13/03/2014 Asia Business Report


13/03/2014

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Union, if they got into power. He said they'd offer a vote only if the

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UK was asked to transfer more powers to Brussels.

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Now on BBC News all the latest business news live from Singapore.

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After more than a week of talks, it is the last day of China's big

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Congress gathering and we ask what comes next for the economy. And King

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of games, creators of candy crush are buying a share sale in the US

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and we find out how investors are likely to react. Welcome to Asia

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Business Report. We begin in China, where an annual 10-day gathering of

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its parliament is finishing. In the press conference at the closing of

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proceedings, the Premier said the government was paying close

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attention to issues like the country 's debt risk and that it would

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continue to fight corruption. During the meeting, the only unveiled key

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proposals for reform, including a measure to set up bank deposit

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insurance, allowing governments to issue bonds and a plan for the

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Chinese currency to trade more friendly. I spoke to a banker from

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HSBC, asking his thoughts on what has come out from the meeting. We

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get the sense of urgency. Nothing that was announced had been rumoured

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or proposed before. At this meeting, they set a clear marker, in playing

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timelines, giving us a sense of when they might begin implementing these

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reforms. It is unusual in a Chinese context to do that, pre- committing

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yourself to a timeline. But we know the deposit insurance scheme for

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banks may be up and running before the end of the year. How significant

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do you think they are? You mentioned this scheme. Will it be as active at

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addressing China's debt problems? It is one of many measures needed. The

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deposit Aaron T scheme is one way to contain deposits in the banking

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sector. -- deposit scheme. We have seen investors investing in a shadow

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banking system or buying poverty. But if deposits are guaranteed, they

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are likely to keep money in banks, thus reducing the shadow banking. It

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will reduce also the upward momentum of property prices. Also, the but

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that means scaling back China's huge industries. How will that look for

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China's economic future? These are hard choices China's leaders need to

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make. But one involves prioritising the environmental issues. They want

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to address pollution. There is clearly a lot of frustration within

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the country about the deteriorating air quality. The leadership has

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gotten the message. The trouble is that some of these decisions in the

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short term will outweigh economic growth. That includes closing down

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steel and cement plants, the big polluters. If you close them down,

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in the short term, that has employment implications and growth

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implications. But they have sent the message they are determined to crack

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down on that. Staying with the mainland, there is new saying, that

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when China sneezes, the world catches a cold. To some extent that

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is true in the markets this week. I ore, a key ingredient in steel

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production, saw prices fall by 20%. -- Iron. Used in everything from the

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production of cars to refrigerators, steel is one of the most important

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metals in life. But to create steel, unique iron ore. Iron ore is

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Australia's most valuable commodity and has been a cash cow for some of

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the world to that most biggest mining companies, including BHP and

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Rio Tinto. This week, iron ore prices fell to an 18 month low, and

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the feeling that this downward spiral will continue. Mining

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executives say they are placed to cope with the tumbling prices,

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despite pain to come. Share prices have fallen in recent days. Showing

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investors may not agree. What is calling the -- causing the fall?

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Mostly to do with China's slowing economy and a credit squeeze. China

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is the biggest consumer of iron ore. Over the past decade, it has bought

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huge amounts for construction and manufacturing. But, as growth

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slows, demand has lessened and there is speculation they might now be an

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oversupply. According to one research firm, stockpiles at Chinese

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ports are up 20%. Ultimately, Australia will be watching closely

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to see if iron ore and other commodity prices improve, because,

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given it is facing a decade high unemployment rate and the -- budget

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deficit, it can't afford to discount iron ore, its biggest export earner

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to its biggest customer. In other news making headlines, Japan's

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electronics firm, Panasonic, will pay employees in China a premium for

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the high pollution. Employees sent overseas receive hardship pay

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increases and Panasonic is the first firm to pay more to do China's

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air-quality problems. Smog has been a problem in many cities.

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Australia's economy added 47,000 jobs in February, triple the number

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and novelist had expected. It comes after two months in declines,

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despite the surge in new jobs, the unemployment rate remained steady at

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6%. US regulators have launched investigations into Herbalife. This

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follows allegations they operate a pyramid scheme, which is making

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money from new distributors rather than sales. A deny allegations and

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said they will call operate in the enquiry. Shares fell by 16% of that

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news, before recovering slightly, down at 7%. The New Zealand central

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bank has lifted its lending rate, the first since 2012. The reserve

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bank increased its cash rate by .25%, to 2.75% of saying that rates

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don't need to be kept at a record low, because the economy had

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considerable momentum. It also signalled further rises were had.

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More on these and other stories from around the region, on the BBC

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website. Have you heard of Candy Crush? If you play games on your

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smart phones, it is likely you know exactly what I am talking about. The

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Dublin -based creator of the games, King Digital entertainment, saw

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sales surge to $2 billion. The company is looking to raise $500

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million from a share sale in the US. I spoke to someone about the

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offering and whether it was reasonable. What is an IPO? The

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founders are trying to get a stake out of the business, get a return

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that is what an IPO is. There is a lot of popularity with regards to

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Candy Crush and, consequently, the founders want to sell. Very

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popular, but a lot of the eggs are in one basket. They get three

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quarters of revenues from Candy Crush a loan. That is about 95% of

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revenue. -- alone. What might this mean for the company's prospect? It

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is a good point. Go that one step, the company called Zinga had a game

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called Farmville. That was very popular until Candy Crush was the

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next three and then came along. -- next big thing. How many big things

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can be world tolerate's the world isn't big enough or that many big

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things, and I right? When you look at Candy Crush, you have to ask what

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is the longevity of the game. I am planing a little. I am waiting for

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the next big thing. -- waning. Valuations aren't exorbitant as far

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as investors are concerned. Will be profit be able to be sustained? If

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not, the company does not have much of a chance. A quick look at the

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markets. not, the company does not have much

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of a chance. A quick look at They are rising in Asia. They are

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recuperating losses from Wednesday. Even though there is a deal of

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caution, we are awaiting the Chinese economic numbers, which are coming

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out in industrial art put -- output and retail sales.

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The Nikkei is up as a result of data from Japan. That is it for this

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edition of Asia Business Report. Thank you for watching.

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I'm Mike Embley. The top stories this hour. The Chinese authorities

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have released satellite images which appear to show three objects

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floating in the South China Sea, near where a Malaysian airliner went

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missing on Saturday. It's not known if the objects are part of the

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plane. President Obama says the West will

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be forced to apply costs if Russia continues its military intervention

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