to finish all the hiring earlier than expected. beijing moving to curb extravagant share offerings that end up falling flat and hopes new rules will restore investor confidence. welcome to "worldwide exchange." coming up today, we head to the strong hold of france's far right voters to find out if nicolas sarkozy's latest employs will pay off in sunday's elections. and we'll speak to an expert who says the beer maker is setting the tone at 11:40 cet. and how do you occupy yourself on the way in to work or on a flight? about if you're addicted to angry birds, stay tuned to an exclusive interview. that's at 11:20 cet. ross, do you play angry birds? >> i think it was about -- when i got my ipad, i think it was about the first app that went on it. that of course now belongs to the children. but it was not a bad -- kind of addictive for a while for me. you play ninja fruit or something. >> fruit ninja. >> explain that to me later. spain falls back into recession. gdp contracting 0.3% in the first three months of the year. not great, if anything on the up side, looking for small positives. it was slightly better than the bank of spain's estimate. they were looking for a contraction of 4%. beccy is in madrid. your assessment there. >> the front pages of the spanish newspapers today are all about the anti-austerity protests yesterday and i think concerns about austerity and the impact that's having on the spanish economy will only be fueled by the con nation that spain is in a recession. so not a ringing endorsement. today the knock down effect is s&p taking negative action on 16 of the spanish banks. so that should be expected i guess because once a it are aings agency downgrades the sovereign, that does have an impact on the institutions that the domiciled in that country. very unusual for a ratings agency to have the institutions rated certainly more than a notch above the sovereign. so some of these things are already priced in, which is why we're not seeing a big impact on the equity markets. but a big part of this is also to do with the bond markets, 00. we've been keeping a very close eye on spain's yield on the ten year government debt which has been flirting with that 6% level. if you cast your minds back the three year ltros it did help to bring the ten year a little bit more under control, but we're around the 5.9% level right now. 6% is an important psychological level. last year we pushed briefly above that 6% level just coming back underneath that today. in the case of spain when we look at how spain sits in the whole eurozone sovereign debt crisis and the eurozone crisis in general, it was the decade long property boom which brought trouble to spain when that burst back in 2008. concern is now there's loads of toxic real estate assets on banks books that haven't been fully realized yet and when that comes to pass, that that could cause more problems which has prompted talk of the possibility of a bad bank being formed for spain. who would fund that, what does that mean for potential next leg down for the spanish economy. >> absolutely. thanks for now. we'll catch you a little later. joining you us global economist at citigroup and steven isaacs also with us the rest of the hour. give us your assessment of where spain goes from here, whether they can -- talking about segregating bank assets out, but not a bad bank wow one wonders whether they have the money to support further the banking sector. >> yes. well, the gdp ratings that just came out were a little bit better than expected as minus 0.3%, but the problem is the austerity measures are really only starting to hit the budget that was announced last month implied that we will see a lot of austerity over the course of the second half of this year, then even more in 201. so the next xwchlt dp ratings are likely to be even worse than the ones we saw on friday and released this morning again. but the big question right now is what will the spanish government do with the banks. . as you implied, the biggest individual concern is where will the money come from. so whether within the bad bank or within the banks itself is of secondary concern. i think the bigger issue is where will that money be found and will it have to come from european credit, will it be coming from the bank credit themselves or will the government itself put in a lot of its own money putting its own solvency at risk in the process. >> we get to the stage when you get risk of is you ordinary nation. we just got this other data out, monthly net purchases of government debt by spanish banks, 20 billion euros in march. net purchase government debt by italian banks, 27 billion euros. how concerned are you that what we've done has actually made them an even more leveraged play on the underlying sovereign risk? >> they are so closely intertwined that one really can't stand without the other. so this has been going on for a few months now ever sense the first ltro and we're very likely to see a continuation of that. so we see a lot of the domestic risks being put back with domestic investors and quite frankly, there's very little alternatives. really only two sources of demand. one are domestic investors being lent on pie the government and regulator, and the other are official creditors if you want. so the likes of the esfs, ecb and soon enough the esm. and as we all know, it's becoming more and more controversial for that official money to be put in. so right now we really see very little alternative but for that domestic buying to continue. and the big question is for how long can it contain. that is, how much more ability do domestic banks have to continue to buy government spanish bonds. >> for all the news out on friday, for the news out of the weekend and this morning, risk appetite actually was okay. that can't last, can it, in this environment? >> i just want to pick up on the comment about spanish banks being the main buyers of spanish debt, likewise italian banks. sure that's as positive, that's just the ltro effect. they're borrowing at 1% from the ecb and then buying spanish bonds at 5.5%. i think it's a deliberate policy to help with the long term equalization of hose banks. >> in the profitable if they bought in february or march. >> if you you got three year funding and you hold it to maturity. >> the one main fact there -- as i say, risk appetite was fairly okay friday and today, not a huge sort of market reaction to this news. does that change? >> as you said, i think a lot of what you you call news was already priced in. the bank downgrades, the gdp release, so a lot of bad news has been digested