26/01/2017 Asia Business Report


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26/01/2017

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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The Dow Jones scores 20,000 for the first time ever. Is this the Trump

:00:00.:00:21.

effect? And why India's universities are banning some start-ups from

:00:22.:00:29.

recruiting on their campuses. Good morning, Asia. Hello, world. It

:00:30.:00:39.

is Thursday. Glad you could join us. We kick off with Wall Street, where

:00:40.:00:44.

US stocks crossed a major milestone. The Dow Jones industrial average

:00:45.:00:49.

finishing above 20,000 for the first time ever and you also have the

:00:50.:00:56.

broader S 500 and the NASDAQ also at record levels. This is how Asian

:00:57.:01:03.

markets are reacting to the Dow Jones 20,000. The Nikkei gaining

:01:04.:01:11.

1.3% and the All Ords hired by 20 points. Basically Mr Trump's senior

:01:12.:01:15.

adviser was quick to comment on the news, tweeting that the landmark was

:01:16.:01:20.

down to the Trump effect, but is it? Let's have a look.

:01:21.:02:25.

Earlier I asked our business adviser if it really is the Trump effect. If

:02:26.:02:30.

you look at stocks, especially the Dow Jones, we have seen it is up

:02:31.:02:34.

some 8%. That's since the election of Donald Trump. Really when you

:02:35.:02:40.

look at some of the executive orders we've seen that Mr Trump put through

:02:41.:02:44.

over the last few days, what it is really signalling to Wall Street is

:02:45.:02:48.

that some of the promises that Mr Trump had campaigned on, things like

:02:49.:02:52.

rolling back some of the banking regulations, making the tax code in

:02:53.:02:59.

the US less, catered and making it easier for people to invest, it

:03:00.:03:03.

would seem from Wall Street that in fact the president will be trying to

:03:04.:03:07.

make those things reality. That said, you also have to consider the

:03:08.:03:12.

kind of economy that Mr Trump has inherited. We are seeing that the US

:03:13.:03:18.

labour market is doing well. The unemployment rate is at its laws

:03:19.:03:22.

level in about a decade and we saw that massive stimulus programme by

:03:23.:03:28.

the US central bank and the Federal Reserve. All of that help to lift

:03:29.:03:32.

market to where they are today. Stocks have rallied, as you

:03:33.:03:38.

mentioned. The US dollar is still putting pressure on Asian currencies

:03:39.:03:42.

are like the Japanese yen, which is usually good news for major Japanese

:03:43.:03:47.

companies who exported overseas. But did Mr Trump pulling out of the TDP

:03:48.:03:53.

and renegotiating the free trade agreement means the weaker yen will

:03:54.:03:58.

not be much help? I asked someone from the Bank of America what his

:03:59.:04:02.

forecast was for the Japanese currency. I think given the policy

:04:03.:04:08.

divergences between the markup in the bank of Japan and the Federal

:04:09.:04:16.

Reserve, the yen will rise into the media and it should be about 120.

:04:17.:04:20.

But then you have the US political pressure, which might talk things

:04:21.:04:25.

down. So from the Japanese policymakers' perspective, the

:04:26.:04:32.

dollar is high but not too high is how they feel. They could also see

:04:33.:04:37.

at strengthening by the end of 2017. What does this mean for the local

:04:38.:04:41.

and export companies? The weaker yen is usually good for Japanese

:04:42.:04:48.

automakers and exporters, but at the same time you are seeing the US

:04:49.:04:56.

president basically wanting Japanese companies to produce in the US and

:04:57.:05:00.

reduce exported from Japan, potentially. So it's a difficult

:05:01.:05:07.

situation. If you come to Tokyo you see many European but not so many

:05:08.:05:11.

Japanese cards and that the preference. So I think this trade

:05:12.:05:15.

issue is going to be quite challenging for the Japanese

:05:16.:05:23.

government and Japanese automakers. In other business news, Facebook has

:05:24.:05:26.

announced changes to its trending feature to tackle the growing issue

:05:27.:05:36.

of tech news. In its latest bid it says Facebook will not be

:05:37.:05:39.

personalised and the system will decide what is trending and everyone

:05:40.:05:46.

in the same region will see the same topics. Shares are down 13% in Tokyo

:05:47.:05:51.

and were untraded at one point, due to too many orders and that's after

:05:52.:05:57.

the company's full-year profitability came in lower than

:05:58.:06:01.

expected. Profit slipped at Boeing last year because of lower

:06:02.:06:06.

deliveries of its aircraft, where the US company expects to deliver

:06:07.:06:10.

more commercial planes and improve its earnings going forward. India's

:06:11.:06:16.

start-up companies have become the biggest recruiters of new graduates.

