01/08/2014 Asia Business Report

happened near Dubrovnik. A woman and a third trial are in hospital. Now

on BBC News, let's go to Singapore with Rico and all the latest

business news. After Wall Street suffers its

steepest falls in months, Asia's markets stumble. And new data shows

manufacturing in China surging to its highest level in more than two

years. Thanks for joining us for this edition of Asia Business

Report. Some good news out of China this morning, manufacturing activity

surging to its highest level in more than two years. Factory output

hitting a 27 month high in the month of July on adding to signs that the

economy is indeed regaining momentum after a burst of government stimulus

initiatives. But the news has not been enough to lift Asian stock

markets. It comes after the US equity markets

had their worst trading day since April. The defaults follow

Argentina's default on its debt for the second time in 13 years. Pulling

sentiment down, Russia and Ukraine tensions and US economic data that

has sparked concern that the central bank in the US could raise the cost

of borrowing sooner rather than later. The Dow and the NASDAQ

slumping about 2% overnight. From the New York Stock Exchange,

Michelle Flowrider. Investor nerves were clearly

frazzled on Thursday. There are a host of reasons why, starting with

the situation in Ukraine. We heard from companies like BP talking about

the impact it's starting to have on their business. Of course there's

also that default in Argentina. Closer to home in the US on Thursday

there was a report on wage inflation. This raised the prospect

that perhaps America's central bank would shift its focus from battling

the weak labour market to fighting inflation, and that could mean

higher interest rates. Now, as former central banker Alan Greenspan

noted, the stock market here has been rising for some time and

perhaps it was due for a significant correction. Investors will be

wondering if that has now begun. An economist at OC EBC says this

will make investors reassessed risks for Asian economies. On top of that

we have to look more importantly at the issues, the expectation that the

bank might raise rates earlier than expected. They might raise rates in

mid`2015, we are seeing better jobs data. If those labour conditions

proved to be better than expected, better than the Fed expected, then

we are likely to see the market recalibrating. Back to China, it is

not just manufacturing that is up, consumers are spending as well. From

Shanghai John Sudworth reports on the effect of government stimulus

measures. China's so`called mini stimulus continues apace. Banks are

lending, the government is spending and so far it seems to be working.

And uptake in second`quarter GDP, for example, and manufacturing data

suggesting factories have put the gloom of a year or so firmly behind

them `` and oh update. The only thing that matters, at least for the

government, is if people feel richer in their pockets. So how does the

man in the street, or in this case the market, feel about things?

TRANSLATION: It's much easier to make money nowadays. The economy is

picking up, my income is up and I'm spending more. I don't know the

precise figures but year`on`year people are spending more. Those

sorts of comments will be music to the ears of China's economic policy

planners, who are desperately trying to unleash the power of the consumer

and the private entrepreneur and move away from growth based on big

infrastructure spending. The problem is the current mini stimulus fits

that latter category exactly. It is big banking, big commerce and big

government acting as the engine of growth. And as many a critic as

pointed out, people may be basking in this warmth, but re` balancing

remains as tough as ever. We look at what is driving this consumer

spending. There definitely are higher levels of... There is more

personal credit card debt. How big a worry is that, now there is a lot of

credit card debt. It's not a big worry because the banks are watching

it carefully. They have been cautious. What other growth drivers

are there now apart from the domestic economy? Manufacturing

remains very strong. We have a lot of products coming in. For domestic

spend the key point would be there's increasing focus on digital spend,

online traffic. What consumer goods companies are trying to balance now

is how can I manage my online physical stores with the online

trend, and getting that end to end the seamless customer experience. We

are seeing the likes of Ali Babar .com doing very well. That is why

they will be listing very soon in the US. Exactly. The Ali Babar

business model has expanded in terms of the services they provide but

also the portfolio of help for their providers. It is no longer just

about a market for selling products, it is also helping vendors

to actually build up credit accordingly as well. In other

business news, March, 2011. The finding follows an

appeal against a prosecutor's decision last September to drop the

case over a lack of evidence. Sales have been hit by a slowdown in China

and other emerging markets. The British drink maker of spirits,

including Johnnie Walker and Smirnoff vodka, seine net sales fell

by 9% to $17 billion for the year to June `` seine net sales. China and

Southeast Asia volumes fell by nearly 20%. `` say net sales. China

is expected to have the biggest increase in billionaires over the

next few years. We look at the phenomenon.

Spinning to the beat of a luxurious June. This is a charity gala

organised by some of Indonesia's richest wives and girlfriends ``

song. To enter one of these clubs there is a monthly fee and it can be

extravagant. It starts from 1 million every month until 100

million every month. So that's like $10,000? Yeah. This woman's business

depends on the indulgences of the Aris handset. I can meeting new

people and they can introduce me to their friends as well. This is her

studio where she buys, sells and rents luxury handbags too well the

status conscious Indonesian women. They can spend $20,000 to buy a

bag. It is ridiculous. We could buy a car or a house in Jakarta with the

cost of the bags. But for many in the Indonesia life runs on a

different track. I'm in one of hundreds of slums peppered across

Jakarta. This woman lives here with her seven children and husband. They

rent this tiny shack for about $45 a month. Every day it is a struggle to

make ends meet. This tin shack is home to her entire family. Just one

luxury handbag could pay her rent for two years. She has seen the

fancy cars and houses that have cropped up just a few hundred metres

away, but they might as well be on a different planet. Her reality is

filled with feeding seven mouse. Sometimes my husband can't find

work. We have to eat everyday. When he doesn't bring home any money it

is very tough, we have a lot of children and I'm very tired ``

mouse. Her story is not unique. Two thirds of Indonesia is population

lives on $2 every day, perilously close to the poverty line. The ranks

of Indonesia's billionaires may be growing, but so does the gap between

the rich and the poor. With that, thank you so much for investing your

time with us. I'm Rico Hizon, goodbye for now.

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