16/01/2017 Asia Business Report


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


The pound is falling sharply in Asian trade ahead of the big Brexit


speech by Theresa May. The billion dollar fine and admission of guilt -


is this the end of the Takata nightmare? Hello and welcome to Asia


Business Report. The British pound is under pressure, falling on


speculation the UK is moving closer to exiting the single market of the


EU. Trading just below a dollar 20. The first time it has fallen that


level since October. I think it is a confluence of not just expectation


about the speech, and it seems some of the key details have been leaked


over the weekend, but it segues nicely to Philip Hammond's comments


that if the UK needed to recalibrate its economy, it would. Taken


together has meant traders in Asia have taken at the signal we are in


for a hard Brexit and that is what Theresa May will signal. We know


that the pound has really been the one asset subject to all kinds of


volatility whenever there is talk of a hard Brexit - will there be any


stability for the currency? I think there is a self curing element to


the sterling weakness. Before Brexit, we even got up to $1.50. Now


we are down around a dollar 20, a big list to the UK economy. Traders


will be focusing on the October line. We could see some heavy


selling but if that level can hold, people can recognise that the UK


economy was in good shape over the last six months of 2016 relative to


expectation and sterling weakness continues to give expert, British


industry and services, a lift as we go forward. It is a self curing


element that traders are still wary. Takata shares are slumping after


announcing a deal with the US government which will pay $1 billion


and plead guilty to criminal wrongdoing due to those bags. We saw


the shares rising over 60% on Friday, they are now slumping by as


much as 10%. -- 16% on Friday. It shows you the difference in


sentiment in Tokyo as compared to the US will is not on Friday, the


shares trade at up seeing %. A big drop in Tokyo. This is a reflection


of the fact that people think the company is not out of the woods as


far as its troubles are concerned. It is facing a billion-dollar fine-


$25 million to the US government, 100 and $25 million compensation to


the victims of the faulty airbags. And also a fine to the makers. It


has to come within the next 30 days - $150 million. We do not know how


bad its financial situation is that it must be presumed it is not good


because it has a ready set in need is to find a new finance to help it


through this crisis. What happens next to this company? Will they have


to file for bankruptcy? They need to get new financing and they said


after this deal with the US government, they are hoping to draw


a line under this problem and to move on to find new financing for


the company but to put the problems in perspective, 12.5 million bags


have been replaced. Up to 40 million have to be replaced and 70 million


worldwide full of that is a huge bill for the company. It seems to


suggest there will be further problems to follow fault Takata. The


company shares and down 4% at the moment. Prosecutors in South Korea


have delayed the decision whether to arrest the air to Samsung until


Monday. He has been investigated over a scandal linked with a Park


Geun-hye. China's President, Xi Jinping will attend is a summit in


Switzerland. We explain the significance of his attendance. He


really will be the star of the show. It is a time when not many world


leaders are coming. A weakening Chinese economy and a weakening


Chinese currency. The President will be under great pains to tell the


world that they should have confidence in China's economy and


that they will play an important and responsible role on the world stage.


This is how the Chinese currency has fared. There is a battle between


market forces and what the Chinese central bank has been trying to do.


The Chinese currency has really weekend against the US dollar


because market forces are trying to push the currency lower. At the same


time, the People's Bank is trying to strengthen the currency because a


weak currency, though good for experts, is bad for the confidence


of the economy and we have seen millions, if not billions of dollars


poured out because of concerned citizens. One of the biggest themes


will be growing inequality which may be growing even further. Oxfam


claims a group of men they can fit into one golf buggy on the same


wealth as half the world. The top eight billionaires have as much


wealth as 3.6 billion people who make up the poorest half of the


world. India's first international stock exchanges have started


trading. It will allow foreign investors to trade on products


listed in one is expanding bond markets. Mestalla bonds are hoped to


be traded. First off, but are they and how will they help? There were


some bonds and then from China. We had a club and then came along the


Indian version - marsala, named after the word for spice in India.


What are they? Bonds are a form of debt, essentially the investor


serves as the bank. A company, a government or a city some money and


they promised to pay you back in full with regular interest payments.


The problem for Indian banks is that they could only raise money and we


pay in foreign currencies like the dollar but that is a risky because


currencies fluctuate. Entering Mestalla bonds - the investor takes


on the currency risk by trading in rupees. Well overseas investors join


the party? While India's national income is rising and the economy is


expected to grow rapidly, Mestalla bonds are the high your returns for


investors compare to the US and Europe where interest rates are


still low and it works out well in there as well. It means money to


spend on things India really needs, like roads. Infrastructure, they


plan to spend more than $1.5 trillion. Long-term investment could


be the potential depreciation of rupees which could hurt the returns.


The Indian companies, too much reliance on debt is risky. Sometimes


too much spice is not very good. Let's take a look at the markets. In


Asia we are seeing declines stop women talking about the losses in


the shares of Takata, the airbag manufacturer. Sentiment is also


impacted by the fall in the British pound ahead of the crucial speech by


the Prime Minister of the UK. Thank you for


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