01/08/2014 Asia Business Report


Live from Singapore, the essential business news as it breaks and a look ahead to the news that will shape the business day.

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happened near Dubrovnik. A woman and a third trial are in hospital. Now


on BBC News, let's go to Singapore with Rico and all the latest


business news. After Wall Street suffers its


steepest falls in months, Asia's markets stumble. And new data shows


manufacturing in China surging to its highest level in more than two


years. Thanks for joining us for this edition of Asia Business


Report. Some good news out of China this morning, manufacturing activity


surging to its highest level in more than two years. Factory output


hitting a 27 month high in the month of July on adding to signs that the


economy is indeed regaining momentum after a burst of government stimulus


initiatives. But the news has not been enough to lift Asian stock


markets. It comes after the US equity markets


had their worst trading day since April. The defaults follow


Argentina's default on its debt for the second time in 13 years. Pulling


sentiment down, Russia and Ukraine tensions and US economic data that


has sparked concern that the central bank in the US could raise the cost


of borrowing sooner rather than later. The Dow and the NASDAQ


slumping about 2% overnight. From the New York Stock Exchange,


Michelle Flowrider. Investor nerves were clearly


frazzled on Thursday. There are a host of reasons why, starting with


the situation in Ukraine. We heard from companies like BP talking about


the impact it's starting to have on their business. Of course there's


also that default in Argentina. Closer to home in the US on Thursday


there was a report on wage inflation. This raised the prospect


that perhaps America's central bank would shift its focus from battling


the weak labour market to fighting inflation, and that could mean


higher interest rates. Now, as former central banker Alan Greenspan


noted, the stock market here has been rising for some time and


perhaps it was due for a significant correction. Investors will be


wondering if that has now begun. An economist at OC EBC says this


will make investors reassessed risks for Asian economies. On top of that


we have to look more importantly at the issues, the expectation that the


bank might raise rates earlier than expected. They might raise rates in


mid`2015, we are seeing better jobs data. If those labour conditions


proved to be better than expected, better than the Fed expected, then


we are likely to see the market recalibrating. Back to China, it is


not just manufacturing that is up, consumers are spending as well. From


Shanghai John Sudworth reports on the effect of government stimulus


measures. China's so`called mini stimulus continues apace. Banks are


lending, the government is spending and so far it seems to be working.


And uptake in second`quarter GDP, for example, and manufacturing data


suggesting factories have put the gloom of a year or so firmly behind


them `` and oh update. The only thing that matters, at least for the


government, is if people feel richer in their pockets. So how does the


man in the street, or in this case the market, feel about things?


TRANSLATION: It's much easier to make money nowadays. The economy is


picking up, my income is up and I'm spending more. I don't know the


precise figures but year`on`year people are spending more. Those


sorts of comments will be music to the ears of China's economic policy


planners, who are desperately trying to unleash the power of the consumer


and the private entrepreneur and move away from growth based on big


infrastructure spending. The problem is the current mini stimulus fits


that latter category exactly. It is big banking, big commerce and big


government acting as the engine of growth. And as many a critic as


pointed out, people may be basking in this warmth, but re` balancing


remains as tough as ever. We look at what is driving this consumer


spending. There definitely are higher levels of... There is more


personal credit card debt. How big a worry is that, now there is a lot of


credit card debt. It's not a big worry because the banks are watching


it carefully. They have been cautious. What other growth drivers


are there now apart from the domestic economy? Manufacturing


remains very strong. We have a lot of products coming in. For domestic


spend the key point would be there's increasing focus on digital spend,


online traffic. What consumer goods companies are trying to balance now


is how can I manage my online physical stores with the online


trend, and getting that end to end the seamless customer experience. We


are seeing the likes of Ali Babar .com doing very well. That is why


they will be listing very soon in the US. Exactly. The Ali Babar


business model has expanded in terms of the services they provide but


also the portfolio of help for their providers. It is no longer just


about a market for selling products, it is also helping vendors


to actually build up credit accordingly as well. In other


business news, March, 2011. The finding follows an


appeal against a prosecutor's decision last September to drop the


case over a lack of evidence. Sales have been hit by a slowdown in China


and other emerging markets. The British drink maker of spirits,


including Johnnie Walker and Smirnoff vodka, seine net sales fell


by 9% to $17 billion for the year to June `` seine net sales. China and


Southeast Asia volumes fell by nearly 20%. `` say net sales. China


is expected to have the biggest increase in billionaires over the


next few years. We look at the phenomenon.


Spinning to the beat of a luxurious June. This is a charity gala


organised by some of Indonesia's richest wives and girlfriends ``


song. To enter one of these clubs there is a monthly fee and it can be


extravagant. It starts from 1 million every month until 100


million every month. So that's like $10,000? Yeah. This woman's business


depends on the indulgences of the Aris handset. I can meeting new


people and they can introduce me to their friends as well. This is her


studio where she buys, sells and rents luxury handbags too well the


status conscious Indonesian women. They can spend $20,000 to buy a


bag. It is ridiculous. We could buy a car or a house in Jakarta with the


cost of the bags. But for many in the Indonesia life runs on a


different track. I'm in one of hundreds of slums peppered across


Jakarta. This woman lives here with her seven children and husband. They


rent this tiny shack for about $45 a month. Every day it is a struggle to


make ends meet. This tin shack is home to her entire family. Just one


luxury handbag could pay her rent for two years. She has seen the


fancy cars and houses that have cropped up just a few hundred metres


away, but they might as well be on a different planet. Her reality is


filled with feeding seven mouse. Sometimes my husband can't find


work. We have to eat everyday. When he doesn't bring home any money it


is very tough, we have a lot of children and I'm very tired ``


mouse. Her story is not unique. Two thirds of Indonesia is population


lives on $2 every day, perilously close to the poverty line. The ranks


of Indonesia's billionaires may be growing, but so does the gap between


the rich and the poor. With that, thank you so much for investing your


time with us. I'm Rico Hizon, goodbye for now.


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