started ticking on this deal means, as you said, the likelihood of an attack on iran's nuclear facility is very low. we have seen movement within the u.s. congress to put pressure on new sanctions on iran. this is not surprising. this is a midterm election year. so the dynamics there are kind of colliding. a diplomatic momentum is very good. the political dynamics in the u.s. could very well interfere to discover it, so after june when this interim deal runs out, then we will look to see whether there can be an extension as we get closer to november midterms in the u.s. >> meanwhile, how does this play into syria? >> well, the conflict in syria is putting pressure on all of syria's neighbors in a variety

of ways, whether it's refugees, or ammunitions and fighters and terrorist blow-back. iran having been invited to the peace talks in switzerland this week is a signal that its participation is regarded by the international community as integral to brokering a deal. again, in congress you've had some objections to that, but what we know from developments last year is that the willingness to intervene militarily in syria is zero. so diplomacy is the way forward, meanwhile, hasad has regained control. >> all of this, every time we look at it, we work out what a fiscal premium is in 15 to $10 to the extreme. at the same time, the u.s. is rapidly expanding developing its

own oil and gas reserves. and they may become an exporter again as well. how is that changing, do you think, the u.s. politics towards the region, if it is, it may not. >> well, in terms of the geo political risk premium, concern about an attack on iran's nuclear facilities has always been the number one fear. with that off the table, in fact, the other considerations weighing on the geopolitical risks on oil are iraq with the security situation and zambia. >> as the u.s. becomes more energy self-sufficient, does that change the nature of how they view the middle east? because it comes with less of assertion when it comes like that. >> this looks to a rebalancing in asia. the midwest is where a number of

geopolitical factors converge, but this frankly lack of capacity to intervene militarily added to u.s. energy independence means that again diplomacy is the way forward. >> all right. we'll be live from the world economic forum this week. for a special report on what the world thinks could be the biggest risk, join us on twitter using the #biggestrisk. and you can follow the davos coverage by heading to cnbc.com or using the hash tag on twitter. at the same time, voters overwhelmingly approved a new constitution in egypt with a two-day referendum with the highest turnout in recent years. the next step in egypt's political transition is likely to be a presidential election. yousef is in cairo with the breakdown. yousef, they are readily endorsing the current government, so what does that mean are the next steps?

>> well, ross, what happens now that the referendum results are out is another announcement that will tell us when the presidential parliamentary elections are likely to take place. now the road map sets forth a 30 to 60-daytimeframe. so you're looking at possibly march or april. more likely presidential than parliamentary election, that's at least sort of the indicators that we're getting at the moment. the results of the referendum, 98.1% endorsing the changes to the constitution. just under 2% saying no. and as you mentioned, key at 38.6% of the 53 million eligible voters in this country. now the reactions from abroad have largely been positive. and i think it will be interesting to see not just when the presidential elections will take place, but whether the army chief himself is going to look into a candidacy himself and what that would mean for the broader transition.

there's a lot at stake in what has already been a roller-coaster ride of transition to democracy. ross? >> yousef, that's the latest from cairo. thank you. not just elections of how important they are in egypt, but massive referendums all over the world, india, brazil, european elections, how big of a risk are these big votes? >> well, most of these elections or the political transitions are risks at the country level, right? i think that represents a very significant change compared to the last two or three years in political risk where we had much more potential for politically generated systemic risks. so markets will be watching elections in brazil, turkey, india, the so-called fragile five, into egypt if they transspire, to see whether the political transitions can happen smoothly. of course, we saw protests last year in all of these countries.

in many cases, the most significant protests to date. >> yeah. but as you say, it's a country level rather than a global level. good to see you, tina, joining us from citi. konch konch coming up, find out who is on top and who is lagging in the global rates to attract capital. [ male announcer ] this is the story of the dusty basement at 1406 35th street the old dining table at 25th and hoffman. ...and the little room above the strip mall off roble avenue. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories. that began much the same way ours did. in a little dorm room -- 2713. ♪ this magic moment ♪

a recap of the headlines, why china's gdp expands slower than in years. and deutsch dee bank has litigan woes. china's economy is slowing to the lowest level since 1997. the number did exceed the government's target of 7.5% at 7.7%. and the analyst forecast was 7.6%. other data has suggested that growth in factory output investment lost steam in december. and while retail sales figures

highlighted domestic demand. meanwhile, singapore island and belgium outperformed the rest of the world in foreign direct investment. this according to a new study analyzing capital flows for the five years since the financial crisis began. the report sites corporate tax rates, favorable regulations as leading factors. joining us is the former chairman here, you are measuring that sort of fdi percentage of gdp. >> it's the percentage of gdp, but one must not forget the absolute figures. >> the absolute figures -- >> they are very different. >> yes, but this is how we are doing, are we punching above our weight, essentially. >> that's right. >> singapore has lower corporate tax rates. what else did they do to put them into those positions? it must be other things. >> no, i think that both are

