10/04/2014 Asia Business Report


10/04/2014

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

:00:00.3:59:59

Singapore. All eyes on China. Fresh trade

:00:00.:00:21.

figures show a fall in exports and imports for March. And India's

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voters are heading to the polls in more than 14 states across the

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country. Hello and welcome to Asia Business

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Report. I'm Sharanjit Leyl. Starting with China. Fresh trade figures for

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the month of March show X boards have fallen 6.6%, compared to

:00:44.:00:49.

previous years. `` exports. Imports have fallen by 11%. These numbers

:00:50.:00:54.

follow a fall in exports in February as well, with fresh concerns over

:00:55.:01:01.

trade. Analysts believe trade will play a lesser role in the way the

:01:02.:01:05.

mainland's government will manage the ongoing expansion of its

:01:06.:01:15.

economy. We think this is the start of a period of adjustment for the

:01:16.:01:19.

Chinese economy, where trade starts to play a smaller role in the

:01:20.:01:23.

overall growth picture. This is partly by design and partly as a

:01:24.:01:29.

result of the downturn in the economy in China. Trade is dependent

:01:30.:01:34.

on the external picture. That picture is stable. We expect

:01:35.:01:36.

external demand to be relatively intact. Overall, policymakers in

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Beijing want to reduce the vulnerability of the economy and

:01:43.:01:44.

reduce the potential for shocks that they experienced in 2008 and 2009,

:01:45.:01:51.

when the financial crisis hit. You call this an adjustment by the

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Chinese authorities. It also announced a mini stimulus of sorts

:01:55.:02:00.

last week. They hope that will help lift some of the slowdown projected

:02:01.:02:03.

for the economy. You see that happening? I think what the stimulus

:02:04.:02:09.

really is moving some projects forward, that were scheduled for

:02:10.:02:13.

later this year, to see what that does for the coming couple of

:02:14.:02:16.

quarters. Towards the end of the year they may reassess things.

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Overall, they are really not keen on bailing out a lot of the accesses.

:02:22.:02:27.

They want to find a way to ease out of the previous cycle of credit and

:02:28.:02:32.

growth. These kinds of projects and infrastructure transport, these are

:02:33.:02:36.

relatively good ways to do that. I think there may be more to come

:02:37.:02:40.

later this year, if growth continues to weaken, but we don't see this as

:02:41.:02:45.

much of a stimulus, more stabilisation may be a better word

:02:46.:02:48.

to use. I think they will reassess when we get to June and July. To

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India, where Walmart is going head`to`head with its plans to build

:02:58.:03:00.

another 50 wholesale stores within the next five years. That's despite

:03:01.:03:05.

possible policy changes that could arise, should the new government win

:03:06.:03:09.

the election. Today could mark a turning point in those elections, as

:03:10.:03:14.

voters go to the polls in more than 14 states across the country. For

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more on the retail sector and how it will impact voters, we can go to our

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correspondent in Delhi. Good morning. Why is the retail sector so

:03:25.:03:33.

controversial in these elections? It has been one of the most politically

:03:34.:03:38.

controversial policies. India's retail sector was opened up to

:03:39.:03:43.

foreign investment 51% in multibrand retail and 100 `` 100% in single

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brand retail one year ago but we still haven't seen any multibrand

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retail stores open up shop here. Walmart exists as a wholesale store

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in India but it is surprising to many that they made an announcement

:03:59.:04:03.

to open 50 more stores. No one has doubt the potential of India's $500

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billion retail market at what has been controversial is the political

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opposition to this decision. Because most of India's retail sectors are

:04:13.:04:17.

organised and many of those are small corner stores, who are key

:04:18.:04:22.

voters of the opposition party, traditionally. So, in its

:04:23.:04:27.

manifesto, the BJP has already says that if it comes into power it will

:04:28.:04:31.

scrap the policy. They are pretty rigid about this. Quite surprising

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that Walmart has decided to go ahead with the announcement. Surprising

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and potentially very risky. What are the odds the BJP will be able to

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follow through with this manifesto? Very strong, because this is one of

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the key points, but they haven't budged on before. Like I said, are

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key voters come from this constituency, small traders, small

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shops, 90% of the retail sector in India. Even with the existing

:05:02.:05:07.

policy, the state has an equal say about whether they want it or not.

:05:08.:05:10.

Not just the BJP but even the latest entrant in the political scenario,

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even that party has a policy because their voters are small traders.

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Worst of them fear loss of jobs and they fear that big retailers will

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come and sweet down into the retail market here. At the Congress party,

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which brought in the legislation, the `` believes it can improve the

:05:30.:05:34.

supply chain system. The food management is pretty poor in the

:05:35.:05:38.

country. They feel they can generate more jobs. Thank you for that.

