17/03/2014 Asia Business Report


17/03/2014

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out checks into the backgrounds of the crew and staff. Singapore is now

:00:00.:00:00.

ready. Here is the business. China lets its currency trade in a

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wider band, doubling against the US dollar. Ali Barber picks New York

:00:20.:00:27.

over Hong Kong for its share sale. -- Ali Baba. Welcome. China is in

:00:28.:00:37.

focus this morning after Beijing announced it will allow the currency

:00:38.:00:41.

to trade in a wider range starting today. The country's central bank

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says it will double the trading band against the US dollar to 2%. It

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underscores the promise that it would allow the market to play a

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greater role in the economy. It has been welcomed by the US Treasury.

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Washington and Beijing have frequently been locked in dispute

:00:59.:01:01.

over the value of the yuan. Here is the reaction in regional markets.

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Most markets are down. The Nikkei down 63 points. One other factor

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that will play into markets, geopolitical risks after the

:01:16.:01:20.

referendum in Crimea. Have voted overwhelmingly in favour of leaving

:01:21.:01:23.

the Ukraine to join Russia. Election officials in Crimea said turnout has

:01:24.:01:29.

been high at more than 80%. With half the votes counted, more than

:01:30.:01:33.

95% of ballots were in favour of joining Russia. The referendum has

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come under fierce criticism from the US and Europe. Earlier, I spoke to

:01:40.:01:44.

someone from the vast financial services in Sydney and asked about

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the significance of China widening the training range of its currency.

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-- trading. This is part of an ongoing process where the Chinese

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are allowing the currency to become more freely traded. It is a process

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that is slower than what some expected. It is part of a well

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thought out process. The last thing China wants to see from an

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artificially inflated currency is high inflation. They want to make

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sure it is conducted in an orderly way. This is all part of the

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process. Do you think it will now start to speed up? It will start to

:02:24.:02:31.

speed things up why Chinese standards but not necessarily by

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Western standards. In the developing markets, these things are well

:02:36.:02:37.

thought out. There is always caution. What we are seeing is the

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traders are seeing this as positive. The market is starting to see this

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as perhaps a greater leap than what we have seen in recent years.

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Interesting. China and weak economic news from Beijing weighed on the

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market last week. Obviously things are different this week. Also in

:02:58.:03:01.

terms of Crimea, now that we've had the referendum, Crimea was a huge

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factor for markets last week. What do you think we will see this week?

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A mixed picture so far. That's right. The market has almost

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entirely brushed this off because it was expected. What we are seeing in

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the Australian market, for example, and other met -- other Asian markets

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is the status quo. No fallout from the referendum outcome, which was

:03:27.:03:29.

expected. The one thing to watch is there are reports of a huge flight

:03:30.:03:34.

of capital outside the US by Russian nationals, back into Russia, in

:03:35.:03:39.

anticipation of sanctions. What we have seen in recent history is that

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it can cause instability in the market. We will watch the gold price

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closely, or ill and also pockets of investment where some Russian

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capital outside the US might find a home. -- oil.

:03:55.:04:02.

The world's large as e-commerce firm Alibaba has chosen New York over

:04:03.:04:08.

Hong Kong. It aims to raise $15 billion from this exercise, making

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it among the world's biggest public offering since Facebook raised $16

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billion last year. One of the main reasons Alibaba picked New York over

:04:18.:04:21.

Hong Kong is that exchanges in the US allow founders like Facebook's

:04:22.:04:25.

Mark Zuckerberg to remain control of their companies, even if they don't

:04:26.:04:29.

own a majority in shares. That scenario is not possible in Hong

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Kong. Our correspondent in Hong Kong has more.

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Sunday's statement from Alibaba makes it clear that they are now

:04:40.:04:44.

pursuing that listing in America. It's not clear which stock exchange

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in New York will win this deal but absolutely a lot of people are

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saying that it might even be bigger than the Facebook listing of 16

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billion US dollars. Something like nine out of the ten

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most recent IPOs in the tech sector have gone to the US, over Hong Kong.

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Is there any indication that there might be some flexibility from Hong

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Kong? Is one shareholder Boral, which they hold so tightly. --

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shareholder rule. Certainly the Hong Kong stock exchange writer has been

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talking about a reconsideration of the rules. We will see if that

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happens. Hong Kong is very proud of its rules. It believes the system is

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fair. Any change would be extremely heartfelt indeed. There could be a

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couple of mega listings later this year. One at the WH group.

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Smithfield is has reportedly said in some publications that it might

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raise as much as $16 billion in the first half of this year. The upbeat

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into that companies that have always traditionally preferred to list in

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New York. SoftBank shares are up by nearly 7%.

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That's following the news of Alibaba's IPO. It owns 37% of

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Alibaba. The group's business to business marketplace unit is already

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listed on the Hong Kong stock exchange, listed in 2007. The latest

:06:30.:06:36.

figures from Singapore showed the nonoil domestic exports rose 9% in

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February, competitor same time last year. Shipments of electronics have

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fallen by more than 3% in the same month. That follows a 70% drop in

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the electorate of exports in January and more than 3% in December.

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Together, with China and Taiwan, it has made it a hub for the manic --

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manufacturing of a phonics, with a big focus on parts for personal

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computers. Singapore may now need to rethink its economic strategies.

:07:07.:07:11.

Earlier, I spoke to someone who explained the slowdown. Sales were

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down by about 12% in notebooks. It is really about the smartphones.

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That is driving things. A lot of that isn't manufactured in

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Singapore. It's all up in China. That's one area where there is an

:07:32.:07:39.

issue. Things will balance over. Electronic exports are very

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important. Do they have to start diversifying? Finding something else

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to fill the gaps? With any economy it is important to look at as much

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as possible. Electronics is still strong. Purchasing was strong last

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year. The island in a big recession, in terms of electronics, but it is

:08:03.:08:10.

slowing down. -- we aren't in a big. Things are heading down a more

:08:11.:08:15.

normal track. We have just gone over a little hump? Yes. It's not like it

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was five years ago. It is down. People are waiting for the coming

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out of the new iPhones and those sorts of things.

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Singapore's DDS bank will buy SocGen in a deal worth over $200 million.

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It covers the acquisition of their private banking equities in Hong

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Kong and Singapore, as well as selected parts of its trust unit.

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DDS is the largest lender in Southeast Asia. -- DBS.

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China will invest more than $150 billion this year to redevelop

:08:58.:09:02.

shanty towns, as the government promotes organisation as an engine

:09:03.:09:06.

of growth. Money will be spent on building more railways and

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increasing the number of small and medium-sized cities. According to

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the plans, rural residents employed in cities should see their incomes

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go up. Investment in urban infrastructure come up public

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facilities and housing will drive economic development. That's it for

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this edition of Asia Business Report. Thanks for the gym. -- for

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watching. The headlines: There have been

:09:31.:09:40.

celebrations in Crimea as people vote overwhelmingly in favour of

:09:41.:09:45.

leaving Ukraine and joining Russia. Of the referendum ballot papers

:09:46.:09:50.

counted so far, 95% are pro-Moscow. 25 countries are now involved in the

:09:51.:09:53.

search for the missing Malaysia Airlines plane, as investigators

:09:54.:09:55.

carry out checks into the backgrounds of the

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