16/01/2017 Asia Business Report


16/01/2017

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

:00:00.:00:12.

The pound is falling sharply in Asian trade ahead of the big Brexit

:00:13.:00:20.

speech by Theresa May. The billion dollar fine and admission of guilt -

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is this the end of the Takata nightmare? Hello and welcome to Asia

:00:32.:00:38.

Business Report. The British pound is under pressure, falling on

:00:39.:00:45.

speculation the UK is moving closer to exiting the single market of the

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EU. Trading just below a dollar 20. The first time it has fallen that

:00:51.:01:01.

level since October. I think it is a confluence of not just expectation

:01:02.:01:07.

about the speech, and it seems some of the key details have been leaked

:01:08.:01:13.

over the weekend, but it segues nicely to Philip Hammond's comments

:01:14.:01:21.

that if the UK needed to recalibrate its economy, it would. Taken

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together has meant traders in Asia have taken at the signal we are in

:01:26.:01:32.

for a hard Brexit and that is what Theresa May will signal. We know

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that the pound has really been the one asset subject to all kinds of

:01:39.:01:45.

volatility whenever there is talk of a hard Brexit - will there be any

:01:46.:01:54.

stability for the currency? I think there is a self curing element to

:01:55.:02:01.

the sterling weakness. Before Brexit, we even got up to $1.50. Now

:02:02.:02:09.

we are down around a dollar 20, a big list to the UK economy. Traders

:02:10.:02:15.

will be focusing on the October line. We could see some heavy

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selling but if that level can hold, people can recognise that the UK

:02:21.:02:25.

economy was in good shape over the last six months of 2016 relative to

:02:26.:02:31.

expectation and sterling weakness continues to give expert, British

:02:32.:02:38.

industry and services, a lift as we go forward. It is a self curing

:02:39.:02:46.

element that traders are still wary. Takata shares are slumping after

:02:47.:02:49.

announcing a deal with the US government which will pay $1 billion

:02:50.:02:57.

and plead guilty to criminal wrongdoing due to those bags. We saw

:02:58.:03:06.

the shares rising over 60% on Friday, they are now slumping by as

:03:07.:03:19.

much as 10%. -- 16% on Friday. It shows you the difference in

:03:20.:03:23.

sentiment in Tokyo as compared to the US will is not on Friday, the

:03:24.:03:30.

shares trade at up seeing %. A big drop in Tokyo. This is a reflection

:03:31.:03:35.

of the fact that people think the company is not out of the woods as

:03:36.:03:42.

far as its troubles are concerned. It is facing a billion-dollar fine-

:03:43.:03:49.

$25 million to the US government, 100 and $25 million compensation to

:03:50.:03:56.

the victims of the faulty airbags. And also a fine to the makers. It

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has to come within the next 30 days - $150 million. We do not know how

:04:05.:04:10.

bad its financial situation is that it must be presumed it is not good

:04:11.:04:16.

because it has a ready set in need is to find a new finance to help it

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through this crisis. What happens next to this company? Will they have

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to file for bankruptcy? They need to get new financing and they said

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after this deal with the US government, they are hoping to draw

:04:34.:04:42.

a line under this problem and to move on to find new financing for

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the company but to put the problems in perspective, 12.5 million bags

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have been replaced. Up to 40 million have to be replaced and 70 million

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worldwide full of that is a huge bill for the company. It seems to

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suggest there will be further problems to follow fault Takata. The

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company shares and down 4% at the moment. Prosecutors in South Korea

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have delayed the decision whether to arrest the air to Samsung until

:05:21.:05:27.

Monday. He has been investigated over a scandal linked with a Park

:05:28.:05:39.

Geun-hye. China's President, Xi Jinping will attend is a summit in

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Switzerland. We explain the significance of his attendance. He

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really will be the star of the show. It is a time when not many world

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leaders are coming. A weakening Chinese economy and a weakening

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Chinese currency. The President will be under great pains to tell the

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world that they should have confidence in China's economy and

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that they will play an important and responsible role on the world stage.

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This is how the Chinese currency has fared. There is a battle between

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market forces and what the Chinese central bank has been trying to do.

:06:33.:06:39.

The Chinese currency has really weekend against the US dollar

:06:40.:06:43.

because market forces are trying to push the currency lower. At the same

:06:44.:06:52.

time, the People's Bank is trying to strengthen the currency because a

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weak currency, though good for experts, is bad for the confidence

:06:59.:07:01.

of the economy and we have seen millions, if not billions of dollars

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poured out because of concerned citizens. One of the biggest themes

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will be growing inequality which may be growing even further. Oxfam

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claims a group of men they can fit into one golf buggy on the same

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wealth as half the world. The top eight billionaires have as much

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wealth as 3.6 billion people who make up the poorest half of the

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world. India's first international stock exchanges have started

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trading. It will allow foreign investors to trade on products

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listed in one is expanding bond markets. Mestalla bonds are hoped to

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be traded. First off, but are they and how will they help? There were

:07:57.:08:05.

some bonds and then from China. We had a club and then came along the

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Indian version - marsala, named after the word for spice in India.

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What are they? Bonds are a form of debt, essentially the investor

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serves as the bank. A company, a government or a city some money and

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they promised to pay you back in full with regular interest payments.

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The problem for Indian banks is that they could only raise money and we

:08:42.:08:45.

pay in foreign currencies like the dollar but that is a risky because

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currencies fluctuate. Entering Mestalla bonds - the investor takes

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on the currency risk by trading in rupees. Well overseas investors join

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the party? While India's national income is rising and the economy is

:09:17.:09:20.

expected to grow rapidly, Mestalla bonds are the high your returns for

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investors compare to the US and Europe where interest rates are

:09:26.:09:29.

still low and it works out well in there as well. It means money to

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spend on things India really needs, like roads. Infrastructure, they

:09:35.:09:42.

plan to spend more than $1.5 trillion. Long-term investment could

:09:43.:09:49.

be the potential depreciation of rupees which could hurt the returns.

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The Indian companies, too much reliance on debt is risky. Sometimes

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too much spice is not very good. Let's take a look at the markets. In

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Asia we are seeing declines stop women talking about the losses in

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the shares of Takata, the airbag manufacturer. Sentiment is also

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impacted by the fall in the British pound ahead of the crucial speech by

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the Prime Minister of the UK. Thank you for

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