:05:39.:05:45.

In other news making headlines, to Gotye recalling 6.4 million vehicles

:05:46.:05:51.

over five separate issues. `` Toyota. Issues include problems with

:05:52.:06:00.

the airbag, seat rails, with screenwriters and a glitch with the

:06:01.:06:02.

engine starters. That poses a fire risk. `` screen wipers. The carmaker

:06:03.:06:08.

said it wasn't aware of any injuries or crashes caused by the conditions.

:06:09.:06:14.

The Bank of America will pay $783 million in fines and refunds to

:06:15.:06:17.

settle accusations that it misled customers about its credit card

:06:18.:06:22.

services. Some $45 million of that will be paid on penalties to US

:06:23.:06:26.

regulators. The pay`out relates to the lending giant's marketing of its

:06:27.:06:31.

payment and protection services between 2012 and 2010. In a study in

:06:32.:06:41.

financial stability, the IMF, referred to as the lender of last

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resort, warned the issue poses a big risks to growth prospects in

:06:46.:06:49.

emerging markets. Our correspondent in Washington. She has been speaking

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to the IMF's director of monetary and capital markets. One topic

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discussed inside the headquarters of the IMF is Howard years of cheap

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credit has led to a rise in corporate debt. In fact, in emerging

:07:05.:07:12.

economies, its a level not seen since the financial crisis, which is

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worrying some people here. I was told the prospect of lower interest

:07:18.:07:20.

rates and slower growth could mean that some companies in emerging

:07:21.:07:25.

markets will have difficulty paying back some of the money they have

:07:26.:07:30.

borrowed. Bite of the corporate debt in emerging markets, a significant

:07:31.:07:35.

fraction, would be at risk. `` much of the. 35% of the corporate debt in

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many emerging markets, specifically, would be owned by

:07:41.:07:44.

firms which will have difficulties in servicing their obligations.

:07:45.:07:50.

Given the IMF's worries about corporate debt, I also asked what

:07:51.:07:54.

lessons could be learned from the recent failure of a Chinese company

:07:55.:08:00.

that defaulted on its debt. This led him to address another concern.

:08:01.:08:07.

China's shadow banking system. It is very important that, given the

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growth in the non`bank financial sector in China, the so`called

:08:11.:08:14.

shadow banking system, that it is very important that these sorts of

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small defaults can play in taking out the hazard and making investors

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and savers feel aware of the risks which are SO shade with the high

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returns. The IMF wants to see greater local cooperation. But as

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ever with countries facing different challenges and at different stages

:08:40.:08:43.

of development that will be easier said than done.

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The World's Largest Busk producer in China is hoping to set a new record

:08:52.:08:55.

on the Hong Kong stock exchange. `` world's largest pork producer. It

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has hired 29 banks to work on the initial offering, which is said

:09:03.:09:07.

could raise up to $6 million. I asked about the upcoming listing.

:09:08.:09:12.

The listing in Hong Kong is directly related to that deal. As you

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recall, that was a very expensive deal at the time. $4.7 billion, US,

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paid for the company. But if you also include the amount of debt that

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the Chinese company had to assume, the pricetag really balloons even

:09:30.:09:32.

further come to more than $7 billion, US. As you can imagine,

:09:33.:09:37.

that's a lot of money to be owing to creditors banks. What we understand

:09:38.:09:42.

is that the main purpose of this listing is to raise money from

:09:43.:09:47.

investors to pay down the debt, to improve its financial standing.

:09:48.:09:51.

According to the Reuters news agency, it will be offering these

:09:52.:10:00.

shares between eight dollars, Hong Kong, to $11 per share. That implies

:10:01.:10:06.

a price to earnings ratio of between 15 and 20. That's a way for

:10:07.:10:10.

investors to decide how expensive or cheap that share is. So, according

:10:11.:10:15.

to fund managers, they are saying that this price looks fairly fed

:10:16.:10:21.

because of course now this company is competing not just against

:10:22.:10:25.

Chinese companies at the biggest food makers in the world.

:10:26.:10:31.

That brings us to the end of this edition of Asia Business Report.

:10:32.:10:39.

The main stories: Oscar Pistorius has faced a tough cross`examination

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by the prosecution for the first time in the trial of the `` killing

:10:48.:10:53.

of his girlfriend. Internet users are advised to change their

:10:54.:10:56.

passwords under what has been described as a catastrophic floor

:10:57.:11:01.

found in a type of security

:11:02.:11:02.

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