already. but clearly there's still a lot of further down side risk on the gdp side. we still didn't really know what's going to happen with the banks. and a lot will depend on decisions being taken at the european level. so i certainly would expect hesitation by investors and a lot of concern to continue. >> this is christine here in asia. as an outside person watching this whole scenario unfold in the euros, a lot of talk has been whether they will try to get rid of distress assets. what's your sense of that? >> well, the big question is price. so of course there are any number of ways for spanish banks to shed these troubled assets. but so far there's been great reluctance by the banks to shed them at a price that really reflects that unlying value. so it remains to be seen how forceful the spanish government will be to truly get rid of will this problem, to make the banks realize to enoccur losses in a way that will restore the banks to solvency and therefore restore confidence by investors that they can move on, that they can continue to work on bringing the spanish economy back to sustainable situation. so i do expect the next few weeks to bring some news of how the government intends to deal with the banking sector problem. >> okay. thanks for that. have a good week. plenty more to come from steven. meanwhile let's bring you up to speed with investment action. christine. >> investment action here in in asia, markets mostly higher. weak gdp data on friday opening the door perhaps the fed might be open to more stimulus. but trading was of course lacklust lackluster. volumes pretty much thin. this is how the picture is looking for the rest of the quit i markets that are owe. hang seng with no cues from shanghai. earnings weighing on sentiment. kospi up 0 abou.3% today. pretty good session for the kospi. australian market 0.8% higher. we had australian rising, miners rising. but the up side was break much capped. a lot of talk that we could get a 25, 50 basis point, but some sort of a rate cut from the central bank there. and the sensex raid to go the up side 0.6% over in india. so overall, pretty good session here in asia for a monday. >> in europe, we're weighted to the down side. just hit the session low. advances being outpaceded by decliners around the ratio of 6:3 at the moment. a little bit less than that. as far as the ftse 100 is concerned, pretty flat on the day. down a quarter of a percent now. and we're down six points on the month. xetra dax up 8 points at the moment. mib down 7.5% for the month. flat today. the cac down 5%. so there you can see they're sort of outperformers on the down side, as well. we keep our eyes on the bond markets. bund yields this morning just below the 1.7% mark. spain capped at the moment below 6%. italy just coming back from the high levels that we reached on friday, we keep our eyes on treasury. slightly disappointing gdp number out on friday has kept t whiff of qe in the air. sterling holding on to gains against the dollar. aussie dollar 1.0440. even the aussies get something strength. and dollar-yen is also down to 80.13, two month lows for the dollar against the yen. euro-dollar, still in those very tight ranges between 1.0 and 1.33. we'll take a short break. still to come, if sarkozy caught far right voters a week before the presidential election, the french town that is the strong hold of front nags nael. all the details when we come back. this one week's time, a new fresh president will be ushered into office as the latest poll shows it will be hollande. the president intensified his campaigning over the weekend tackling the topics of immigration and border control. >> translator: the choice that you'll have to make on the 6th of may is historic. france cannot make any mistake. your voice will count even more than you imagine. i have to ask you to make in choice not because of your political allegiance, not because of what you thought in the past. but i'm asking you to choose after asking yourself one question. where do you want france on go, what kind of france do you want for your children, what value do you want for your country, where is the general interest and what decisions will we have to make. >> in paris, francois hollande held a rally and pledged a government funded jobs program and higher taxes on the risk. >> translator: for months the people of europe has been watching france and seen how the campaign has taken a certain direction. i feel the positions even the ones of conservative governments are evolving. very well, receipt them wait for us because we are coming. we will be there. >> if there is going to be a swing factor, it may be down to those supporters of the far right. stefane joins us from the french town that is basically held by the national front of marine la pen. do we know where the votes might go from the far right? >> that's the whole question and why we moved very close to the german border. in this city he got 35% of votes in in the first run of the election and it's typically the like of voters that sarkozy would like to convince for the second round of this election. in the last few days, sarkozy sent a strong message with the campaign focused on immigration and security, the two things honored, the top priority for the french people that they're the main concern for the voters of the extreme right. is it the right strategy, is it acceptable to win an election with the support of the extreme right. if you look at the numbers, it's not really bearing prut. tomorrow he will give an official recommendation for the second round, but unlikely to endorse any of the two candidates. what she'll say is a call for a blank vote the for the the second round even if it's no secret that she would like sarkozy to be defeated on sunday. in the meantime, sarkozy is reducing the gap with hollande. fran a would get 53% of votes, sarkozy would get 47%. it's the smallest gap since the beginning of the campaign. >> the only poll take matters is the one next weekend. stefane, thanks very much. steven, let's just assume for the moment that the current polls, with did he have presidented hollande this time next week wherein investors react positively on that. >> it's a very complicated picture. and certainly there may be a little short nervousness in the bond market. the people of europe are watching us, that's what he said in that clip. and the nice comment over the weekend is we're not any ordinary country in europe. this this is france. -- sorry, germany angela merkel, what water saying has to be taken very seriously. and he's claiming to speak for europe, as well. and what