singled out through the brick force indication, they are a highly skilled workforce. the island particularly is strong in technology. we can see that through a number of growth companies setting up their headquarters -- >> apple, linkedn. >> yes. >> also in singapore, you target specific industries as well. right? >> yes, again, it is very technology driven. and i don't know what other industries, but technologies. >> i suppose shipping. >> shipping, yes. >> that sort of stuff. okay, i think most investors looking at the report would understand that. it's harder to understand that the very top of this table is belgium. net fdi equivalent to nearly 92%

of its gdp, this is a country with enormous bank collapses, they haven't had a government, yet here they are making a huge amount of money compared to their size. how are they doing that? >> belgium has had an enormous tax advantage in relation to other special european countries for decades. and they have unique tax structures that attract companies -- it's actually discontinuing some things, but right now they are supporting equity investment in france. >> does it help in belgium you have the eu and the european commission? >> of course it has. belgium is really the hub for european commission as opposed

to the european parliament that is the decision makers for europe. so it's quite an important thing, but i think the taxes are -- >> okay. they don't want fundamentalism or just have rules and things to do. >> i think it's a combination of bureaucra bureaucracy, high tax levels and the general willingness to address the need for direct investment. >> the other thing is germany does less well than expected. they are investing overseas and exporting. they are not so good at getting money in, why? >> germany, they are one of the largest investors worldwide, but again there's quite a lot of bureaucracy. it takes a long time to set up a business in germany. they have rules and regulations

that are -- that make ease of business more difficult, i would say. >> good to see you. some surprises in there. thank you. former chairman at uhy. happy 50th birthday to sports illustrated. yes, it's celebrating the anniversary of the famed swimsuit edition. after the break, we'll dive into the publishing market and ask are magazines washed up. more in a moment.

deutsche bank lost more than 1.1 billion bureaus in 2013. that's weighing on the dax a

little bit this morning down .20%. we'll get more on this, because it was a surprise annetta, the stock up 3.5%, and the numbers were due in ten days' time? >> that's true. the numbers were due on january 29th. and it was a surprise for the market of this giant loss. deutsche bank was posting in the fourth quarter, but looking at the analysts' notes, it is interesting to see most analysts were happy with the underlying profitable of the bank above all with the results in the private wealth management. and also an asset management. the investment banking is weak, and that's a big problem for the banks. deutsche bank is a big fixed income house, and here we are seeing the severe decline in revenues. now the analysts are expecting to rebalance fixed income

operation towards the united states. that is quite a huge thing, i would say. and probably that's the case because regulation inside germany or in europe is a lot harsher right now for investment banks than in the united states. it's a clear move to make use of that regulatory arbitrage, what they are calling it. and apart from that, of course, it's a litigation cost weighing on the shares. and the prospect of 2014 not being a good year. they are saying it remains very challenging. 2015 might be a bit better. with that, ross, back to you. >> let's hope so. anne th annetta, thank you. have a good lunch there in frankfurt. sports illustrated says the swimsuit special edition is the best selling issue accounting for some 7% of total annual revenue. the continued success comes as the industry has been trying to

struggle headwinds facing other forms of print media. the global magazine market is still expected to reach 83 billion dollars by 2017. even the sales of physical copies slide. find it hard to understand the success of the sports illustrated magazine, but apparently it is doing rather well. alex is joining us here now, nice to see you. is "sports illustrated" one-off in terms of magazine successes and failures? >> i think it is. the friend the mature western markets is gently downward, but absolutely there could be growth in emerging markets or in other markets where magazines to date haven't really sold so well. >> yeah. what is the combination now between the literal physical copies and digital? >> so physical sales are declining at roughly 5% in general, but digital is taking up a lot of the slack. the question is whether or not digital is charged for.

>> what revenues can you get on digital -- what's the slideoff in revenues? >> the slide-off, at the moment, there is a slide-off. the two don't net off, so publishers revenues are declining. the hope would be that most publishers are able to use payables where you pay as a consumer a subscription access to access these online. >> who is being able to do that at the moment? anybody there making it work? >> not really, no. we are aware in the u.k. that if the newspaper publishers have it a go, but it has not made a dent yet in the decline of core revenues. the most successful publisher in the u.k. has massive success with mail online, but to date they have not charged for that. however, maybe it's coming. >> i suppose there are other ways of building revenue up without having to put a physical payable in, because the magazines presumably don't make money on the sale price.

the money comes from advertising. >> advertising in booming in general, or at least on the strong recovery path. so magazines if they standstill do pretty well on the 12 to 18-month. >> the world's biggest publisher -- >> there's a lot of assets amongst all publishers. "time" is looking to spinoff their print titles. likely is the "tribune." a lot of their titles are high end, quite expensive, however i suspect they will be focusing on new digital extensions. >> it is interesting when you look at the travel magazine and how that buzzes online. it works rather well. who doesn't like looking at that. alex, thank you for coming out. that's just about it for today's edition. i would say stay tuned for the countdown to the opening of the u.s. markets, but they are not open today. so that won't happen. whatever happens, we still hope you have a profitable day. for now, good-bye. ♪

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