20/05/2016 Asia Business Report


20/05/2016

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

:00:00.:00:13.

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

:00:14.:00:22.

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

:00:23.:00:27.

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

:00:28.:00:29.

European Union? Good morning, Asia and hello,

:00:30.:00:41.

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

:00:42.:00:45.

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

:00:46.:00:49.

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

:00:50.:00:54.

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

:00:55.:00:58.

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

:00:59.:01:05.

trading partner and the outgoing president was known to be friendly

:01:06.:01:10.

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

:01:11.:01:13.

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

:01:14.:01:18.

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

:01:19.:01:23.

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

:01:24.:01:29.

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

:01:30.:01:34.

sanctions. Or example the reduction of the Chinese tourists visiting

:01:35.:01:40.

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

:01:41.:01:46.

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

:01:47.:01:51.

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

:01:52.:01:56.

feeling the pressure. Should investors be concerned about these

:01:57.:02:00.

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

:02:01.:02:06.

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

:02:07.:02:11.

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

:02:12.:02:19.

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

:02:20.:02:26.

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

:02:27.:02:30.

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

:02:31.:02:39.

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

:02:40.:02:43.

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

:02:44.:02:49.

the retooling of the Taiwanese economy, with its worst performance

:02:50.:02:55.

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

:02:56.:03:01.

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

:03:02.:03:06.

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

:03:07.:03:11.

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

:03:12.:03:16.

the product concentration because China's exports are concentrated on

:03:17.:03:21.

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

:03:22.:03:28.

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

:03:29.:03:32.

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

:03:33.:03:38.

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

:03:39.:03:41.

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

:03:42.:03:46.

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

:03:47.:03:48.

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

:03:49.:03:57.

branches in India following a strategic review showing customers

:03:58.:04:01.

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

:04:02.:04:05.

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

:04:06.:04:12.

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

:04:13.:04:17.

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

:04:18.:04:22.

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

:04:23.:04:29.

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

:04:30.:04:36.

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

:04:37.:04:43.

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

:04:44.:04:49.

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

:04:50.:04:56.

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

:04:57.:04:59.

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

:05:00.:05:05.

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

:05:06.:05:09.

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

:05:10.:05:14.

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

:05:15.:05:19.

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

:05:20.:05:23.

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

:05:24.:05:31.

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

:05:32.:05:34.

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

:05:35.:05:38.

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

:05:39.:05:44.

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

:05:45.:05:48.

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

:05:49.:05:52.

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

:05:53.:05:57.

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

:05:58.:06:01.

entire EU region as one single market.

:06:02.:06:04.

Mr Yamamoto from Fujitsu. Plain packaging for tobacco products will

:06:05.:06:10.

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

:06:11.:06:13.

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

:06:14.:06:18.

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

:06:19.:06:23.

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

:06:24.:06:27.

packages to make smoking less attractive, especially to young

:06:28.:06:32.

people. Australia was the first country to make plain packaging

:06:33.:06:34.

compulsory in 2012. Phil Mickelson will return nearly $1

:06:35.:06:41.

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

:06:42.:06:44.

had no desire to benefit from training and stock that regulators

:06:45.:06:51.

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

:06:52.:06:54.

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

:06:55.:07:00.

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

:07:01.:07:07.

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

:07:08.:07:10.

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

:07:11.:07:16.

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

:07:17.:07:19.

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

:07:20.:07:25.

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

:07:26.:07:30.

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

:07:31.:07:33.

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

:07:34.:07:37.

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

:07:38.:07:41.

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

:07:42.:07:45.

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

:07:46.:07:51.

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

:07:52.:07:54.

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

:07:55.:07:58.

strong that they even have enough steel supplied to provide the

:07:59.:08:05.

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

:08:06.:08:09.

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

:08:10.:08:14.

good right now. Is China really deserving these massive tariffs

:08:15.:08:19.

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

:08:20.:08:25.

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

:08:26.:08:31.

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

:08:32.:08:38.

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

:08:39.:08:45.

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

:08:46.:08:50.

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

:08:51.:08:55.

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

:08:56.:08:59.

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

:09:00.:09:03.

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

:09:04.:09:08.

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

:09:09.:09:13.

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

:09:14.:09:18.

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

:09:19.:09:22.

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

:09:23.:09:26.

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

:09:27.:09:30.

infrastructure but also Beijing putting in $15 billion for layoffs

:09:31.:09:35.

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

:09:36.:09:40.

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

:09:41.:09:43.

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

:09:44.:09:53.

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

:09:54.:09:58.

lacklustre. This is after stocks remain under pressure as investors

:09:59.:10:02.

continued to digester possibility that the US Federal Reserve will

:10:03.:10:07.

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

:10:08.:10:14.

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

:10:15.:10:17.

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

:10:18.:10:24.

and the NASDAQ finishing negatively. Thank you so much for

:10:25.:10:28.

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

:10:29.:10:30.

next.

:10:31.:10:33.

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