05/08/2014 Asia Business Report

have been turned off around the country to mark the moment.

Now time for the latest business news with Asia Business Report.

A pulse check on Indonesia's economy. We look at the tasks that

lie ahead for the President`elect. Shares in the world's biggest sports

of supply again as they begin trading on the stock exchange.

`` sports supplier. Thank you for joining us. Indonesia

has been one of Asia's best performing markets this year but its

overall economic growth has been slowing and as the country prepares

to show its second`quarter figures, we find out there are hopes by its

new government will find a way to push through with some much`needed

reforms. From furniture maker to Jakarta

governor to Indonesia's president elect, Joko Widodo has seen his

political star rise rapidly. There are hopes his business friendly

attitude will help spur growth. But as the euphoria wears off, he has a

long list of challenges to tackle. Rampant corruption, rising prices,

slowing foreign investment, poor infrastructure and a stubborn fiscal

deficit. A key to fixing its finances is cutting fuel subsidies

which take up about 16% of the government's budget. He promised to

do away with the subsidies within four to five years but it is a

sensitive topic and previous attempts to raise the price of fuel

have led to huge protests. He will also have to play tough politics.

His main rival in the election is contesting the results claiming

massive fraud. His party does not have a large majority in Parliament

so it is harder to pass laws. Combined with his relative

inexperience at national politics, some warn his efforts to get the

economy back on the fast track may be a slow slog.

I asked a representative from the Royal Bank of Scotland about this.

We expect a slow number for this quarter and this is part of a

broader slowdown we expect to last for some time. We expect a number

similar to quarter one. What about the election spending of the

candidates, won't that have an effect on the economy? Yes indeed.

We have seen retail sales up, that means consumption up but slowdown in

exports, a slight rise in imports, a fall in public spending. Put all

that together, we will see a slower number. We are already in the third

quarter. Will it be more of the same as the first and second? As the

adjustment process, it is lagging but as it continues we will see the

numbers are low. The president elect has to fix a lot of things in the

economy. He takes over in the fourth quarter of the year. What do you

think should be his priorities because one is basically pushing

growth to 7% in two years. Essentially he needs to focus on

boosting investments, infrastructure spending and structural reform. Some

of that will come later in his term but we expect him to start with

infrastructure spending, looking at some of the governance issues.

In other business news in making headlines, LinkedIn, the

professional networking site has agreed to pay $6 million in wages

and damages after regulators found it had failed to account for all of

the hours worked by employees. The figure includes more than $3 million

in unpaid wages and also damages to be paid to former and current

employees. McDonald says the food scare it has

undergone in China and Japan is having a significant negative impact

on sales in the region. Last month they expanded sales of Nugget in

Hong Kong after concerns about a Chinese meat supplier.

Fresh data from Australia has shown that the trade deficit in June

narrowed to about $1.56 billion from a revised deficit. We crushed to

Sydney. Thank you for joining us. Why are we seeing a narrowing of the

trade deficit, which is quite considerable, from May to June? Yes

it was and a bit of a surprise for the markets, expecting a deficit of

around 2 billion. A drop on imports, they were down 1% and although the

overall export performance was flat, surprise increases in key

commodities have driven a better than expected result. Has a China's

improving conditions contributed to the deficit because the mainland are

a major importers of Australia's iron ore. An increase in iron ore

and coal, largely driven by trade with China that has contributed to

this result. And liquid national gas, although that goes to other

parts of Asia are not China, it isn't regional partners driving that

performance. In July and August will be see a continuing trend of the

narrowing of the trade deficit? A lot will depend on commodities and

the level of the Australian dollar. Export volumes were a surprise given

the maintained hike against other currencies. If it does as expected

and falls, we could see further narrowing of the gap. Apart from the

trade deficit, attention will be on the monetary policy position, will

they keep rates at 2.5%? Almost certainly they will keep the rate

stable. That is what the RBA has flagged to the market, an extended

period of stability. It would be a real surprise if we saw a change.

The market is likely to focus on the statement that any change in

language and any efforts to talk down the Australian dollar. Thank

you for your insights. Shares in WH group made its debut

this week. Shares are sitting at about $6 70 Hong Kong dollars. Up

from the initial price. They raised funds in the second attempt of

public offering, the biggest in Asia this year.

A steaming wok full of freshly cooked pork and vegetables. It is by

far China's favourite meat. Every region has its own special recipes.

In Hong Kong, in south China, besides fragrant stirfry is there is

also roast pork. And juicy barbecued pork buns. This country consumes

half of the world's pork and is expected to account for 75% of

growth in consumption over the next five years. That is why an initial

public offering by the biggest pork supplier on the pay`out is

commanding so much attention. `` pork supplier on the planet. The

firm made headlines last year when they purchased America's largest

pork supplier. The biggest deal of its kind and left the company deeply

in debt. To pay it back, they turned to the Hong Kong stock market,

trying to raise $5 billion in April. After a few weeks it had to cancel

the listing when investors decided it was far too expensive. They

stockbrokers said it was wise for the country to return several months

later with a much more modest deal. They lowered the price

substantially. Most of all, they cut the amount of money raised by 50%.

It is much easier. And investment banker who turned analyst agrees.

believes how the shares trade over the next few months will affect the

entire industry. Will be watching this very closely. It is big,

eye`catching and how it trades, how significant trading volumes develop

will bear on the decision to launch transactions in August, September

and October. China's love of pork was supposed to result in the

biggest listing of the year in Hong Kong. It did not happen but this

resurrected deal may still help drive investor appetite for major

offerings. Before we go a quick look at the

Asian stock markets, which have become lacklustre in mid`morning

Tuesday trade. This is despite a rally in US equities overnight.

Japan is shopping as it waits for corporate earnings. Australian

investors remained cautious at the start of the earnings season. Thank

you so much for investing your time with us. I am Rico Hizon. Goodbye

for now. In London with the main news

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