:00:17. > :00:26.The bitter feud - between businesses and the ousted chairman might be
:00:27. > :00:30.headed for the courtroom next. Restrictions on converting yuan is
:00:31. > :00:37.fuelling more demand for US dollars in China.
:00:38. > :00:43.Good morning, Asia, hello world, it's a Wednesday. Glad you could
:00:44. > :00:49.join us for this mid-week edition of Asia Business Report. I'm Rico
:00:50. > :00:53.Hizon. We start off with India and a very public boardroom battle will be
:00:54. > :00:59.the top of the agenda at a number of meatings being held this week by
:01:00. > :01:05.companies belonging to the con gam rat Tata. The meetings were
:01:06. > :01:11.originally called to remove the director. But he resigned from six
:01:12. > :01:14.companies on Monday. We have the details from Mumbai.
:01:15. > :01:19.By resigning in the remaining Six posts, the director no longer holds
:01:20. > :01:24.any executive position in the Tata group, but Tata firms are still
:01:25. > :01:29.going ahead with the respective extraordinary general meetings which
:01:30. > :01:33.were originally called to remove the director. The sons, the main
:01:34. > :01:39.promoter of the con gom rat, wanted to use the meetings to justify his
:01:40. > :01:44.decision to sack the chairman in October. The corporate battle has
:01:45. > :01:48.damaged the group's reputation. It has also raised serious questions
:01:49. > :01:56.regarding corporate governments, something that the group has always
:01:57. > :01:58.prided itself on. The firms want to use these Ioms to reassure
:01:59. > :02:03.shareholders and investors that there are no reasons to worry about.
:02:04. > :02:07.There have been a series of accusations and counter-accusations
:02:08. > :02:11.from both sides. But the chairman has announced he'll be lodging legal
:02:12. > :02:16.action against the Tata Group which means this public spat is far from
:02:17. > :02:22.over. Moving to other business news making
:02:23. > :02:25.headlines. European commission has charged Facebook with providing
:02:26. > :02:29.misleading information which could result in the social networking
:02:30. > :02:34.company paying a fine that would amount into the hundreds of millions
:02:35. > :02:39.of dollars. Well, the issue lies with a WhatsApp privacy policy
:02:40. > :02:43.change in August when it said it would share user phone numbers with
:02:44. > :02:46.the parent company Facebook. The social networking site has
:02:47. > :02:51.previously indicated to the commission that it was unable to
:02:52. > :02:55.match the identity of users who are both Facebook and WhatsApp accounts.
:02:56. > :03:00.Nike, one of the world's top brands in sports wear apparel has reported
:03:01. > :03:04.better than expected quarterly earnings thanks to higher demand
:03:05. > :03:10.from western European, greater China and the emerging markets. Revenues
:03:11. > :03:14.rising to $8 billion for the three months to November and that is a 6%
:03:15. > :03:20.jump when compared to the previous period.
:03:21. > :03:25.The Malaysian rig get is making headlines this week falling to
:03:26. > :03:30.levels not seen since the 1998 Asian financial crisis, although the
:03:31. > :03:34.strengthening US dollar has put in Asian currencies under pressure,
:03:35. > :03:40.Malaysia is particularly hard hit. I spoke to the Asia Pacific economist
:03:41. > :03:45.for IHS and I asked him what's behind the Ringgit falling so steep.
:03:46. > :03:51.I think you need to look at the depreciation of the Ringgit against
:03:52. > :03:54.the broader context the US is strengthening because of the Fed
:03:55. > :03:58.hike that happened a few days ago and because of the expectation that
:03:59. > :04:07.the Fed is going to tighten more in 2017. But is the Ringgit's problems
:04:08. > :04:13.left headlines agitating global left headlines agitating global
:04:14. > :04:19.of factors for the Rinnggit's of factors for the Rinnggit's
:04:20. > :04:22.weakness and one of those is that the overall foreign exchange
:04:23. > :04:26.reserves of Malaysia have come down in the last three years so that's
:04:27. > :04:32.looking a little bit thinner than it was two or three years ago, and also
:04:33. > :04:35.because there's a perception in the market that Malaysia's vulnerable to
:04:36. > :04:41.capital outflows because there's a very high level of foreign ownership
:04:42. > :04:46.in both the equity market and in the Malaysian government securities
:04:47. > :04:53.market. But we see now the currency at levels not seen since the 1988
:04:54. > :04:56.Asian financial crisis, they're at fear that they could reintroduce
:04:57. > :05:01.capital controls to stem the fall of the currency. I think if you look at
:05:02. > :05:06.Philippine peso and also the Philippine peso and also the
:05:07. > :05:14.Ringgit, they're all down to the east Asian crisis levels. The
:05:15. > :05:19.Ringgit isn't alone. 'S not the right to put in the capital
:05:20. > :05:23.structural trend of the US dollar structural trend of the US dollar
:05:24. > :05:27.rising and I think we will see turmoil in Asian currency markets
:05:28. > :05:33.next year. Because of the additional Fed rate hikes that are expected. So
