15/02/2016 Asia Business Report


15/02/2016

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

:00:00.:00:10.

More dismal numbers from Japan. The latest figures show the economy

:00:11.:00:19.

contracted 1.4% in the last quarter. The Chinese markets reopen after the

:00:20.:00:26.

week-long New Year holiday. Is it good news or will it bear a monkey

:00:27.:00:34.

on its back? Good morning, Asia. Glad you can join us for this Monday

:00:35.:00:41.

edition. We start with Japan. The latest growth figures are out,

:00:42.:00:49.

revealing the country's GDP has shrunk 1.4% in the fourth quarter

:00:50.:00:54.

compared with the year before. The figures are considered a measure of

:00:55.:00:57.

the effectiveness of government policy. What does it mean for the

:00:58.:01:06.

Prime Minister's reforms? Earlier I spoke with my correspondent. No one

:01:07.:01:12.

is talking about the death of Abenomics yet but we are three years

:01:13.:01:16.

into it and we are where we were three years ago in terms of where

:01:17.:01:21.

the economy is. Two things are happening, one is domestic

:01:22.:01:23.

consumption has not grown to waive Abenomics was supposed to make it.

:01:24.:01:28.

The other thing that has hit Japan hard, and why we have these figures

:01:29.:01:33.

today, is that exports have fallen as well. Over three years exports

:01:34.:01:37.

have done well but the world economy is slowing down and China is slowing

:01:38.:01:44.

down. In the last few weeks we have seen the appreciating yen which will

:01:45.:01:49.

hurt exports going forward. It is a pretty bad outlook for the Japanese

:01:50.:01:52.

economy at the beginning of the year. Exports has been the growth

:01:53.:01:58.

engine of the Japanese economy. That is affected by the global slowdown.

:01:59.:02:02.

Domestic consumption is not taking off. The population is growing old

:02:03.:02:09.

and shrinking. This is the conundrum that the Prime Minister and his team

:02:10.:02:13.

have - how do you get Japanese people to spend money again? The

:02:14.:02:21.

idea has been to engage in quantitative easing for the last

:02:22.:02:26.

three years but it has not have the desired effect because the

:02:27.:02:29.

fundamentals of the economy are driven by demographics. Japan is

:02:30.:02:34.

growing old and the population is shrinking. In 2020 it will be

:02:35.:02:40.

shrinking by 600,000 people a year. In that situation getting the

:02:41.:02:44.

economy to grow again is difficult. The fact that the economy is doing

:02:45.:02:49.

as well as it is some say it is not a bad result. It just shows how

:02:50.:02:56.

difficult it is when you have a shrinking population to keep growth

:02:57.:03:02.

going in your economy. Many economists are saying what the Prime

:03:03.:03:05.

Minister has two launch is the structural arrow to make the economy

:03:06.:03:10.

more productive but they have been slow to move things around --to

:03:11.:03:14.

launch. They have been very slow to move on structural reform. It is a

:03:15.:03:20.

difficult thing to do in an ageing society. Japan is a conservative

:03:21.:03:24.

country with a conservative culture. Many corporations are controlled by

:03:25.:03:30.

old managers. And this makes reform very hard. And the big one is

:03:31.:03:35.

immigration. The Japanese people, the government, don't want more

:03:36.:03:40.

immigration. Despite the poor fundamentals the Nikkei to divide is

:03:41.:03:45.

up 4% at this hour. Chinese sharemarket have opened after a

:03:46.:03:50.

week-long break because of the Chinese New Year period. The

:03:51.:04:00.

Shanghai Composite Index is down 2.6%. The Hang Seng index is going

:04:01.:04:06.

in the opposite direction, headed north, up 2.1%, about 400 points.

:04:07.:04:12.

Let's cross over now to the Hong Kong stock exchange. Why have we

:04:13.:04:18.

seen this diversification of the mainland and Hong Kong markets

:04:19.:04:24.

today? Well I think because China is just starting to open after a

:04:25.:04:29.

week-long holiday, playing catch up with the rest of the market. It has

:04:30.:04:34.

had a dismal week elsewhere in Asia. We have now seen a rebound. I think

:04:35.:04:40.

Shanghai is simply playing catch up. In Hong Kong the Hang Seng is up 2%

:04:41.:04:47.

after it fell 4% on the first day it opened on Thursday, and 1% later. I

:04:48.:04:53.

think it is a matter of Chinese markets catching up with the world.

:04:54.:04:58.

Over the weekend we heard that retail sales over the New Year

:04:59.:05:03.

holiday was relatively healthy, up 11% over the holiday period compared

:05:04.:05:07.

with last year. That will boost sentiment. We had the central bank

:05:08.:05:15.

speaking to a magazine ahead of the week-long opening, saying there is

:05:16.:05:18.

no basis for devaluation of the currency and hoping to boost Chinese

:05:19.:05:27.

and global markets. He says that the Chinese yuan will be stable but they

:05:28.:05:31.

will allow greater volatility against the dollar. And a big story

:05:32.:05:38.

over the last several hours, HSBC has decided to stay put in London.

