25/04/2017 Asia Business Report


25/04/2017

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.:00:13.

China stocks taking a nosedive as regulators crackdown and investors

:00:14.:00:20.

lose confidence. And will South Korea's giant family -- family run

:00:21.:00:34.

companies change the elections? -- ahead of the. It is a Tuesday. Good

:00:35.:00:39.

morning Asia, hello world. Glad you could join us for Asia Business

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Report. I Rico Hizon. We start off with Chinese investors and they are

:00:44.:00:48.

closely watching their portfolios today after the worst day of trading

:00:49.:00:52.

this year. As you can see right here on our graphic board, stocks on the

:00:53.:00:59.

Shanghai stock market have been on a downward spiral over the past two

:01:00.:01:04.

weeks. So what is causing the loss of confidence? Regulators are

:01:05.:01:07.

cracking down on speculative trading and underlying concerns that the

:01:08.:01:14.

economy is slowing, weakening investors' enthusiasm. We get more

:01:15.:01:18.

from our Shanghai corresponded. The Shanghai and stock market and the

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Shenzhen stock exchange are opening in about one hour. Everybody will be

:01:24.:01:28.

watching how they will react to what happened yesterday. --

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correspondent. Yes. I think one of the most interesting statistics

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after yesterday's events was that the last time we saw a fall like

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this in 2015, it was followed by 820% fall over the next six days.

:01:47.:01:51.

That came two years ago in that summer of horror. We had to

:01:52.:01:55.

substantial falls in the Chinese stock markets and $5 trillion was

:01:56.:01:58.

wiped off the value of shares in this country. And the economic

:01:59.:02:04.

incompetence, really, of the regulators, here, and the political

:02:05.:02:09.

leadership here was exposed. In the next hour, we will see whether the

:02:10.:02:13.

trend is likely to continue from yesterday, and then the test will be

:02:14.:02:18.

the extent to which this regulatory bite is willing to tolerate falls in

:02:19.:02:24.

the market, or if there is a limit for China's newly emboldened

:02:25.:02:27.

regulators and we may see some kind of intervention, either in a

:02:28.:02:33.

suspension of trading, or if government backed investors will

:02:34.:02:36.

come on trade of all things up. So it will be interesting. One fall --

:02:37.:02:45.

1.4% drop yesterday. Some say this crackdown is a positive for the

:02:46.:02:50.

Chinese stock markets because it will increase the appeal of the

:02:51.:02:53.

stock market to foreign investors such as pension funds. Yes.

:02:54.:02:59.

Volatility is a huge issue in the stock markets here, particularly in

:03:00.:03:03.

Shenzhen. What we're seeing is effort from the newly emboldened

:03:04.:03:10.

Rigoletto is to try and send a message to investors looking to come

:03:11.:03:14.

in, but also investors with money in the market already, that they are

:03:15.:03:19.

willing to let them write it out on our own, really. They tried to send

:03:20.:03:22.

the message that they won't always be there to intervene, and this

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market can be more mature and become something more like a free, open

:03:28.:03:31.

stock market. But like I say, I think there is a level of tolerance

:03:32.:03:35.

here. Remember this is an important political year for the government

:03:36.:03:39.

here. Overall, the regulators I don't think will let things go

:03:40.:03:43.

completely on their own. Everybody will watch the opening trades in the

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Shanghai stock market in about 55 minutes' time. South Korea's is a

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selection is in two weeks from today. There are calls for real

:03:53.:03:59.

reform and particularly in regards to chaebols. The biggest chaebols

:04:00.:04:07.

have been charged in the events that brought down the President. We take

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a look now at peace two. Calls for of chaebols have happened many times

:04:17.:04:21.

before. But it really feels, on the ground, for many of the people that

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I spoke to, that this time it is different. I spoke with business

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leaders in small and medium-sized enterprises that said that chaebols,

:04:31.:04:34.

these massive family run conglomerates, that they stack the

:04:35.:04:38.

system against them. Young people as well complain about the lack of jobs

:04:39.:04:42.

and opportunities because of this chaebol dominated system. Another

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Saturday, another protest in Seoul. Many here are calling for the reform

:04:50.:04:54.

of massive family run conglomerates, or chaebols, as they are known.

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TRANSLATION: Right now, cables monopolise to much of the wealth in

:05:02.:05:06.