:06:17.:06:20.

The jobs on offer are amongst the most sought after banks to juicy

:06:21.:06:25.

salaries and attractive terms. That's until this year. Many

:06:26.:06:28.

universities have now blacklisted a number from recruiting on campus.

:06:29.:06:36.

This man is slowly getting used to the demands of professional life. He

:06:37.:06:40.

has been working as a trainee at a foreign company for the last six

:06:41.:06:44.

months. Although the engineering graduate counts himself lucky, it is

:06:45.:06:51.

not exactly his real job. He wanted to work for an up start-up and was

:06:52.:06:55.

recruited by one before he even graduated last year. Only to have

:06:56.:06:59.

the offer withdrawn within a few months. That left him with no

:07:00.:07:04.

prospects to find another opportunity. I started applying the

:07:05.:07:10.

companies and got some refusals because they didn't want to hire

:07:11.:07:14.

someone who was initially hired in another company. It was a struggle

:07:15.:07:19.

to find the next job. It is not a situation students from the

:07:20.:07:23.

prestigious Indian institute of technology expect to be in. For

:07:24.:07:29.

students in India, securing a seat at IIT is a big achievement. It is

:07:30.:07:37.

the Indian equivalent of studying at somewhere like Oxford University.

:07:38.:07:41.

Part of the appeal is a chance of getting a job offer from prestigious

:07:42.:07:44.

company and these days employment opportunities and successful

:07:45.:07:48.

start-ups are the most sought after, where people can do new and

:07:49.:07:53.

innovative things. If you want to be posted as a sales office or in the

:07:54.:07:57.

marketing division... Global investors have been pouring in

:07:58.:08:00.

capital to fund Indian start-ups, but most are struggling to make

:08:01.:08:03.

company Dimeck money, which means too many cutting jobs. -- struggling

:08:04.:08:12.

to make money. In an effort to protect its students, the IIT

:08:13.:08:17.

management has now and those companies from recruiting on campus

:08:18.:08:20.

at 23 of its branches throughout India. Our approach to start-ups

:08:21.:08:24.

this year has been more cautious. I also want to look at whether the

:08:25.:08:28.

funding opportunities and sources these companies have are viable or

:08:29.:08:33.

sustainable for a substantial period of time. The BBC contacted

:08:34.:08:38.

companies, but only a few responded. One of them said:

:08:39.:08:47.

More than 10 million young Indians enter the job market every year and

:08:48.:08:56.

the ones who are in the start-up sector expected to absorb a lot of

:08:57.:09:00.

them. But businesses can be risky. Both entrepreneurs starting out and

:09:01.:09:04.

for potential employees, hoping to work with them one day.

:09:05.:09:11.

The world's against human migration is currently under way this week and

:09:12.:09:15.

I've been talking about the many people returning home for the

:09:16.:09:21.

Chinese New Year holidays, or the spring festival. It is China's most

:09:22.:09:24.

important holiday, yet a seven-day break comes to a halt. Except for,

:09:25.:09:32.

as these pictures show, transportation systems and tourist

:09:33.:09:37.

sites. I asked someone from a travel company whether there is a different

:09:38.:09:41.

trend this year. Beyond the numbers we see a polarisation of traveller

:09:42.:09:44.

preferences onto important dimensions. One is how self focused

:09:45.:09:50.

they are and the second dimension in his how much control they are

:09:51.:09:56.

looking to exit on their travel. For Chinese travellers we are seeing

:09:57.:10:00.

more and more travellers, about 50%, getting much more self focused. It

:10:01.:10:06.

is all about me and not about the family? About self-discovery and

:10:07.:10:10.

wanting to exert more control. Let's have a quick look at the

:10:11.:10:15.

markets. An historical day on Wall Street for the Dow Jones industrial

:10:16.:10:22.

as Donna -- industrial and NASDAQ and SNP at record levels as well. It

:10:23.:10:27.

is rubbing off on the Nikkei and the Hang Seng as well. Australia is

:10:28.:10:32.

closed today for a public holiday. Thanks

:10:33.:10:33.