20/05/2016 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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Now on BBC News all the latest business news live from Singapore.


It's Taiwan's new president set for an early clash with China? We


assessed the potential impact on the economy -- is. And why is Fujitsu


getting involved on the UK referendum on whether to stay in the


European Union? Good morning, Asia and hello,


world. It's Friday and glad you could join us for this edition of


Asia Business Report, I'm Rico Hizon. We start with Taiwan and the


new president Tsai Ing-wen steps into the country's top job today and


investors will be watching very closely as to how she will address


China in her inauguration speech. The mainland is the island's biggest


trading partner and the outgoing president was known to be friendly


towards Beijing but since Tsai Ing-wen won the elections in


January, cross trade relations have becoming greasing the tense. Earlier


I spoke to an economist in Taipei to ask him what investors are expecting


to hear from the new president. It seems the result of the January


election has meant we have seen the early signs of soft economic


sanctions. Or example the reduction of the Chinese tourists visiting


Taiwan -- for example. In some parts of China it has reduced by almost


40%. The visitors from China account for a significant part of Taiwan's


foreign visitors each year so the tourism sector in Taiwan is already


feeling the pressure. Should investors be concerned about these


early warning signs from Beijing and the tough stance of Tsai Ing-wen


with the mainland? The economic sanctions will continue to be in


place for the foreseeable future. I think regardless of what President


Tsai will say today in her speech, Beijing will be a bit disappointed


compared with what President Ma has been doing over the last few years.


In the short-term investors have a reason to be concerned. It might


bring the cross trade China Taiwan relationship to a more healthy and


sustainable point, though. The other big challenge for Tsai Ing-wen is


the retooling of the Taiwanese economy, with its worst performance


in six years in 2015, and a major trading partner of Taiwan is


mainland China. Yes, indeed. There are two Mac major structure issues


in Taiwan's exports. First is the market concentration as you mention,


30% of time on these trade goes through China and now the problem is


the product concentration because China's exports are concentrated on


ICT and flat panel display areas. All these areas are unfortunately


going to be confronted by China's so-called import substitution


policy. In the long run Taiwan's exports to China with or without


sanctions are going to reduce. They need policies to mitigate these


issues by Doug Lhasa diversifying the market and also by having new


areas of product -- by diversifying. Roy Chun Lee, an


economist based in Taipei. Age is BC will be closing down


branches in India following a strategic review showing customers


are increasingly choosing to do their banking online -- HSBC. It's


been on a massive cost-cutting drive and the lender has slashed more than


87,000 jobs overseas. That's over the past five years.


American clothing retailer Gap will be closing down 75 stores abroad as


they turn their focus to the North American market to revive fortunes.


The Cure at retail family includes Old Navy and Banana Republic, it


will include all 53 Old Navy outlets in Japan. It will help save 255 and


is. The chairman of Fujitsu has warned that if the UK leads the


European Union it would reconsider its investments. It's the biggest


Japanese employer in the UK. We were told by him in an interview to the


BBC that he thought Britain leaving the UK would be a threat to


investment stashed the EU. TRANSLATION: So far we believe the


UK is the centre of the European region and that's why for the last


decade we have made ?3 billion in investment. If there is any change,


with the UK remaining in the EU or not, we have to be careful about


watching the process, the outcome, then decide if we will make any


further investment or not. We have been making the most investment in


the UK within the European region and yes we believe that the UK is


going to remain at the centre of the EU. Where are we going to make


investment to? Well, we have data centre and cloud type services, we


have to really see what the issues are, what the challenges are in the


respective market and the respective region, then make the decision as to


how we are going to invest and in which area. We would like to see the


entire EU region as one single market.


Mr Yamamoto from Fujitsu. Plain packaging for tobacco products will


be introduced in the UK from today after a legal challenge against the


new law was dismissed by the High Court. The case was brought about by


four of the world's biggest tobacco companies including Philip Morris


international. Plain packaging means a ban on all marketing of tobacco


packages to make smoking less attractive, especially to young


people. Australia was the first country to make plain packaging


compulsory in 2012. Phil Mickelson will return nearly $1


million in profits linked to an insider trading scheme. He said he


had no desire to benefit from training and stock that regulators


found questionable. The US market regulator alleged a friend of his


had passed on a trading tip to the golfer about Dean food stock that


came from the company's Chairman. China's food industry has been in


hot water lately with producers in Europe and the US accusing the


Chinese of flooding the market with cheap products. Beijing has set


aside over 4 billion US dollars to help local governments pay for


closures in the steel and coal sectors. The production by steel


mills is still picking up. Earlier I spoke with Anna-Lise Jefferies and I


asked her for her outlook on the Chinese steel sector. The Chinese


steel sector is doing very well right now, this year it is Tronc, we


have strong demand partly because of growth in the cities with properties


-- strong. That's unexpected because many thought these empty flats we


were hearing about would be a problem but we have seen a lot of


growth. Also the Chinese government is investing $750 billion in


infrastructure over the next two years, so pretty strong. Pretty


strong that they even have enough steel supplied to provide the


world? Yes. Exports are still good. Yeah, it is all strong. I think


exports will go down a bit because the strength inside China is very


good right now. Is China really deserving these massive tariffs


being imposed by the United States? 522% on this steel? With that kind


of steel it is a smaller market, the big markets are the HRC and the


retail market is. In that regard, no, most exports are going to get


places like Japan and Korea. They go mainly to Asia rather than the US.


All of these tips for tax tariffs by the US and China will not only


impact the small sector but it could have a knock on effect on other


things -- tit for tat. We have to see what happens in terms of trade


tariffs around the world, you find those cropping up not just in the US


but across the world when it comes to steal. Interesting to see what


happens. With the mechanics and the dynamics, where do you see steel


prices going forward? That's a good question. It's been very volatile


this year for the iron ore and steel segment in Asia, right now things


like iron ore prices are in the 50s and steel is relatively strong,


margins are good and production is high. But you have money going into


infrastructure but also Beijing putting in $15 billion for layoffs


because there will be consolidation in the steel industry. Longer term


the idea is they will be less steel production coming out of China.


Annalisa Jefferies. Before we go, the markets... It is a Friday in


deed and Asian stocks as you can see are looking very lethargic and


lacklustre. This is after stocks remain under pressure as investors


continued to digester possibility that the US Federal Reserve will


raise rates potentially as soon as June. The Nikkei two to five down by


24% and the macro All Ords down by a 10th. The Hong Kong stock exchange


will be opening in about 15 minutes. As for Wall Street, the Dow


and the NASDAQ finishing negatively. Thank you so much for


investing your time with us. I'm Rico Hizon. Sport Today is coming up




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