he's saying is this fiscal austerity pact has to be rewritten. now, that's messy, no doubt there will be a few bumps in the negotiations phase, and i'm more of a belief that it will be done behind closed doors, but i have a feeling that it's actually going to happen, that there will be some sort of watering down or some sort of deal on the monetary side. i think they'll cut rates. >> krag gi has already come out with this idea of this growth compact. you can see this will french latin bloc emerging with a lot of backing. what does that does in terms of german politics. >> germans don't like it, but you what will they be doing. writing letters and leaking them explaining his embarrassment about germany's view with this whole policy of ltros. but at the end of the day, what will the germans actually come if the french side with the latins as you said, that's a very significant impact and i find it hard to believe that the germans would be able to resist. more easing one way or the other is coming. >> steven thinks the ecb will cut this thursday. i think that puts you in the minority. >> it does. >> we'll come back to him, christine. >> interesting to know that. over in china, where the security regulator is stepping up its scrutiny of ibos, after too many expensive offerings have fallen flat. trace sey chang has more. >> these new adjustments are aimed at making the newly priced shares better reflect these companies fundamentals. if a company prices shares with valuation at 25% higher than the average level of its peers, then the regulator will ask the insurer for more information on its pricing and projects. and the new rules will also make more shares available to institutional investors. under the new rule, no less than 50% of new shares will be sold to institutions compared to 20% previously. it's expect stod stared to star number of ipos and investors are likely to view the new regulation as a negative because the new guidelines are focused on technical adjustments then a whole scale reform. >> steven, what do you make of that? this new ibo pricing. does this this somehow -- will it somehow make the ipos a little bit more at track it difference for foreign investors as a result? >> i think what a what what international investors will be more concerned about is the figures that go into the ip chlt ons. to me that's the issue for international invest ors. i'm not sure they're going to follow the money shy of your argument. >> to what extent do you think this crackdown -- there seems to be all these elements at play. what do you make of that and how are foreign investors looking at this. >> it is a very serious issue and it's interesting that to me this very public debate within the chinese communist party does show how serious they are about the economy. it goes back many years how strong growth has been over a long period of time. but now there are some very serious concerns and to some extent they spilled over into the political process. can the chinese success story condition without political reform. and i have a feeling that there is some positive signs coming out, that there will be some slight changes and that's good for growth. still to come, small to medium sized companies are finding it difficult to getting a says to capital. we'll speak to a c chlteo looki raise funds from you, the public. headlines today from around the globe, spain falls back into recession, gdp contracts by 0.3%. slightly better than expected. >> china and the u.s. gear up for a tense week of did i proceed massey. the incident comes just days ahead of high level talks in beijing. >> in the u.s., friday's jobs report could show another month of slow growth as the warm winter may have pushed companies to to finish all their hiring earlier than expected. report found in britain, five lenders capped more than 90% of loans to small and medium enterprises. so businesses are now sourcing out new areas of funding. our next guest launched a retail bond to get cash flow moving. we've seen some awful bank lending figures to the uk economy. sharp dropoffs, record dropoffs in march. others have tried this retail bond idea. why are you going down this route? >> as you said, we've got a brand that people hope any know about. and we have a fantastic customer base and membership base. and we thought it would be a wonderful way of sharing in hopefully the future success by offering our customers and public a chance to invest. >> a minimum of 1,000 pound investment and you're offering what? >> a four year term. you can a 7.5% back in pace paid semiannually or we will pay you 9 about.5% back in smith royalty money, which you can put toward holiday. so, yeah, you can -- >> you can do a mix? >> you you can't mix. one or the other. but we're encouraging people to go on holiday with us. >> did you try to raise money, and what will you -- did you you think about bank financing or equity financing? why debt financing direct to the public? >> banks are tough at the moment as you know and we've had a number of private equity companies out this, we're very interested ebb veing in us, as well, but it felt more us to go to our members and raise the money through them. just felt like a good win/win situation and we always like to do things slightly differently. >> what sort of response are you hoping to get? >> well, we're raising hopefully up to 5 million pounds. but sadly i have no idea how much we'll get. it's crystal ball stuff at the moment. but we're hopeful we'll reach the target. >> a lot of people might want to ask what's the down side in your business, what would you tell them? >> as with every business, there's always challenges. we've been a fast growing company for the last five, six years. we hope that the bond money will help even further. we remain optimistic. >> if you're an investor, you look at 7.5% and you go that's kind of attractive. if you go bust, you lose all your money. >> i'd like to ask what was the attraction the coupon or the four years. from a company point of view. >> both is attractive for us. it's good that people commit for a healthy time period and i think that the fixed rate we're offering is also i hope appealing to people. so for us, it's the right price at the moment. >> what are you going to do with the money exactly and where will you spend -- >> mr. and mrs. smith has been the first company and we're about to launch a new company at the end of the year called smith and taem which is all about family bookings. whereas mr. and mrs. smith has all been about romantic getaways for two. and we'll invest more in the technology of the company beca