10/01/2017 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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


been more concerned about their health and safety issues and have


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Shanghai. Shares of Japanese pharmaceuticals are currently, as


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


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


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


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


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


agreement with Hong Kong to privatise the department store. The


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


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


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


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


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


that China - US relationships should be strengthened and the more


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


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


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


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


advertising tools. New figures suggest the association of Southeast


Asian Nations is making an increasingly important contribution


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


private consumption and infrastructure investment. Quickly,


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


stocks weighed on the US markets overnight ahead of the earnings


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


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


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


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


news is coming up