16/07/2014 Asia Business Report

it a "massacre of the moderates". Now on BBC News all the latest

business news live from Singapore. New signs that China's economic

growth is stabilising, why do concerns persist about the bubble in

the property sector? Concerns from the head of America's central bank,

that social media and biotechnology companies are overvalued.

Thank you for joining us. China's economic growth number is better

than expected, new data just doubt reveals it has picked up speed,

expanding by 7.5% in the second quarter, and in June. Let's go to

Beijing and join our correspondent Martin. What factors have basically

boosted the Chinese economy from April to June? On the face of it,

these figures will obviously be welcome, 7.5%, but when you look

behind the figures, what is bolstering them, I think many

analysts will say that they are being pushed by a government

stimulus programme, which is now bearing fruit. If we look at for

example, some of the banks have reduced their holdings, in order to

lend more money. Panellists would say that this growth will not be

sustainable without more government support, and one big area of concern

is, of course, the once booming property market, which is beginning

to slow. Many analysts would say that if it slows sharply, that could

pull down overall economic growth. Indeed, the property sector is a

major headache for the mainland officials. Why the economy was up

was because of targeted stimulus measures... Do you think they could

introduce more of them going forward? To sustain expansion? The

Premier has said that the targeted 7.5% and it has been hit today.

Obviously, they want to hit that in the future. Most analysts want to

unveil smaller measures, and the danger always is that there are

bubbles in the economy, and you can kick the can down the road, and not

deal with fundamental problems in the world 's second`largest economy.

Thank you be joining us. `` thank you for joining us. Despite this,

there are concerns about a stronger slowdown in the property market,

which makes up 20% of China's economy.

Our correspondent joins us from eastern China.

Despite the looming clouds on the economic horizon, this city, like so

many Chinese cities, has kept on building. Now, it may have become

the first to face the storm of overcapacity and unsold housing

stock. This year, something previously unheard`of is rife.

Massive property discounting. This brand`new apartment is being

advertised with 30% off. That leaves those who paid the original price

furious. China has been through property wobbles before, and the

question this time is whether it is another adjustment or something more

serious and systemic. Some observers suggest that if this country 's

massive construction boom really is unwinding in a catastrophic way,

then it could by two percentage points off GDP at a stroke. Many

analysts had feared the market the years, and important engine of

growth is posing the biggest risk, there is talk of further government

action to support home sales. Others, like this estate agent, so

that the danger is limited. Chinese families have lower debts than those

in the west, so they are less vulnerable to price falls. Anyway,

he says that it's all about the sheer weight of numbers. People from

the countryside are still flooding to the cities, for better education

and life. The demand will always be there. The Chinese government

agrees, it is urbanisation, it says, that will ultimately keep growth on

track. But if so, critics are beginning to wonder why so many new

homes are still empty, and why prices are so damp.

The US central bank is the most powerful financial institution of

its kind in the world, and controls the flow of trillions of dollars of

bonds, when the banks boss speaks, the world listens. And today she

warned a stretched valuations for social media and biotechnology

companies, and danger signs for the global economy.

Prices of real estate, equity and corporate bonds have risen

appreciably, and valuation metrics have increased. But, they remain

generally in line with historical norms. In some sectors, like lower

rated corporate debt, valuation is stretched, and insurance has been

brisk. I asked what is behind her concerns. It is about financial

imbalance, it is what has been talked about, low interest rates

breeding financial excess. What she is effectively warning is that rates

can go up and you have to be careful. She also talks about the

economic outlook in the US, and continues to champion it. She says

the labour market is slack, the Fed have to keep interest rates low for

as long as possible. It is unlikely that interest rates will go up as

fast as the market expects. She will keep interest rates low, but how do

you think this could impact the monetary policies of Adrian `` Asian

central banks? Those linked to the dollar, and in Singapore, to some

extent, and there are those who run independent policies, like New

Zealand. The policies linked to the dollar will follow. Automatically.

Those that don't are not concerned by domestic conditions. New Zealand

have raised interest rates, you have high interest rates in Indonesia,

and in India. What about the economies that have basically kept

interest rates low with their monetary policies? How will they

react and move with the latest statement from Janet Yellen? You

have career who have kept interest rates low. They will not do anything

until they see a pickup in global growth and trade. And in the

domestic economy. Shares in the ship maker Intel have risen by 4% when

the company grows profits. It has gone up stronger than expected.

Intel also expected growth for the remainder of the year. Shares in the

Internet giant Yahoo have rebounded after a fall, an 18% rise until the

end of June. Revenue will drop, falling by 3%. Most of the decline

was due to a sharp drop in digital and display advertising which

plunged by 8% in the second quarter. Apple and IBM are joining forces in

a partnership to design applications for iPhones and iPods. IBM will

begin selling Apple devices preinstalled software to business

clients. They were once rivals, but experts say it is too soon to know

how significant the deal will be. Leaders of the world 's largest

emerging economies meeting in Brazil have signed a new agreement, a 100

billion dollar reserve fund. They will be recording in Shanghai.

The fact is that the BRICs countries have always felt that they lose out

when it comes to the global financial institution, the World

Bank has always had an American president, the IMF has had a

European leader, they feel these are emerging economies, they are

powerful and hold 40% of the world 's population, why shouldn't they

have more of a say when it comes to London? That is what the bankers

about, and it is what Brazil's president spoke, the fact that the

BRICs have the power to change for the good in terms of making things

fair and equal. The idea behind this is that they can fund projects in

the developing world, not only in BRICs countries, but they can extend

outwards to other emerging markets. They can have more of an influence,

on the emerging markets in the world. What will happen if the

International monetary fund, in this new body of the BRICs group of

nations, have a different or contradictory approach to deal with

the financial crisis? One of the concerns is that the critics talk

about the fact that the BRICs are more rivals than friends. Certainly,

up until the announcement was made early on Tuesday, there were

concerns that these new headquarters that would be in Shanghai men that

India would have a say, there are concerns in the rivalry between the

two countries. And in the wider BRICs as well. It is early days,

they have to iron out these issues. The bank has not begun yet, and how

the money will be spent is important. One of the crucial things

is that these countries will put in equal amounts into the bank, in the

start of it. It is an important role, that these institutions are

equal going into the beginning of the development bank.

Before we leave, we will tackle the aviation sector. Malaysia Airlines

have signed a deal to buy players. `` air Asia. It is worth $40

billion, and it will start in 2018. Now, let's have a look at the Asian

markets. `` to buy planes. Thank you for investing your time

Sport Today is up next. This is BBC News. I'm Adnan Nawaz.

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