10/01/2017 Asia Business Report


10/01/2017

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.:00:12.

Investors are loving it. Donald Trump sells a $2 billion stake in

:00:13.:00:23.

his trainees operations. And we take a look at whether it will be smooth

:00:24.:00:27.

sailing or choppy waters for the cruise ship industry in 2017. Good

:00:28.:00:34.

morning, Asia. Hello, world. I'm Rico Hizon. Welcome to Asia Business

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Report. It's a Tuesday. Glad you could join us. We start off with the

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fast food giant McDonald's and its decision to sell a controlling stake

:00:49.:00:53.

in its business in China and Hong Kong, a sign of another company

:00:54.:00:57.

admitting they need help in this huge and unique market. In a $2

:00:58.:01:02.

billion deal, the Chinese state owned conglomerate Civic will take a

:01:03.:01:12.

stake. Coni Group will take a 28% stake. McDonald's will be holding on

:01:13.:01:20.

to the remaining 20%. Earlier, I spoke to someone and ask them if the

:01:21.:01:26.

sale is a good move for McDonald's? This will help them a lot. If you

:01:27.:01:30.

look at how McDonald's has performed in China over the last couple of

:01:31.:01:34.

decades it has done quite well but is still looking to expand further

:01:35.:01:39.

into third and fourth tier markets. They need cash to do that so this is

:01:40.:01:43.

how they can do that without the bottomline taking a hit. Has China

:01:44.:01:47.

become a revenue burden for McDonald's? It has. If you look at

:01:48.:01:52.

the quick service restaurant space in the last two years consumers have

:01:53.:01:56.

been more concerned about their health and safety issues and have

:01:57.:02:00.

cut back on spending. That has helped to Mark Hurd McDonald's. But

:02:01.:02:06.

growth is coming back a little bit. There is still room to adapt and

:02:07.:02:09.

that is what McDonald's is banking on going forward. Do you think these

:02:10.:02:13.

two groups that have no experience in the food and beverage business

:02:14.:02:17.

will be able to grow the food and beverage business of McDonald's? The

:02:18.:02:22.

challenges they do not have a lot of experience in that market. On the

:02:23.:02:26.

flipside, they have a lot of experience in China and have good

:02:27.:02:29.

real estate connections in China. That is the name of the game in

:02:30.:02:34.

China. Can they get good locations and spend the money to refurbish

:02:35.:02:37.

their stores? They have a strong team in the Chinese market. They can

:02:38.:02:42.

use that to adapt the menu. They need the cash to allow them to open

:02:43.:02:46.

new restaurants quickly. Do you think the new ownership taking a

:02:47.:02:52.

majority stake in the China business will affect customers? I don't think

:02:53.:02:55.

the average customer is going to know or care that much. As long as

:02:56.:02:59.

the restaurants continue to work well. McDonald's is a good visual

:03:00.:03:06.

presence. Ordering is efficient in store. If they can maintain that,

:03:07.:03:10.

consumers will be happy to continue to go. China market research in

:03:11.:03:20.

Shanghai. Shares of Japanese pharmaceuticals are currently, as

:03:21.:03:23.

you can see, they are trailing for the first time and are up 1%. That

:03:24.:03:29.

is since they said they would buy another company for 4.7 billion US

:03:30.:03:35.

dollars. They make drugs for patients with rare cancer. They are

:03:36.:03:40.

paying for each added share. That is nearly 75% more than the previous

:03:41.:03:46.

closing price. It is a big day with Alibaba. 8.6 billion-dollar

:03:47.:03:54.

agreement with Hong Kong to privatise the department store. The

:03:55.:03:58.

company has accepted the chairman Jack met Donald Trump. The company

:03:59.:04:04.

claims it can create 1 million US jobs by helping small businesses

:04:05.:04:08.

sell their products to China and Asian consumers. Here is what he had

:04:09.:04:13.

to say about the meeting. We talked about small business and young

:04:14.:04:18.

people and American agriculture products in China. And we also think

:04:19.:04:22.

that China - US relationships should be strengthened and the more

:04:23.:04:28.

friendly. That was Alibaba's Jack Ma. The Chief Executive will not

:04:29.:04:33.

join the board of the newly created holding company once it has killed

:04:34.:04:43.

with Verizon completely. -- made a deal. They are creating a new

:04:44.:04:47.

company to handle its purchase of Yahoo e-mail, websites, and

:04:48.:04:52.

advertising tools. New figures suggest the association of Southeast

:04:53.:04:56.

