22/03/2017 Asia Business Report

Political figures have paid tribute to Martin McGuinness,

the former IRA commander who played a key role

in the Northern Ireland peace process.

Asian stock markets fall after Wall Street had its worst trading day

this year. A steady result for New Zealand dairy giant Viterra. We will

hear what their chief executive has to say. -- Fonterra. Good morning

Asia, hello world. It is Wednesday. Great to have you with us on Asia

Business Report. Rico Hizon. Stocks are retreating following US stocks

lowering today. Here is what they are doing. The Nykea is down by 332

points. And the All Ordinaries is giving up 75 points, that is 1.3%.

US markets had the worst session of 2017. -- Nikkei. It is the first

decline of at least 1% since October last year. Investors are nervous

that Donald Trump will not lower taxes and push through with the

socket layers. I asked market strategist Mike McCarthy if jitters

in America would further in that regional market. The market was

ready set up a bit of a sell-off. We are looking at stretched valuations

in the US and a maximum amount of optimism about the new

administration's ability to similar the economy. That means we are

seeing good support to equities, and here in the Asia-Pacific region. So

although in valuation terms, local embassies and share markets are

looking healthier than the US, if we get a short-term downdraught in US

shares, that is likely to drag us down in the short-term. Which

particular markets are healthy and Asia? In particular in valuation

terms of the Hang Seng index looks very strong. We are also seeing

strength across markets like India and Indonesia. And those highly

engaged in trade with China. So overall, the outlook is positive.

Japan possibly the exception, they are. But how concerned are Asian

investors now that the Fed could still raise the cost of borrowing

and maybe once or twice before the end of the year and this economic

programme protectionism? --. As always, people can treat these in

different ways. They can respond to be signalled that the reason rates

are going higher is because the economy is improving. So what are

you telling your clients right now? Given the Asian market landscape,

how should they respond? For a start, volatility is very low. That

meant option prices are cheap. Investors are taking on one-sided

risk profiles using options. Others are taking a daily to the fact that

markets are very much about picking the right stocks at the moment. I

like in key, high-quality stocks, and investing in those, regardless

of their outlook in the country's index. What about Mr Trump following

through on his threat to eventually brand China as a currency

manipulator? Udinese will ever materialise? It is one of the Keath

is that Asian investors? It is a concern. -- key fears. Behind closed

doors, there is a clear message being delivered to Donald Trump that

when your own Federal reserve has pumped more than $3 trillion into

the currency system, to label anyone else as a currency manipulate is

fraught. This could hurt not only this region but also the US economy.

Call ahead might prevail when it comes to the heads up on this issue.

-- cooler heads. New Zealand dairy giant Fonterra said its net

profitability after tax rose. This is a steady result for the world's

largest dairy exporter. But its high-value products like butter and

yoghurt have delivered strong returns. The company has also shown

strong growth in the Chinese market. Earlier, I spoke to Fonterra's chief

executive and asked if it would be a tough year for the company's

shareholders. No, it is going to be a strong year, because that is all

on the back of 54% higher milk prices. So the 54% higher milk

prices are at translated author a cost of goods sold. So we are

delivering more net profits. In that sense, when you look at cash cows to

our farmers, this is a significant step up from the last two years. For

our Cheryl does, it is good news. Why did you then downgrade your

full-year earnings forecast? First of all, like last year, around this

time, we decided to not focused too much on the earnings, but to go to

dividends. Last year, we announced our half-year results that we would

get 20 cents dividend half year, and we forecasted ten plus ten. So 40

cents. Now we are forecasting 40 cents. So in that sense, it is a

similar result in pay-out, but your question as to why the bracket has

shifted, that is because we had a very bought Spring Hill with very

poor grass growth, so a shortage of melt. Is still realistic to have

this projected milk pay-out of $6 per kilogram? -- a very poor spring,

here. It is the best possible market for us. Your partner, they have been

bleeding red. Losses have doubled in 2016. You plan to drop them all

continue this partnership? This is a strategic partnership in China. We

go through a new set of regulations. The people who are there, they

suffer at the moment. All the strategic players are suffering. The

people who are going to leave China because of regulation, they are then

benefiting. This is what we want for our product. This is a highly

private business for us in China. It is our largest market. Fonterra's

chief executive there. In other news:, Uber has promised to become a

more humane company. This comes amid a wave of ugly developments, at

including reports of sexual harassment and video over a

confrontation between the CEO and a disgruntled driver. Tencent is

hitting its results today. These are expected a 40% increase to $30

billion. It is China's biggest social media company. It has about

850 users per month. It also has a problem of games business. But how

much longer can it remain leader of the pack? -- it also has a

profitable games business. I asked if there were any areas where the

company might struggle. Overall, I think for Tencent in the gaming

industry, they are doing well. I think the only thing that might be

concerning is when Tencent started actually expand to other online -

off-line business. This is a very competitive business, especially in

China. The gunmen have placed in lots of investment and there

competing with other companies that at the very beginning thou not

looking for profitability. So that probably is the only challenge for

Tencent at this moment. But by looking at the gaming industry as

well as what they are looking out for the video and the music

industry, they are actually do very well. But isn't the online gaming

space getting too crowded in China? I actually think that there is still

a lot of room to grow. I think a particular when you move to the

mobile gaming industry, because you need to remember that there are a

lot of people in China that actually own a smart phone. You are talking

about 800 million people that have a smart phone. Gaming is actually one

of the major entertainment for a lot of the people who live in the

cities. Even now going into the rural areas. I think there is still

a lot of room to grow, especially for the sport area, as well. So the

thing is for Tencent, because they are already dominating the market,

it is difficult for the gaming industry, for the next three to the

next 3000 developers. It is challenging. They have 850 million

users. Gisin at saturation point? There are still in use is coming to

the portfolio. -- isn't that a saturation. There is any one

platform for Tencent. But now they have a number platform, which is a

very good complement to each other. Their new product, QQ, is aimed at

the teenage generation. That is confident current platform. Let's

and a quick look now before we go at the financial markets. As you can

see, all red arrows. The Nykea, the Hang Seng, and the all Ord is all

down. This is after the US sought the worst slump yet this year. --

saw. -- Nikkei. Norcia again pride in early on Thursday. I'm Rico

Hizon.