:00:00. > :00:16.Here is Rico now with Asian business report.
:00:17. > :00:23.Chinese shares on a global index. We look what this could mean for
:00:24. > :00:29.investors in Asia and around the world. And what are the big spenders
:00:30. > :00:40.from the aviation industry eyeing off at the Paris air show? It is
:00:41. > :00:45.Tuesday. Good morning Asia hello world, glad you could join us for
:00:46. > :00:49.Asia Business Report. We start off with Chinese stocks. After years of
:00:50. > :00:56.discussion, MSCI it will announce whether it will include China's a
:00:57. > :01:01.shares, the mainland shares traded in China, in its emerging markets
:01:02. > :01:04.index. This is the fourth time that MSCI is looking into the
:01:05. > :01:11.possibility. It could mean potentially a lot of investment
:01:12. > :01:16.going into mainland issues. Our correspondent has more from a rainy
:01:17. > :01:23.day in Beijing. China is chasing a global financial benchmark here.
:01:24. > :01:27.Inclusion for its eight shares, leading shares here would mean that
:01:28. > :01:31.they attract by investors and responsible for trillions of dollars
:01:32. > :01:35.of investment. There would no doubt be a boost to those shares although
:01:36. > :01:39.it is hard to quantify exactly what that would be. To more significance
:01:40. > :01:44.to the Chinese authorities is that they would regard a yes vision here
:01:45. > :01:49.as being a vote of confidence in the financial sector. This is, however,
:01:50. > :01:55.the fourth time they have asked. In the past what has been an impediment
:01:56. > :01:59.has been the old familiar tale of reciprocal access. It is not easy
:02:00. > :02:04.for foreign investors to invest here in China and buy shares. Authorities
:02:05. > :02:08.have taken measures to try and make that simpler but it is still the
:02:09. > :02:12.case that if you wish to purchase shares you need to deal with quotas
:02:13. > :02:16.from the regulatory authority or you can invest via a linkup with the
:02:17. > :02:21.Hong Kong stock exchange which has a linkup with either here in Shanghai
:02:22. > :02:30.or another city. A note of warning, Chinese stock markets unnoticed
:02:31. > :02:34.speculative peril -- are known for speculative peril. They have not had
:02:35. > :02:40.a good 2017, they are up by 6% half way through. Broader economic
:02:41. > :02:44.context, the authorities are trying to do and the insurance sector to
:02:45. > :02:48.make sector has clamped down on shadowy products being sold,
:02:49. > :02:52.particularly wealth management products. And in housing, what many
:02:53. > :02:55.regard as a bubble here in this country, authorities are still in
:02:56. > :02:59.the process of bringing in restriction on the selling and
:03:00. > :03:03.buying sides. If this was a yes, however, there is no doubt that the
:03:04. > :03:09.Chinese authorities would see it as a big tick in a box in terms of
:03:10. > :03:13.being trusted globally. Over now to Australia where the cost of home
:03:14. > :03:17.ownership has turned out to be risky business. That is one of the main
:03:18. > :03:21.reasons that the ratings agency Moody 's has downgraded its
:03:22. > :03:25.long-term ratings of the banks in the country, including the biggest
:03:26. > :03:28.fall. Currently the banks down in Sydney trading. To tell us more
:03:29. > :03:33.about this downgrade and the outlook for the banking sector, I'm joined
:03:34. > :03:40.now from Moody 's. Frank, great to have us. So, 12 banks have been
:03:41. > :03:46.downgraded. What will it take to improve ratings again? We need to
:03:47. > :03:49.see a period of relative stability. We need to see a period where income
:03:50. > :03:54.starts to write in household debt does not increase of March. That
:03:55. > :03:58.gives households a chance to reduce their leveraged and if those
:03:59. > :04:01.mortgages start to perform in line with expectations, then that is of
:04:02. > :04:05.benefit to the banks. If that trend continues for a while then there
:04:06. > :04:10.could be upward pressure on bank ratings. How long will these banks
:04:11. > :04:16.take to get back to that level? I think it will take some time. If you
:04:17. > :04:19.look at at forward projects and is and predictions for income growth,
:04:20. > :04:23.it takes a while, even at the current levels of debt, just to
:04:24. > :04:28.bring the leveraged down. You need a few years of the current loans so
:04:29. > :04:32.people start paying them down, and income rises to come through as
:04:33. > :04:38.well. At that point you may start to see some benefit. Looking at these
:04:39. > :04:43.12 banks, are some worse than others? The ones we have downgraded,
:04:44. > :04:48.we have primarily downgraded because of the household debt level and the
:04:49. > :04:54.exposure that the banks have. Obviously some banks are much
:04:55. > :04:59.smaller and have lower flexibility. They will find it more difficult to
:05:00. > :05:04.respond if things mature or improve they will probably not improve as
:05:05. > :05:08.quickly where is the larger banks with more flexibility to reduce
:05:09. > :05:13.costs and raise capital, they have more pricing power and are better
:05:14. > :05:17.placed to take advantages of an improving operating environment. How
:05:18. > :05:21.about the latest rate hike from the US Federal Reserve. There could be
:05:22. > :05:24.another one before the end of the year as well. Could this have an
:05:25. > :05:31.impact on Australian banks and their profitability? Potentially. If US
:05:32. > :05:36.investors start to look at higher prices to buy a stream bank debt
:05:37. > :05:40.than that impacts profitability. But most swap back into Australian
:05:41. > :05:45.dollars so it depends on the cost. If there is a rapid rise in swap
:05:46. > :05:53.cost than it does not have a material impact we will have to wait
:05:54. > :06:03.and see. Thank you for those inside in other business news. Time Warner
:06:04. > :06:10.and Snap have agreed to create original dramas for Snapchat. Warner
:06:11. > :06:15.Brothers will also advertise on the augmented reality and messaging
:06:16. > :06:23.platform. The deal is reportedly worth around 100 million US dollars.