Asian Nations is making an increasingly important contribution

:04:57.:05:00.

to the global economy. This year, it is estimated the combined economies

:05:01.:05:05.

of their ten members will be worth 2.6 trillion US dollars, which makes

:05:06.:05:09.

it bigger than India, the UK, and France. Also, it makes more than

:05:10.:05:19.

twice as much as Australia's economy. I asked what is driving

:05:20.:05:24.

this economic growth and will it continue? What we have seen for many

:05:25.:05:30.

years is that the ASEAN region has been growing strongly. But it has

:05:31.:05:37.

been below investors' radar because until ten years ago, it was less

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than 1 trillion. In the last decade we have seen phenomenal growth,

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particularly because Indonesia is a key driver for us when it comes to

:05:46.:05:52.

accounting for 40% of ASEAN. Private consumption is fuelling the growth

:05:53.:05:57.

of ASEAN more and more, with the big population is of Indonesia, the

:05:58.:06:00.

Philippines, and so on. Domestic consumption is a key driver of

:06:01.:06:07.

growth, but 2017, there will be a lot of red flags, vulnerabilities,

:06:08.:06:15.

for the ASEAN economy, like the new Donald Trump policies, Brexit, and

:06:16.:06:17.

the slowing Chinese economy. There are headwinds, like last year as

:06:18.:06:22.

well. But we expect their GDP to reach 2.6 trillion in this current

:06:23.:06:29.

year with a growth rate of about 4.6%. I think exports already were

:06:30.:06:35.

facing headwinds in the last two years. Many countries last year saw

:06:36.:06:39.

some negative growth in exports. More and more it is depending on

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private consumption and infrastructure investment. Quickly,

:06:43.:06:48.

what will be the top three ASEAN economies this year? In terms of

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pure economic rapid growth, it will be the frontier economies, plus the

:06:54.:06:56.

Philippines. The Philippines is doing well, which you will be glad

:06:57.:07:01.

to hear. Also Vietnam, Cambodia, Laos, they will be very strong. From

:07:02.:07:08.

IHS. One industry set to ride the waves of economic uncertainty in

:07:09.:07:14.

2017 is the cruise ship industry. 25 million people are expected to

:07:15.:07:17.

cruise this year. An increasing number of them are from Asia.

:07:18.:07:21.

Karishma Vaswani caught up with the boss of a cruise to find out more. A

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red carpet welcome for every guest. This is the boat here docking in

:07:30.:07:34.

Singapore for the first time. Cruising is still relatively new in

:07:35.:07:38.

Asia. It is seen as a holiday for retirees. Most of the passengers are

:07:39.:07:44.

from the US, Europe, or Australia. This ship, according to the company

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that owns it, is one of the most luxurious in the world. It is on its

:07:50.:07:54.

maiden for it to Asia. Asia is a massive market for the cruise liner

:07:55.:07:58.

industry. In China has become a particular focus, despite the fact

:07:59.:08:02.

that economic growth is slowing down there. Asia is a huge market. A

:08:03.:08:07.

large part of it is completely and penetrated, that is China. Plus the

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rest of Asia is growing. The middle-class is growing. Australia

:08:18.:08:23.

has been one of the fastest growing markets, growing almost 30% a year

:08:24.:08:26.

for the last ten years the bite economies in Asia are slowing down.

:08:27.:08:30.

China is still slowing down. Do you feel you have missed the boat? It is

:08:31.:08:40.

so and penetrated -- unpenetrated it almost doesn't matter. You can only

:08:41.:08:46.

produce so fast. They were unpenetrated. Even though things are

:08:47.:08:51.

slowing, there are many millions of people who can still and will

:08:52.:08:55.

cruise. It has not all been smooth sailing. A few years ago, more than

:08:56.:09:00.

30 people died after one of Carinval's ships, the Costa

:09:01.:09:07.

Concordia, thank. It spent years trying to build back its reputation.

:09:08.:09:11.

That was eight terrible tragedy. We learned some things from it.

:09:12.:09:15.

Something that had nothing to do with us. But we still want to

:09:16.:09:22.

examine it closely. We look at every incident that happens anywhere in

:09:23.:09:26.

the world. Since that time, of course, we have advanced a number of

:09:27.:09:31.

safety systems on the ships, which we do on a continuous basis anyway.

:09:32.:09:37.

Safety concerns do not appear to be dampening their prospects in the

:09:38.:09:41.

industry. At least a dozen new ships are set to hit the seas this year,

:09:42.:09:47.

and profits are soaring. They are finding new and younger passengers

:09:48.:09:50.

willing to take a cruise. But they might find that a challenge. BBC

:09:51.:09:55.

News, Singapore. And before we go, let us have a quick look at the

:09:56.:09:59.

Asian financial markets. As you can see right now on the screens,

:10:00.:10:02.

lacklustre in early Tuesday trading. This is after energy and financial

:10:03.:10:08.

stocks weighed on the US markets overnight ahead of the earnings

:10:09.:10:12.

season. You have Japan back in action after the holiday break. It

:10:13.:10:16.

is currently done by two fifths of 1%. Wall Street, they slept

:10:17.:10:22.

overnight by 76 points. The NASDAQ was up wide ten and three quarters.

:10:23.:10:28.

Thank you for in the thing your time with us. I am Rico Hizon. The sport

:10:29.:10:33.

news is coming up

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