:00:17. > :00:23.US markets deliver a cool reception to President Trump's plan to slash
:00:24. > :00:29.corporate tax rates. And living a Samsung life. Why South Korea's
:00:30. > :00:35.corporate giants are so big you'd struggle to live without them.
:00:36. > :00:42.Good morning, Asia. Hello, world. Glad you could join us for this
:00:43. > :00:46.Thursday edition of Asia Business Report, I'm Rico Hizon. Donald Trump
:00:47. > :00:51.is hours away from completing his first 100 days in office, a
:00:52. > :00:55.milestone where the chief executive is graded on his progress in office
:00:56. > :00:59.and before the clock ticks down, following through on a major
:01:00. > :01:05.campaign promise with a proposal to drastically cut the business tax
:01:06. > :01:10.from 35% to 15%. Well, it is now clear how the White House plans to
:01:11. > :01:14.pay for the cuts which could add some $2 trillion to the national
:01:15. > :01:19.deficit over the next decade. But the US Treasury Secretary says
:01:20. > :01:25.economic growth is both the goal and the solution. We believe we can get
:01:26. > :01:30.back to 3% or higher GDP that is sustainable in this country.
:01:31. > :01:37.The overall economic plan consists of massive tax cuts and tax reform,
:01:38. > :01:41.regulatory relief and renegotiating trade deals, and with that we will
:01:42. > :01:46.unlock the economic growth that's been held back for too long in this
:01:47. > :01:50.country. Earlier I spoke with Samira Hussain my colleague in New York and
:01:51. > :01:54.asked her if the plan will be approved by Congress. The way the
:01:55. > :02:00.plan is put out as is it won't get through Congress exactly the way it
:02:01. > :02:03.has been penned. But this offers a framework from which Congress can
:02:04. > :02:08.start to debate and it will take a very long time to actually get tax
:02:09. > :02:13.reform through Congress in a way that can actually get past. So there
:02:14. > :02:17.are some parts of it that are going to appeal to Republicans. Of course
:02:18. > :02:25.first and foremost the reduction of the corporate tax rate from 35% to
:02:26. > :02:30.15%. But on the flip side, you know, Democrats are going to come after
:02:31. > :02:34.this plan, saying that it really only benefits America's corporate
:02:35. > :02:44.rich, of which Donald Trump belongs to that grouping and because we
:02:45. > :02:49.haven't seen a copy of his taxes, we don't know how he will actually
:02:50. > :02:55.personally benefit from these tax cuts. We could see a watered-down
:02:56. > :03:00.version of Trump's tax plan when indeed it becomes law. Is this why
:03:01. > :03:07.we are seeing the markets negatively reacting to this plan? Or is it by
:03:08. > :03:11.on the rumour, sell on the news. If you look at markets and take a step
:03:12. > :03:16.back, in general they have been very optimistic about the plans from
:03:17. > :03:20.President Trump. The Trump bump as we've been calling it, the more than
:03:21. > :03:25.5% increase we've seen on US markets since Donald Trump has been elected,
:03:26. > :03:28.has really been on optimism, on the optimism that he will be able to get
:03:29. > :03:37.an infrastructure spending bill passed, that he will be able to get
:03:38. > :03:41.tax reform put in. That optimism was waning a little bit when markets saw
:03:42. > :03:44.some of the details, but it's hard to differentiate that and some of
:03:45. > :03:48.the corporate earnings we are seeing as well. So it could be a little bit
:03:49. > :03:50.of jitteriness but overall I would suggest markets are looking a little
:03:51. > :03:55.bit more confident. Samira Hussain in New York and in
:03:56. > :04:01.other business news, shares suspended in Tokyo trade for Honda.
:04:02. > :04:05.They are looking at filing for bankruptcy protection with a plan to
:04:06. > :04:10.sell all its operations to an American company, that's according
:04:11. > :04:14.to the Nikkei newspaper. Samsung Electronics posting a 48% jump in
:04:15. > :04:18.operating profits to nearly 9 billion US dollars for the three
:04:19. > :04:22.months until March, that is the best quarterly result in more than three
:04:23. > :04:26.years. The boost comes from the conglomerate's memory chip unit.
:04:27. > :04:32.That South Korean economy expanded by 2.7% in the first quarter from
:04:33. > :04:36.January to March compared to last year, much of that growth was driven
:04:37. > :04:40.by a jump in capital investment. All this week we have been looking at
:04:41. > :04:48.the state of South Korea's giant family run businesses also known as
:04:49. > :04:53.chebols, staggeringly the five largest account for more than half
:04:54. > :04:57.of the country's GDP. These chebols don't only dominate the economy,
:04:58. > :05:03.they are also highly visceral in the everyday life in South Korea.
