11/01/2016 Asia Business Report


11/01/2016

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Chinese markets have opened lower and are set for another bubbly

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ride. And, the Taiwanese economy, is it swimming upstream, or will it be

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gobbled up by a bigger fish, China? Welcome to Asia Business Report. I

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am Sharanjit Leyl in Singapore. Investors will keep a close eye on

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the turbulent Chinese markets today. They have opened a minute to go and

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are trading lower. They start that trading week after fresh data from

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China on the weekend showed inflation went up 1.6% from a year

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earlier. That is just above the 1.5% rise from November. Cost of living

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was pushed up with higher food prices. As we look at the trading so

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far, lots of questions about the government's willingness to

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intervene in the market. Now, that's take a look at how the markets are

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faring this morning. -- let's. Shanghai and Shenzhen are trading

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lower. Shanghai's markets were down about 2% at the open. Shares and is

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down well over 3%. That was just a moment ago. -- Shenzen. In

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Australia, the ASX has gone down 2%. Having a pretty bad morning. The

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Nikkei was spared all of this because it was closed for a public

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holiday. Let's go to Chris Conway from the Australian stock report in

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London. He joins us live. Greece, a bad opening for markets this

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morning. -- Chris,. The second trading week of the year. As we saw

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last week, the first, a record weekend for bourses. What do you

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anticipate? So far, this morning, Chinese markets are coming back on

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line and being weaker, as you said. That follows on from last. A pretty

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bad week. One of the worst ever. -- last week. Australia was down,

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reversing gains leading up to the end of the year. A horrible start to

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the new year. More of the same this week. There seems to be some

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stability, though. Hopefully as the session unfolds today we get some

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stability. Maybe we can claw back some of the losses. What is

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interesting about the Chinese market is actually foreign investors are

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not in it, it is tough to invest there, only 2% of the market has

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foreign investment, so why are regional markets, like in Australia,

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for instance, so influenced by places like China? Interesting

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question. The Chinese stock market and the violent moves we are seeing

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in it is a symptom of the Yuan pricing we have seen going on. There

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is uncertainty. As China moves to shift it's economy from an export

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economy to a consumption -based economy that evaluation is something

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they have to do for that process to take place. -- its. Beijing has been

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very opaque about their targets and what they are trying to achieve and

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indeed when they are going to devalue it. Because of that, that is

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what is causing uncertainty, especially in equity markets. The

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Shanghai Composite, which is really the epicentre in terms of an equity

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market, that flows through to Australia and through America. So,

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not so much the Chinese market to be worried about, the devaluation of

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the Chinese currency, is causing the problems. It is interesting you

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mention is that, the authorities have lept in and intervened. Maybe

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it is too much, maybe it is making the situation worse. That is

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something I would agree with. I touched on it before, the lack of

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clarity in regards to why Beijing and white china is choosing this

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particular path to devalue the currency. -- why China. They have

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not been clear. Look at what happened recently. They were clear

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in helping the market understand when they were going to raise

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interest rates in America and why they were going to do it and plenty

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of evidence to back it up. China with the Yuan, the other hand, it

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came of nowhere. The same thing happens last year. They clearly have

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not learned. -- happened. We have seen the devaluation... We have seen

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the big sellers. -- sell offs from before. They need to be clearer.

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Thank you for joining us. Chris Conway. Apologies, as we saw, the

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image froze a few times. Singapore airlines has declared it is takeover

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of tiger airways. -- Tiger Airways. That came after the 60% of the

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budget carrier being taken over. That happens until February. Staying

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with Singapore airlines, it is subsidiary, Scoot, is still doing

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pretty well for itself. It sustained it is a line waiting for two years.

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After three years it is close to breaking even. -- its record. We got

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an opinion. The first six months of us fly to Sydney we increased the

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number of Singaporeans going to Sydney by a person. -- 3%. For

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vacations, 67%. We brought in business to Singapore and their

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airline. The evidence is clear. What about expansion? Our expansion plans

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are to China. We will add a six Chinese destinations soon. -- sixth.

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And next year, probably three Indian destination. Oil prices have been

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volatile. What is your strategy? Our volume is combined with another's

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and hedged as a hole. Beheading profile is two years. -- a whole.

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Anything that was struck before 2013 was at high prices. -- The hedging.

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They will run off by August 2016. That will be more akin to today's

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spot price. That was the CEO. Taiwan will hold parliamentary elections

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this Saturday and many voters will be weighing up which party can

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better manage economies there economy grew by just 1%. -- economy.

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-- there economy. Taiwan sees it as a Chinese province. That makes them

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nervous. We have more. These fish will soon be served at Chinese

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banquets. China is Taiwan's biggest customer for this expensive

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delicacy, the grouper. They used to have to smuggle the fish there. Now,

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he and other Taiwanese farmers can export them legally, without paying

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tariffs, earning $160 million a year. All because of improving

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relations between the two side. TRANSLATION: Taiwan's economy

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depends on China. -- sides. If they close their market to ask we will

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not be able to survive. -- us. Other companies share that view. Including

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one that makes Taiwan's most famous souvenir, pineapple cakes. Demand

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has soared since time is tourist began flocking here. -- Chinese.

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TRANSLATION: Half of our business comes from Chinese tourists. If they

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stopped coming half of us will become unemployed. But, prayers to

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the gods, from the ruling party's candidate, for an election victory

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and continuation of this row China policy, may be in vain. --

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pro-China. In the past eight years, Taiwan's government has signed more

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than 20 deals with China. But economic benefits alone have not

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helped him win over the Taiwanese. Instead, an increasing number of

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people here are worried by no maybe using closer economic ties as a

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neutral to take back the island. -- that China's. They staged huge

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demonstrations last year to block approved and of a trade deal. -- a

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trade deal. They believe it has mainly helped Taiwan's business

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elite. This is the opposite candidate. She and her party do not

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favour unification, so many would prefer her to negotiate deals for

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Beijing. But the question for voters is, can she help improve ties and

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improve the economy for the people? That is it for Asia Business Report.

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Thank you for watching.

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