:00:00. > :00:00.happened near Dubrovnik. A woman and a third trial are in hospital. Now
:00:00. > :00:00.on BBC News, let's go to Singapore with Rico and all the latest
:00:00. > :00:23.business news. After Wall Street suffers its
:00:24. > :00:28.steepest falls in months, Asia's markets stumble. And new data shows
:00:29. > :00:36.manufacturing in China surging to its highest level in more than two
:00:37. > :00:40.years. Thanks for joining us for this edition of Asia Business
:00:41. > :00:45.Report. Some good news out of China this morning, manufacturing activity
:00:46. > :00:50.surging to its highest level in more than two years. Factory output
:00:51. > :00:54.hitting a 27 month high in the month of July on adding to signs that the
:00:55. > :01:02.economy is indeed regaining momentum after a burst of government stimulus
:01:03. > :01:03.initiatives. But the news has not been enough to lift Asian stock
:01:04. > :01:18.markets. It comes after the US equity markets
:01:19. > :01:25.had their worst trading day since April. The defaults follow
:01:26. > :01:30.Argentina's default on its debt for the second time in 13 years. Pulling
:01:31. > :01:34.sentiment down, Russia and Ukraine tensions and US economic data that
:01:35. > :01:37.has sparked concern that the central bank in the US could raise the cost
:01:38. > :01:44.of borrowing sooner rather than later. The Dow and the NASDAQ
:01:45. > :01:46.slumping about 2% overnight. From the New York Stock Exchange,
:01:47. > :01:52.Michelle Flowrider. Investor nerves were clearly
:01:53. > :01:56.frazzled on Thursday. There are a host of reasons why, starting with
:01:57. > :02:00.the situation in Ukraine. We heard from companies like BP talking about
:02:01. > :02:03.the impact it's starting to have on their business. Of course there's
:02:04. > :02:08.also that default in Argentina. Closer to home in the US on Thursday
:02:09. > :02:12.there was a report on wage inflation. This raised the prospect
:02:13. > :02:16.that perhaps America's central bank would shift its focus from battling
:02:17. > :02:21.the weak labour market to fighting inflation, and that could mean
:02:22. > :02:30.higher interest rates. Now, as former central banker Alan Greenspan
:02:31. > :02:32.noted, the stock market here has been rising for some time and
:02:33. > :02:37.perhaps it was due for a significant correction. Investors will be
:02:38. > :02:43.wondering if that has now begun. An economist at OC EBC says this
:02:44. > :02:50.will make investors reassessed risks for Asian economies. On top of that
:02:51. > :02:55.we have to look more importantly at the issues, the expectation that the
:02:56. > :03:01.bank might raise rates earlier than expected. They might raise rates in
:03:02. > :03:08.mid`2015, we are seeing better jobs data. If those labour conditions
:03:09. > :03:12.proved to be better than expected, better than the Fed expected, then
:03:13. > :03:20.we are likely to see the market recalibrating. Back to China, it is
:03:21. > :03:26.not just manufacturing that is up, consumers are spending as well. From
:03:27. > :03:31.Shanghai John Sudworth reports on the effect of government stimulus
:03:32. > :03:34.measures. China's so`called mini stimulus continues apace. Banks are
:03:35. > :03:41.lending, the government is spending and so far it seems to be working.
:03:42. > :03:45.And uptake in second`quarter GDP, for example, and manufacturing data
:03:46. > :03:51.suggesting factories have put the gloom of a year or so firmly behind
:03:52. > :03:55.them `` and oh update. The only thing that matters, at least for the
:03:56. > :04:00.government, is if people feel richer in their pockets. So how does the
:04:01. > :04:04.man in the street, or in this case the market, feel about things?