South Korea and it isn't being used properly. I think this needs to be

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corrected. -- chaebols. One of frustration, a sense that the system

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is stacked in favour of the chaebols. South Korea's president

:05:17.:05:24.

and the heads of Samsung and Lotte have been charged with bribery. But

:05:25.:05:29.

at the top of the country's tallest tower, built by Lotte, we can see

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how far this has brought South Korea. Here, South Korea's marvel at

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what the chaebols have built in just a few decades. You know, it occurs

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to me, as I looked out from this building, towering over the city of

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Seoul, that it is like the relationship between chaebols and

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how much they dominate the South Korean economy. On the face of it,

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you would never know that scandal had hit Lotte. But there is

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recognition in the sprawling empire that something has to change.

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TRANSLATION: The corporate brand image has been damaged. Because of

:06:09.:06:12.

that, new investment and development of new businesses may have been

:06:13.:06:16.

affected. But it has also provided us with the opportunity to look at

:06:17.:06:20.

corporate governance, which we have not been paying attention to. That

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is little comfort for those who challenge the dominance of the

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chaebols. 15 years ago, this man was the founder of a successful

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business. He partnered -- partnered with a chaebol to spend. But after

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there was a disk ute over the deal, he lost everything. -- dispute. His

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business, his house, and his marriage. He should be the evidence

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of his long campaign for justice, which has come to nothing.

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TRANSLATION: I have fought for 15 years. I have met more than 170

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congressmen. My case has been discussed in the National Assembly

:06:58.:07:01.

and featured countless times in the media. It is impossible in Korea for

:07:02.:07:06.

a small business to win against a chaebol. Whatever is next for Cho,

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his future and that of other families will inevitably be checked

:07:16.:07:19.

by chaebols. They have been some steps to change, but it is hard to

:07:20.:07:24.

see how real reform could go. And his was not the only story we heard.

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There were many such similar tales that people in Seoul told us about

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the unfairness of the system. Because the reformer getting louder.

:07:37.:07:41.

But we are sounding like a broken record here. Over and over again,

:07:42.:07:46.

reforms for chaebols, but now, with what has happened, is there enough

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impetus for reform is to take root? I think that the real test for this

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will be at the elections next month, when South Koreans go to elect their

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new president. Brita much every single candidate has made chaebol

:07:59.:08:05.

reform part of their election campaign platform. -- pretty much.

:08:06.:08:07.

Whether or not this actually happens, you will be very difficult,

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even how entrenched chaebols are within the South Korean economy.

:08:14.:08:25.

While commuting to meetings, is that of traffic, could you take a

:08:26.:08:30.

helicopter? Sharanjit Leyl went for a browse. If you're in the market

:08:31.:08:36.

for a new helicopter or a state-of-the-art drone, then this is

:08:37.:08:40.

the place for you. This is Asia's first show dedicated to rotorcraft.

:08:41.:08:47.

And just about every big Pharma is here, hawking products. So let's

:08:48.:08:52.

seem what is on offer and who buys them. This is the Airbus H160. Let's

:08:53.:09:04.

go inside and have a look. How much is this cost? The cost of a

:09:05.:09:11.

helicopter in the basic version, it should be around, all included,

:09:12.:09:19.

about 10.4 million euros in 2017. That is a lot of money. So who buys

:09:20.:09:24.

these things? VIPs, of cores. We also have oil and gas operators. --

:09:25.:09:32.

offcourse. Doctors love the interior and it can be used as a long-range

:09:33.:09:37.

ambulance. Finally, it is public services, which might include search

:09:38.:09:42.

and rescue missions, and others who need this size of a helicopter. --

:09:43.:09:50.

of course. Let's find out who some of these buyers are. This man has

:09:51.:09:54.

his place in order for three helicopters, amounting to $60

:09:55.:10:01.

million. He is with an aircraft maintenance and charter firm. Time

:10:02.:10:06.

is money. We make deals happen. People who come into the country or

:10:07.:10:11.

arrived in Manila, we fly them to their meeting place, to our helipad.

:10:12.:10:16.

They have their meeting in two hours, make a big deal happen, and

:10:17.:10:20.

give jobs to a lot of people. So business aviation really provides

:10:21.:10:25.

the opportunity to create, actually, jobs, deals. The region is still a

:10:26.:10:29.

relatively new market for helicopters. But these companies are

:10:30.:10:34.

betting orders and demand continues skyward.

:10:35.:10:38.

Great looking helicopters. Thank you for investing your time with us. I

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Rico Hizon. Sport Today is coming up next. -- I'm.

:10:44.:10:52.

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