:05:39.:05:42.

If you look at the share price, it is in positive territory. That is

:05:43.:05:51.

right. HSBC is up more than 3% at the moment, really in line with the

:05:52.:05:55.

rally that we are seeing here in Hong Kong. There was a reaction

:05:56.:05:59.

today from the head of the Hong Kong monetary authority, the de facto

:06:00.:06:03.

central bank of Hong Kong and a regulator. He said he respected the

:06:04.:06:09.

decision of the HSBC board, also recognising that Hong Kong is that

:06:10.:06:15.

Asian headquarters, and of course leadership at HSBC have said that

:06:16.:06:18.

they will stick to their so-called Asian pivot and will continue to

:06:19.:06:22.

pour money and investment into southern China, the river delta

:06:23.:06:33.

where Hong Kong river is --is located. Now to India, the

:06:34.:06:37.

fastest-growing market. Last year passengers jumped 20%, which has

:06:38.:06:47.

attracted companies like air bath -- Airbus and Boeing. What about India

:06:48.:06:50.

as a place to manufacture planes as well? Made in India for an American

:06:51.:06:59.

company. This factory has built up expertise in assembling helicopters

:07:00.:07:05.

for the US firm Bell and is part of a growing number of products for the

:07:06.:07:11.

aviation industry which is made locally. These components are the

:07:12.:07:15.

main product of the plant here in Bangalore, flat track beams used in

:07:16.:07:26.

the wings of all Airbus aircraft. Airbus has plans to make India a

:07:27.:07:30.

more important part of its global supply chain. As a market India is

:07:31.:07:35.

already importing for the company. But the planemaker no longer sees

:07:36.:07:38.

India as only a customer but a supply hub. Outsourcing product and

:07:39.:07:46.

services worth $400 million per year. Every commercial thing that

:07:47.:07:50.

comes out of our plans today has a piece of India in it. We are buying

:07:51.:07:54.

detail parts, components, subassemblies, complex stuff, doors

:07:55.:08:03.

that go on the A320 ARI need piece of engineering. Catering to the

:08:04.:08:10.

international firms, Indian companies are building huge

:08:11.:08:14.

industrial parks, like this one. Here is the biggest aerospace

:08:15.:08:20.

components maker, accessing the right technology from Europe -- A320

:08:21.:08:23.

are a. In a break from traditional plain building it now offers most of

:08:24.:08:27.

the services under one roof. It says it makes it cheaper and more

:08:28.:08:34.

attractive for customers. But some of India's smaller firms fear

:08:35.:08:38.

missing out on this growing industry. This company makes parts

:08:39.:08:42.

for aircraft used by the Indian air force. But its boss says it needs

:08:43.:08:46.

help if it is to have a chance of winning lucrative military

:08:47.:08:52.

contract. You need to train them, had told them and encourage them to

:08:53.:08:54.

understand the technology and intricacies of the business. And

:08:55.:09:01.

then, perhaps, increase the number of organisations to get in a group.

:09:02.:09:07.

Whether it is commercial aviation or defence, that is what manufacturers

:09:08.:09:10.

here are hoping. That the made in India ambition can help their

:09:11.:09:18.

businesses fly. Before we go, here is a look at the markets once again.

:09:19.:09:24.

And a relief rally for most Asia-Pacific stocks after US and

:09:25.:09:29.

European shares rebound it on Friday from recent weakness with reassuring

:09:30.:09:32.

US resale sales data, boosting sentiment, while in the US rallies

:09:33.:09:38.

after 12 year lows. Despite the worst unexpected GDP number for the

:09:39.:09:45.

quarter, the Nikkei to divide is up 4%, at 15,585, after the Nikkei two

:09:46.:09:52.

to five 1 to 12% last week. And the Hang Seng has rallied after falling

:09:53.:10:00.

last week, one 1.9%. However, we have seen catch up ball from the

:10:01.:10:05.

Chinese markets, especially Shanghai, down two -2.8% after

:10:06.:10:09.

closing with the week-long Chinese lunar New Year holiday -- Nikkei

:10:10.:10:14.

225. Thank you so much for investing your time with us. I am Rico Hizon.

:10:15.:10:16.

Bye for now. The top stories this hour: Turkey

:10:17.:10:24.

bombs Kurdish positions in northern Syria for a second day, dismissing

:10:25.:10:27.

calls for an end to the shelling. Pope Francis urges Mexicans to turn

:10:28.:10:31.

their country into a land

:10:32.:10:34.

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