:06:24. > :06:25.President Donald Trump met with the head of 18 US technology companies
:06:26. > :06:29.including apple, Amazon and Microsoft, seeking their help to
:06:30. > :06:34.make the government's competing systems more efficient. The White
:06:35. > :06:38.House wishes to update government information technology systems, cut
:06:39. > :06:43.costs, eliminate waste and improve service. Mr jumpstarted -- said it
:06:44. > :06:50.estimates that the government could save up to $1 trillion over ten
:06:51. > :06:54.years through such initiatives. The war's biggest airshow has kicked off
:06:55. > :06:56.in Paris where manufacturers are showing off their newest aircraft.
:06:57. > :07:04.On Monday, Boeing launched the latest version of its 737. It will
:07:05. > :07:13.compete with the air bus a three to one. So what are Asia-Pacific
:07:14. > :07:21.carriers purchasing? I asked that question earlier to flight global's
:07:22. > :07:27.financial editor. The Boeing 737 max ten, the latest in the long line of
:07:28. > :07:31.737s launched yesterday and we have seen that Asian carriers are pleased
:07:32. > :07:38.a large role in that. Line a announced major commitment of 50
:07:39. > :07:47.aircraft will stop we have also seen many Asian leasing companies, CDP
:07:48. > :07:53.Asian leasing and finance, owned by CDB leasing, has committed to this.
:07:54. > :08:01.They obviously see that there is great potential in the Asian market
:08:02. > :08:05.for this Longer 737 jet. So why are we seeing more leasing of aircraft
:08:06. > :08:13.rather than direct purchase of these planes? At the moment it is a good
:08:14. > :08:16.environment for leasing companies to pick up the aircraft. One of the
:08:17. > :08:22.reasons that airlines to deal with leasing companies is that it takes
:08:23. > :08:25.away a sense of risk for them because, ultimately, they don't have
:08:26. > :08:30.to put a lot of capital into the aircraft and so they can get a
:08:31. > :08:33.leasing company to do that and that makes it easier for them to run
:08:34. > :08:38.their business and focus on running an airline rather than being a
:08:39. > :08:42.financial manager. So the Airbus A380 also getting a lot of attention
:08:43. > :08:47.at this Paris airshow. Do you any of the regional airlines to make major
:08:48. > :08:59.purchases? BA 380 has been very interesting. They show an 8380 plus,
:09:00. > :09:03.it has a package of enhancements. These will not flow through till
:09:04. > :09:07.2020 so it is hard to say that will have much interest in the region.
:09:08. > :09:12.They speak about reduction in fuel burn with all of the enhancements to
:09:13. > :09:19.the wing and a few other things. That would be quite appealing to
:09:20. > :09:23.many airlines but it will only be for new aircraft so many of these
:09:24. > :09:29.airlines would be up for taking the new A380 in that time frame. At the
:09:30. > :09:35.end of this Paris airshow, who will have the upper hand in terms of
:09:36. > :09:40.orders? Knowing or air bus? At this stage, Boeing has come out was a new
:09:41. > :09:44.aircraft to launch, traditionally, Paris is a big one for Airbus so we
:09:45. > :09:51.will have to see what happens towards the end. I think it will be
:09:52. > :09:55.close. Let's have a quick look now at the markets and Asia is rising
:09:56. > :10:02.for a second day with the Japanese market up. The All Ordinaries is
:10:03. > :10:06.flat to hire at this point, because all big four banks in Australia are
:10:07. > :10:12.in negative territory due to the downgrade by Moody 's. But overall,
:10:13. > :10:17.the mood is positive after the Dow closed at record high overnight.
:10:18. > :10:25.Tech shares had strong gains. The table at the Dow and the NASDAQ.
:10:26. > :10:29.They are both in positive territory. There is a suggestion that investors
:10:30. > :10:33.think there may be a rival bid for whole foods after Amazon placed
:10:34. > :10:34.theirs. Sport Today is