:05:34. > :05:38.I think there's many other currencies that will also be seeing
:05:39. > :05:46.significant depreciation next year. When you say Asian currency turmoil
:05:47. > :05:50.in 2017, so could we see a repeat of the financial crisis from 1998? I
:05:51. > :05:54.don't think the fundamentals of Asia are bad. I think the economic
:05:55. > :05:59.fundamentals are much better. This is really about the dollar. It's
:06:00. > :06:04.because the dollar was operating under very low interest rates for a
:06:05. > :06:10.very long time since 2009. So I think we need to see this not as a
:06:11. > :06:13.crisis in Asia, but more about the normalisation of interest rates in
:06:14. > :06:19.the US. How will this impact Asian economies next year? I think we will
:06:20. > :06:24.see probably quite significant appreciation of the dollar still to
:06:25. > :06:28.come against many Asian currencies. So on the currency side, we will see
:06:29. > :06:35.somewhat more weakness for many Asian countries, and that may help
:06:36. > :06:40.their exports. But it also brings with it concerns about capital
:06:41. > :06:44.outflows because the strong dollar and stronger US growth will attract
:06:45. > :06:50.capital into the US assets and out of Asian currencies and Asian
:06:51. > :06:53.assets. So that is a risk that if there is significant capital
:06:54. > :06:58.outflows, it could create some pressures on some of the currencies
:06:59. > :07:06.in Asia. So it is one of the downside risks for 2017. Over now to
:07:07. > :07:13.China where currency weakness is driving up demand for US dollars.
:07:14. > :07:16.The Chinese yuan has lost 6.6% this year and with the American central
:07:17. > :07:21.bank, the fed expected to deliver more rate headaches in 2017, that
:07:22. > :07:22.weakness could continue. To help slow the yuan's appreciation,
:07:23. > :07:26.Chinese authorities have placed a Chinese authorities have placed a
:07:27. > :07:31.cap on the amount that can be converted into foreign currencies
:07:32. > :07:34.and that limit stands at $50,000 US per person. To get around this,
:07:35. > :07:36.people are putting their Chinese currency into investment products
:07:37. > :07:51.that are priced in US dollars. Kind of the structure products of
:07:52. > :07:56.funds provided by the banks or by the asset manager, because in China
:07:57. > :08:02.we have to quote our QDI, which is the qualified domestic institutional
:08:03. > :08:05.investors, under this quota for those asset managers, they're
:08:06. > :08:10.allowed to invest in off-shore marks which is the bond marks or economic
:08:11. > :08:14.markets. In return, those aseat manager, they can structure the
:08:15. > :08:19.products to the kinds on the off-shore markets. That will provide
:08:20. > :08:26.them the access. And domestically it could also be as simple as a US
:08:27. > :08:31.dollar-timed deposit. Yes. By having these off-shore investment products,
:08:32. > :08:35.don't the officials from the People's Bank of China see this as a
:08:36. > :08:41.way to skirt this 50,000 cap rule? That's in the really the case,
:08:42. > :08:45.actually. In fact, for most of the conversion, you'll still be
:08:46. > :08:50.operating within this $50,000, US dollar, quota. But for this kind of
:08:51. > :08:54.products, which will enhance the return for the investors - for the
:08:55. > :09:02.investors, so that's why we have significant amount for this kind of
:09:03. > :09:07.-... Are investors in China looking at moving their Chinese yuan into US
:09:08. > :09:13.dollars off-shore or domestically hedging against the US dollar? I
:09:14. > :09:16.would say could be both. I mean, for some Chinese individuals they do
:09:17. > :09:22.have quite a lot overseas business. So that's why I prefer to move the
:09:23. > :09:27.move out of China to the off-shore accounts, but not all the Chinese
:09:28. > :09:31.have overseas markets. A lot of people who don't have that kind of
:09:32. > :09:37.overseas market, they're more looking for hedging purpose. I can
:09:38. > :09:44.share with you, as you know, as of now we have about 118 billion US
:09:45. > :09:50.dollar deposit from... And despite the $50,000 cap rule, the head of
:09:51. > :09:54.can China research at OCB Bank, forecasts a further depreciation of
:09:55. > :09:59.the Chinese yuan against US dollar in 2017. Before we go, here is a
:10:00. > :10:05.look at the markets and as you can see in our markets boards, the
:10:06. > :10:09.Nikkei 225, up about 75 points. The Hang Seng index gaining 42 and the
:10:10. > :10:13.all ordinaries index in positive territory. Most of the regional
:10:14. > :10:17.boards are in positive territory. This is after the Dow Jones
:10:18. > :10:23.industrial average closed yet again at another record high. It's 17th
:10:24. > :10:28.record since the US election, ending within 25 points off 20,000. So good
:10:29. > :10:32.day so far for the global markets. Thank you so much for investing your
:10:33. > :10:39.time with us. I'm Rico Hizon, Sports Today is coming up next.
:10:40. > :10:45.You're watching BBC News. Let's bring you a reminder of the top
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