08/01/2016 Asia Business Report


08/01/2016

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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Transcript


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

:00:00.:00:13.

Asian stocks are falling but Chinese markets that have just opened are

:00:14.:00:26.

higher. A slippery slope for oil and we find out why they have tumbled to

:00:27.:00:36.

a 12 year low. Welcome to Asia Business Report. We have been

:00:37.:00:42.

watching Chinese stocks and they have just reopened for the first

:00:43.:00:48.

time since yesterday. The benchmark is currently up 3%. It is a huge

:00:49.:00:56.

relief for many investors. China's authorities say they have suspended

:00:57.:01:00.

the circuit Baker and is that led to trading being stopped -- breaker. We

:01:01.:01:15.

have seen of course Japan's Nikkei has been lower because of this

:01:16.:01:26.

positive" have seen in China. This has been a hugely volatile week from

:01:27.:01:34.

markets and we saw them having the worst ever start. The very latest,

:01:35.:01:44.

let us go live. We have seen this positive open the Chinese stocks and

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a lot of investors are reading a huge sigh of relief. What do we owe

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it to? I think it is part of the mini rollercoaster ride that our

:02:01.:02:03.

markets are coming back from the holidays. The year has kicked off

:02:04.:02:09.

but multiple new policies are kicked into place at the start of the New

:02:10.:02:12.

Year. But only in regard to the circuit breakers, but where the new

:02:13.:02:20.

trade index has started to garner more attention given how it is

:02:21.:02:31.

starting to influence the fixing. It is not to say that markets will

:02:32.:02:34.

inevitably stay on the front foot for the rest of the year. I would

:02:35.:02:37.

say I would buckle up for a copyright. -- bumpy ride. Investors

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are tired of hearing that, I think. We are sing a game of people are

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questioning the confidence of the regulators of China due to this

:02:59.:03:03.

constant going back and forwards removing these circuit breakers.

:03:04.:03:10.

What is this say about policy? It is creating confidence amongst

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investors? There is a very nuanced fact that we need to acknowledge and

:03:18.:03:23.

that is the way in Chinese officials have introduced new policies they

:03:24.:03:28.

have always accompanied it with several reiteration is as to what to

:03:29.:03:32.

drop the policies and the details of those policies. Investors,

:03:33.:03:36.

typically, nonetheless, have a knee-jerk reaction when the outcome

:03:37.:03:46.

comes into play. People knew it was coming into January one. And with

:03:47.:03:54.

the expiration of the six-month ban, everyone knew that was coming this

:03:55.:04:02.

Friday. On top of that, with the currency as well, they are aiming

:04:03.:04:10.

for stability. We have been looking at how that currency has been

:04:11.:04:14.

trading. We are seeing that Asian markets are reversing those previous

:04:15.:04:22.

losses. Is it a surprise that a lot of global investors are reacting

:04:23.:04:25.

this way to all this volatility in China and should they be reacting

:04:26.:04:29.

that way when there's really only 2% of foreign investors invested

:04:30.:04:39.

there? It is not an entire surprise when a new policy comes out and

:04:40.:04:45.

markets have become accustomed to the pre-existing policy. It always

:04:46.:04:55.

take -- takes time. Keep a clear head and keep your eyes focused on

:04:56.:05:04.

what the underlying processes. They are supporting growth and ensuring

:05:05.:05:08.

the gear acceleration does not get too sharp. Keep an eye on what they

:05:09.:05:16.

are saying but at the same time make sure you understand that different

:05:17.:05:25.

pieces I'm -- are moving. And don't get phased. Thank you very much. The

:05:26.:05:35.

Hong Kong's currency has opened higher as well. Oil prices have also

:05:36.:05:41.

taken a bit of a battering after all of the volatility in stock markets

:05:42.:05:45.

that we have seen. That is because of a slowdown in China, the world's

:05:46.:05:50.

second is consumer of oil. Crude prices are down. Take a look at this

:05:51.:05:59.

chart as it shows a dramatic slide below $34 a barrel. That us take a

:06:00.:06:05.

look at where they are trading right now. We are seeing a bit of a

:06:06.:06:10.

recovery this morning in Asia. They are higher by about 2%. Wire have a

:06:11.:06:16.

tumbled so much in recent months and these there any chance they will

:06:17.:06:26.

rebound. It is a supply driven price . Russia, the US, and Canada has

:06:27.:06:37.

increased production. It is largely driven by the Saudi policy tried to

:06:38.:06:44.

force the hand of these external produces to win back market share.

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So there is the political motivations

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prices fall and the strengthening US dollar. What do these lower oil

:06:59.:07:06.

prices mean the regional economies in Asia? They are coping with this

:07:07.:07:09.

topping with China slipping, that a man dropping off, this affects Asia

:07:10.:07:14.

at large. We are also adjusting to an environment where we have to cope

:07:15.:07:20.

with gradually rising interest rates . It makes it more challenging for a

:07:21.:07:28.

developing economy. And how long do you see this lasting? I think this

:07:29.:07:34.

will run through this year at the very least. You will not have the

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turnaround coming against his back drop of diplomatic feuding with the

:07:40.:07:49.

Saudis. I do not see a resolution happening with the conflict of the

:07:50.:07:56.

two largest exporters and produces. OPEC will compete with them which

:07:57.:08:01.

they have not faced in the last year. I mentioned China earlier. But

:08:02.:08:07.

how much do they have to do with all of this because the rejections are

:08:08.:08:14.

driving the increase in energy and a driving the increase in energy and a

:08:15.:08:21.

man grows. -- demand growth. Anywhere else in the world this

:08:22.:08:26.

would be great, but in the case of China it slipping and the

:08:27.:08:31.

transformation from an export orientated manufacturing economy to

:08:32.:08:36.

a domestic focused service economy. All of this is hitting at a time

:08:37.:08:42.

where markets are in turmoil and China, I think, the one big factor

:08:43.:08:47.

we will have to watch is how they play out. This could be a Black

:08:48.:09:01.

Friday with all asset prices. More than likely to come into five Lene

:09:02.:09:06.

dollars up 15% from a year ago. It fall short of expectations. The

:09:07.:09:10.

global leader in smart phones and memory chips will give a more

:09:11.:09:14.

detailed earnings report at the end of the month. It has been gadgets

:09:15.:09:21.

galore at the annual consumer and atomic show in Las Vegas. --

:09:22.:09:32.

electronic. There has been a huge focus on how to make our smartphones

:09:33.:09:34.

even smarter. You can extend your phone with those

:09:35.:09:59.

modules. We have a bunch of 12 done. We are open to a community to

:10:00.:10:03.

develop new projects. That is it for this edition of Asia

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Business Report. Thank you for watching. You watching BBC News. The

:10:33.:10:47.

top stories this hour. Trading has resumed in China without these

:10:48.:10:52.

circuit rake safety mechanism that shut down trading

:10:53.:10:53.

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