:00:00. > :00:00.ageing Trident system -- top story in the UK. The Labour Party was
:00:00. > :00:00.deeply divided on the vote which won by 135. Now the latest business news
:00:00. > :00:19.from Singapore. Drama at Netflix. Shares are down
:00:20. > :00:26.sharply as it reveals fewer people are subscribing.
:00:27. > :00:30.And China's banking industry, it is huge but is it solid? We'll look at
:00:31. > :00:40.the challenges facing the world's biggest banks.
:00:41. > :00:45.Good morning, Asia and hello, world! It's Tuesday and glad you could join
:00:46. > :00:50.us for this for this edition of Asia Business Report, I Rico Hizon. We
:00:51. > :00:53.start with a big day for the technology sector in America with
:00:54. > :00:58.Netflix and Yahoo releasing their earnings. The big surprise was from
:00:59. > :01:03.Netflix, which has seen fewer subscribers joining the video
:01:04. > :01:08.streaming service than forecast. At Yahoo!, the prospect of the sale of
:01:09. > :01:14.its core search business is still just a prospect. No concrete
:01:15. > :01:16.announcement on that as of yet. I asked our North American technology
:01:17. > :01:19.correspondent David Lee what went wrong at Netflix.
:01:20. > :01:25.They're saying they didn't attract as many new users as hoped, they
:01:26. > :01:28.wanted to add 2.5 million over the last quarter, they only managed
:01:29. > :01:34.growth of 1.7 million and much of that is due to people leaving the
:01:35. > :01:38.site. Reed Hastings, the CEO of Netflix, came out and he said he was
:01:39. > :01:42.blaming media coverage of a price hike that was coming on Netflix for
:01:43. > :01:48.users that had been on the service for quite a long time. Focusing on
:01:49. > :01:53.Yahoo, everyone wanting to find out not only about their earnings
:01:54. > :01:56.numbers but what will happen to their search business. The sale of
:01:57. > :02:00.Yahoo has been in the offing for quite some time and the earnings
:02:01. > :02:04.reports Yahoo put out today are most likely probably its last ever as the
:02:05. > :02:10.company is today. Some investors would have been hoping for Marissa
:02:11. > :02:15.Meyer, the CEO, to say that a sale had been agreed upon, and perhaps
:02:16. > :02:19.who made the Internet side of Yahoo's Internet business. But that
:02:20. > :02:23.didn't happen and she said there would be no announcement and even
:02:24. > :02:26.worse there will be no announcement about when the announcement could
:02:27. > :02:30.be, she said she would update investors at the right time. Some of
:02:31. > :02:35.those investors would be frustrated, they had hoped to hear more from
:02:36. > :02:39.Marissa Mayer about that but nonetheless, Yahoo's shares have
:02:40. > :02:44.gone up on the back of the earnings in anticipation of that eventual
:02:45. > :02:45.deal despite the fact Yahoo itself is performing continually quite
:02:46. > :02:52.badly. Dave Lee in Silicon Valley. Staying
:02:53. > :02:55.with the technology space, the Japanese market has reopened
:02:56. > :03:00.following one of the biggest deals of the year, which was reached on a
:03:01. > :03:10.public holiday on Monday. Japan's telecommunications giant Softbank
:03:11. > :03:15.will be buying British tech firm ARM Holdings. But shares in Softbank are
:03:16. > :03:17.down more than 10% in Tokyo trade this morning. Our business editor
:03:18. > :03:23.Simon Jack reports. It might be the most important UK
:03:24. > :03:29.company you've never heard of. Last year alone 15 billion microchips
:03:30. > :03:33.designed by ARM found their way into devices around the world. Based in
:03:34. > :03:37.Cambridge, it's the crown jewel of the UK tech industry and soon it
:03:38. > :03:43.will belong to this man's private company. I'm very excited to make
:03:44. > :03:50.this announcement. This is the company that I have admired for the
:03:51. > :03:54.last ten years. I want to ask you why suddenly this deal has been done
:03:55. > :03:59.and whether Brexit and the devaluation of sterling had anything
:04:00. > :04:03.to do with the timing. I would have made this decision at this time
:04:04. > :04:09.regardless of wrecks it happening or not happening. -- Brexit. It's the
:04:10. > :04:15.biggest ever investment by an Asian company in the UK and that is music
:04:16. > :04:20.to the new Chancellor's the years. ARM is a great success story and the
:04:21. > :04:23.fact a Japanese country three years after the referendums and decision
:04:24. > :04:27.is prepared to make this commitment to the UK and commit to grow that
:04:28. > :04:31.business in the UK is a resounding endorsement of the resilience of the
:04:32. > :04:39.British economy -- referendum decision. And the attractiveness of
:04:40. > :04:48.Britain for a international companies. The company's founder had
:04:49. > :04:52.little cause for celebration. ARM is the proudest achievement of my life
:04:53. > :05:00.and this is a sad day for me and a sad day for high-technology in
:05:01. > :05:04.Britain because ARM has been such a phenomenal global success.