:05:04. > :05:11.South Korea's acid conglomerates or chebols as they are known here help
:05:12. > :05:15.to build this economy -- massive. They've also been criticised for
:05:16. > :05:19.being far too powerful. Samsung is the largest, making up around a
:05:20. > :05:25.fifth of GDP here. You probably already know it for its mobile
:05:26. > :05:28.phones and laptops but it also has interests in insurance, healthcare,
:05:29. > :05:32.financial services, even an amusement park. To show you how
:05:33. > :05:37.sprawling its influence is, I'm going to try to get through a
:05:38. > :05:47.typical working day here using Samsung related products and
:05:48. > :05:50.services. Samsung makes pretty much every appliance you might need in
:05:51. > :05:57.your home. If I wanted to I could fill my entire house full of Samsung
:05:58. > :05:59.products. Off to work now. They don't really make cars any more but
:06:00. > :06:13.they do have a stake in this. You wouldn't think it but Samsung is
:06:14. > :06:37.even involved in the food business. The Samsung life in South Korea.
:06:38. > :06:41.Over to China now and investors have been banking on the mainland stock
:06:42. > :06:44.carriers for the last couple of years on rising travel demand and
:06:45. > :06:49.today we will be hearing the latest financial numbers from China Eastern
:06:50. > :06:54.and Air China, but will it all be good news? Here's a preview from
:06:55. > :06:59.industry watcher Matt Driscoll. It's a mixed bag. China Eastern is
:07:00. > :07:04.looking to beat expectations, analysts are talking about a 31%
:07:05. > :07:07.increase in net profit, China Southern above market expectations
:07:08. > :07:12.according to the analysts, although profit is likely to be down as much
:07:13. > :07:16.as 40% compared to Q1 of last year. Air China is likely to be in line
:07:17. > :07:22.with expectations but profits still down. So much expectation from these
:07:23. > :07:27.mainland carriers and they have really expanded on the international
:07:28. > :07:30.routes. What is giving them better yields, Matt? Is it the
:07:31. > :07:33.international business or the domestic business? Part of the
:07:34. > :07:39.problem is last year they turned in their best year since 2012, the
:07:40. > :07:43.combined profits for the top three were $2.7 billion. International
:07:44. > :07:48.yields are down a little bit, that's where they are having a problem. But
:07:49. > :07:53.I looked at it, markets go up and down, stocks go up and down, you
:07:54. > :08:00.need to look at the big picture when it comes to China. According to
:08:01. > :08:03.Boeing, they are going to buy $1 trillion worth of aeroplanes over
:08:04. > :08:08.the last 20 years -- next. Chinese carriers are overdoing it and buying
:08:09. > :08:14.so many planes, but over, on the other hand the outlook for global
:08:15. > :08:17.aviation looks quite dim because you have the Middle Eastern carriers and
:08:18. > :08:22.the major legacy carriers in the region. The outlook, long-term
:08:23. > :08:28.outlook... Short-term is a different story but the long-term outlook for
:08:29. > :08:30.China is very impressive, it will overtake, according to the
:08:31. > :08:34.International Air Transport Association, overtake the US
:08:35. > :08:38.probably in the next two years as the top passenger market in the
:08:39. > :08:45.world. By 2035 you're looking at 1.3 billion passengers in China coming
:08:46. > :08:50.to an travelling within and leaving China. So that's a huge number.
:08:51. > :08:54.Good prospects for the Chinese carriers but a different picture in
:08:55. > :08:58.Europe, Alitalia is holding a shareholders meeting on Thursday to
:08:59. > :09:03.discuss putting the Italian airline into administration. This follows a
:09:04. > :09:08.union vote rejecting a cost-cutting plan. Here's a look at Alitalia's
:09:09. > :09:12.struggles. Alitalia is the sick man of the
:09:13. > :09:19.skies. It loses hundreds of millions of dollars a year. In 2015,
:09:20. > :09:25.desperate for cash, it sold 49% of its shares to Etihad airways Abu
:09:26. > :09:30.Dhabi. Etihad offered to inject $2.2 billion to fund Alitalia's recovery
:09:31. > :09:36.but a key condition was poor Alitalia to cut its costs. The
:09:37. > :09:42.airline plan was lay off 1700 staff. Cut wages by 8%. And cut its fleet
:09:43. > :09:47.size. But union members voted to reject
:09:48. > :09:51.these measures, so Etihad has taken its money off the table. Now
:09:52. > :09:55.Alitalia is planning to appoint an administrator who would decide
:09:56. > :09:59.whether the airline can be saved or whether it should be wound up. The
:10:00. > :10:07.Italian government says it will give Alitalia a bridging loan to continue
:10:08. > :10:10.to operate for the next few months. Problems at the Italian carrier
:10:11. > :10:15.Alitalia. Let's have a quick look at the Asian stock markets, currently
:10:16. > :10:20.mixed, the Nikkei down by 66 points but the all ordinary is flat to hire
:10:21. > :10:24.at this hour. This is after Donald Trump's dramatic tax cut proposal
:10:25. > :10:29.failed to lift US stocks overnight. On Wall Street the Dow fell 21, the
:10:30. > :10:31.NASDAQ was unchanged. Thank you so much for investing your time with
:10:32. > :10:37.us, I'm Rico Hizon, by bye for now. The Trump administration says it
:10:38. > :10:41.aims to force North Korea into dismantling its nuclear
:10:42. > :10:43.and missile programmes through diplomatic pressure
:10:44. > :10:46.and economic sanctions.