:04:05. > :04:11.TRANSLATION: It's much easier to make money nowadays. The economy is
:04:12. > :04:14.picking up, my income is up and I'm spending more. I don't know the
:04:15. > :04:21.precise figures but year`on`year people are spending more. Those
:04:22. > :04:27.sorts of comments will be music to the ears of China's economic policy
:04:28. > :04:30.planners, who are desperately trying to unleash the power of the consumer
:04:31. > :04:35.and the private entrepreneur and move away from growth based on big
:04:36. > :04:40.infrastructure spending. The problem is the current mini stimulus fits
:04:41. > :04:43.that latter category exactly. It is big banking, big commerce and big
:04:44. > :04:51.government acting as the engine of growth. And as many a critic as
:04:52. > :05:06.pointed out, people may be basking in this warmth, but re` balancing
:05:07. > :05:10.remains as tough as ever. We look at what is driving this consumer
:05:11. > :05:19.spending. There definitely are higher levels of... There is more
:05:20. > :05:25.personal credit card debt. How big a worry is that, now there is a lot of
:05:26. > :05:28.credit card debt. It's not a big worry because the banks are watching
:05:29. > :05:33.it carefully. They have been cautious. What other growth drivers
:05:34. > :05:38.are there now apart from the domestic economy? Manufacturing
:05:39. > :05:46.remains very strong. We have a lot of products coming in. For domestic
:05:47. > :05:52.spend the key point would be there's increasing focus on digital spend,
:05:53. > :05:56.online traffic. What consumer goods companies are trying to balance now
:05:57. > :06:00.is how can I manage my online physical stores with the online
:06:01. > :06:07.trend, and getting that end to end the seamless customer experience. We
:06:08. > :06:12.are seeing the likes of Ali Babar .com doing very well. That is why
:06:13. > :06:17.they will be listing very soon in the US. Exactly. The Ali Babar
:06:18. > :06:22.business model has expanded in terms of the services they provide but
:06:23. > :06:27.also the portfolio of help for their providers. It is no longer just
:06:28. > :06:31.about a market for selling products, it is also helping vendors
:06:32. > :06:35.to actually build up credit accordingly as well. In other
:06:36. > :07:13.business news, March, 2011. The finding follows an
:07:14. > :07:19.appeal against a prosecutor's decision last September to drop the
:07:20. > :07:24.case over a lack of evidence. Sales have been hit by a slowdown in China
:07:25. > :07:29.and other emerging markets. The British drink maker of spirits,
:07:30. > :07:35.including Johnnie Walker and Smirnoff vodka, seine net sales fell
:07:36. > :07:39.by 9% to $17 billion for the year to June `` seine net sales. China and
:07:40. > :07:51.Southeast Asia volumes fell by nearly 20%. `` say net sales. China
:07:52. > :07:56.is expected to have the biggest increase in billionaires over the
:07:57. > :08:03.next few years. We look at the phenomenon.
:08:04. > :08:10.Spinning to the beat of a luxurious June. This is a charity gala
:08:11. > :08:21.organised by some of Indonesia's richest wives and girlfriends ``
:08:22. > :08:27.song. To enter one of these clubs there is a monthly fee and it can be
:08:28. > :08:34.extravagant. It starts from 1 million every month until 100
:08:35. > :08:46.million every month. So that's like $10,000? Yeah. This woman's business
:08:47. > :08:49.depends on the indulgences of the Aris handset. I can meeting new
:08:50. > :08:55.people and they can introduce me to their friends as well. This is her
:08:56. > :09:03.studio where she buys, sells and rents luxury handbags too well the
:09:04. > :09:15.status conscious Indonesian women. They can spend $20,000 to buy a
:09:16. > :09:21.bag. It is ridiculous. We could buy a car or a house in Jakarta with the
:09:22. > :09:24.cost of the bags. But for many in the Indonesia life runs on a
:09:25. > :09:31.different track. I'm in one of hundreds of slums peppered across
:09:32. > :09:36.Jakarta. This woman lives here with her seven children and husband. They
:09:37. > :09:43.rent this tiny shack for about $45 a month. Every day it is a struggle to
:09:44. > :09:49.make ends meet. This tin shack is home to her entire family. Just one
:09:50. > :09:55.luxury handbag could pay her rent for two years. She has seen the
:09:56. > :09:59.fancy cars and houses that have cropped up just a few hundred metres
:10:00. > :10:05.away, but they might as well be on a different planet. Her reality is
:10:06. > :10:10.filled with feeding seven mouse. Sometimes my husband can't find
:10:11. > :10:14.work. We have to eat everyday. When he doesn't bring home any money it
:10:15. > :10:20.is very tough, we have a lot of children and I'm very tired ``
:10:21. > :10:27.mouse. Her story is not unique. Two thirds of Indonesia is population
:10:28. > :10:31.lives on $2 every day, perilously close to the poverty line. The ranks
:10:32. > :10:38.of Indonesia's billionaires may be growing, but so does the gap between
:10:39. > :10:42.the rich and the poor. With that, thank you so much for investing your
:10:43. > :10:52.time with us. I'm Rico Hizon, goodbye for now.
:10:53. > :10:56.You're watching BBC News, these are the main headlines: Israel and Hamas
:10:57. > :10:57.have agreed a