:05:05. > :05:09.Cambridge's old-fashioned charm belies its high-tech prowess, but it
:05:10. > :05:11.only has one arm. And while still strong, that has lost control of its
:05:12. > :05:21.own destiny. Simon Jack, BBC News. For more on this deal we are joined
:05:22. > :05:25.in our studios by our Asia business correspondent. Looking at the Nikkei
:05:26. > :05:29.225 in positive territory but Softbank is down 10%, what's
:05:30. > :05:35.happening? Investors in Japan have had their first chance to react to
:05:36. > :05:39.this deal and this is a deal that has been lauded by counterparts in
:05:40. > :05:45.the UK, politicians in the UK saying this is a real vote of confidence in
:05:46. > :05:52.the British economy after the Brexit decision. This reaction is very
:05:53. > :05:57.specific to what is going on in Softbank in Japan, this company has
:05:58. > :06:02.debt to the tune of $100 billion! Investors were hoping the asset
:06:03. > :06:06.sales we have seen in recent times at Softbank, selling off its private
:06:07. > :06:11.stake in Alibaba, would be used to pay down some of that debt. Now it
:06:12. > :06:19.looks like the CEO is going to use some of this money to pay for this
:06:20. > :06:26.major acquisition in the UK, the biggest ever come of a British firm
:06:27. > :06:31.by an Asian company. You don't want your boss to play down the debts
:06:32. > :06:34.only, you won the dividends. What he has been saying and yesterday at the
:06:35. > :06:40.conference call, he believes in the future of what ARM Holdings can
:06:41. > :06:45.bring to Softbank, he's a big believer in the Internet of things
:06:46. > :06:48.and the chips that ARM Holdings designs, the technology behind it,
:06:49. > :06:56.is what he is paying the premium for. It's no small amount, 43%, a
:06:57. > :07:02.premium of that much, on every ARM Holdings share. That's why you're
:07:03. > :07:06.seeing the nervousness in regards to Softbank shares in Japan today.
:07:07. > :07:11.Karishma Vaswani, thank you for joining us. I'm sure everyone will
:07:12. > :07:15.want to know how this impacts the dynamics of the Asian technology
:07:16. > :07:20.space going forward. To China and the latest world figures have
:07:21. > :07:24.indicated that its massive economy is likely stabilising but there are
:07:25. > :07:29.concerns about the health of parts of the country's banking sector,
:07:30. > :07:36.which is the largest in the world. Many of China's giant banks are
:07:37. > :07:37.government owned, putting a huge burden on the state. Robin Brant
:07:38. > :07:43.reports from Shanghai. Big buildings and big banks, very
:07:44. > :07:48.big banks in fact. They dominate here in the heart of China's
:07:49. > :07:51.commercial capital. Let's start this little circuit in the city with some
:07:52. > :07:58.staggering statistics. The biggest bank in the world is Chinese. ICBC
:07:59. > :08:04.has just over 3.5 trillion US dollars in assets. It has around
:08:05. > :08:08.half a billion customers. And four of the five biggest banks in the
:08:09. > :08:14.world are Chinese. This is an industry with huge reserves and
:08:15. > :08:19.global ambitions. But China has a debt problem, a big debt problem. In
:08:20. > :08:22.the years following the global financial crisis there's been
:08:23. > :08:26.interest rate cuts and a boom in credit, all aimed at boosting the
:08:27. > :08:29.economy and all on the orders of the government which owns or controls
:08:30. > :08:38.most of the banks. The International Monetary Fund estimates there is 1.3
:08:39. > :08:43.trillion in US loans at risk of default. Most of that has been
:08:44. > :08:46.channelled into state-owned enterprises, mostly unprofitable, or
:08:47. > :08:51.into local government and bad loans are on the up, they are at an 11
:08:52. > :08:56.year high. What next? Maybe some of the banks will topple over, the
:08:57. > :09:01.government will bail them out at great cost and maybe the country's
:09:02. > :09:05.currency will devalue further. Or do the banks restructure their debt and
:09:06. > :09:09.survived while a select few go to the wall? Through all of this the
:09:10. > :09:15.government will be remaining focused on their number one priority,
:09:16. > :09:20.remaining -- retaining harmony and stability even that if that means a
:09:21. > :09:36.few don't survive. Goldman require a controlling stake
:09:37. > :09:44.a cosmetics maker and an investment arm in LVMH will take a stake in
:09:45. > :09:47.Clio later this week. It was up 20% from the previous year. Why are
:09:48. > :09:52.Korean companies more attractive than western or Japanese rivals? I
:09:53. > :09:55.put that question to an industry analyst.
:09:56. > :10:03.With Korean companies, a lot are very strategic in their price
:10:04. > :10:09.positioning. They are in between mass and premium. A lot of Western
:10:10. > :10:17.brands and Japanese brands are priced pretty high. Korean cosmetic
:10:18. > :10:19.brands went into a segment which is a segment which is not exactly
:10:20. > :10:25.saturated yet. Joanna Chan. A quick look at the
:10:26. > :10:31.markets and currently in positive territory after the holiday break,
:10:32. > :10:33.the Nikkei 225 up 0.2%. Flat elsewhere. Thanks for investing your
:10:34. > :10:39.time with us. The bye for now.