23/06/2017 Asia Business Report


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


Status check. The banking regulator in China wants a report card on


overseas acquisitions. Kazakhstan is strapping in for what could be a


fast ride on China's One Belt, One Road expansion. Good morning, Asia.


Hello, world. Welcome to another edition of Asia Business Report.


It's a Friday. I'm Sharanjit Leyl. China's banking regulator has


ordered a group of lenders to assess the exposure to offshore


acquisitions by a handful of companies on a buy spree overseas.


They are some of China's largest, like HNA and Fulson. I spoke to our


Shanghai correspondent asking why authorities are so worried. There


are two elements to this. They see the acquisitions, a vast 235 billion


US dollars last year, they see it as giving a risk to the currency. They


don't want that level of capital out of there. And they are worried about


big Chinese conglomerates raising money in this country. There is a


big worry about debt overall in China. Wealth management products,


retail vehicles, high risk, high interest-bearing, it is a concern


among much of the authority base here about the risk they pose to not


just the companies using them, but more widely to be financial system


in China. This is not just about economics and the financial sector,


it is also about politics. This is a very important year for the


president of China, Xi Jinping. In October this year at the conference,


he will almost definitely be chosen for another five years. At the very


top, we are seeing a message out to the most influential and prominent


economic leaders that they need to be risk averse and reminded of who


is in charge overall. Will this put an end to the Chinese companies and


their foreign buying spree, paying eye-wateringly high prices for


foreign assets? The tide has turned already. For instance, Delian,


controlled by the richest man in China, he owns Legendary Pictures in


the US along with an attempt to get Dick Clark Productions, which did


not happen in the end. The tide is turning. Much of that is trying to


stem the capital outflows and it is about the pressure on the currency,


the RNB, as well. And there is money flooding out to Hong Kong. We are


seeing the tide turning. We are not seeing levels last year and this


year repeating again. The Chief Executive of Fox Com says the


company will invest more than 10 million US dollars in a display


making factory in the United States. The Taiwan -based company is the


largest contract electronics maker and a major supplier for Apple. He


says he is optimistic about doing business in the US. TRANSLATION:


This time when we go to America it is not just to build a factory, but


to move the entire supply chain to one oil prices have had a volatile


ride this week. We can see they are up slightly in Asian trade. They


bounced back yesterday ever so slightly after hitting ten month


lows. The market sentiment remains negative because oil producing


countries refused deeper cuts despite a global supply glut.


Peaking at $57 a barrel in February, prices are at about 20% lower. I


spoke with an energy expert earlier asking which way prices will go


next? There will be continued pressure on markets, with too much


or little out there and too much oil from the States. And Libya and


Nigeria are exempt from OPEC accords, which is putting even more


pressure to be more barrels are going into it. Industries are not


going down. These are the kind of things that make it challenging for


this new cartel of OPEC, non-OPEC, to reach objectives. They want to


reach a five-year average of global inventory is. The consensus is we


will be lure for a while and market rebalancing will take a while. --


lower. Where are we headed next? At the end of May, after the OPEC


meeting, you asked me that same question, and I certainly will not


reach 55, the US speed limit. I see a massive correction. I think we


will test 40. That could be the wakeup call. Everyone is trying to


call the bottom, point do we hit the threshold and bounce back? The head


of the world's largest defence contractor says big-ticket products


will remain relevant despite security challenges. A persistent


criticism of large contractors is military hardware does not do much


to addressing increasingly common low-tech threats. But they say there


is plenty of demand for the products. There is a broad range of


threats in the marketplace, from the low and, as you just described, to


the high end. -- end. We focus on the need to high end. . -- mid to


high. We just got a $600 million contract to supply to the


Netherlands, to Australia, Japan, and Korea. Again, that is to address


the high-end threat that they see a need for a capability to defeat.


China's Belt and Road initiative is ploughing through central Asia into


Europe. As part of that global initiative, China has supplied


billions of dollars' worth of trade, infrastructure, and energy deals in


the 6-iron. They want to bring growth and jobs to the oil-rich


nation. -- Kazakhstan. They also want to help China's energy needs.


We went to the economic capital of China to see the impact on the city.


No, it is not Beijing or Shanghai, it is a marketplace in Kazakhstan in


central Asia. This man has owned this market for 15 years. And this


woman came from China to take part in an eyes skating competition, but


stayed for the opportunities. -- ice skating. TRANSLATION: It has been


great for business. Many people have come here and they need my products


from China. Everything in this market is from China. It is not just


good, upload, toys, exercise equipment, even infrastructure. The


local community says it is starting to take off. This oil and gas man is


also taking profit from the initiative. At the start it was just


him. Now it does deals worth almost $200 million every year. He is


expecting business to keep growing. Xi Jinping said the two countries


have gone from friends to relatives. Kazakhstan has given the Chinese


preferential policies and is trying to speed up approvals and


formalities for us. But with that success has come suspicion. Last


year, Kazakhstan soul protesting against a controversial land reform


bill. -- saw. Many thought that China would own too much of the


country. Yes. Only beautiful statements. China is our neighbour,


it is our good partner, it is our future. And, umm, Kazakhstan is


going to use this China economical problem and wealth for our own


economical interests. But what about the ordinary people? There are many


different statements about China. Traditionally, inside of our


society, we have our own culture. Despite those fears, China is still


an increasingly important influence here. At this Chinese language


school, they see this as the language of the future. For most


people in Kazakhstan, this is the new reality, the relationship with


China, one that will not change any time soon. If you are interested to


hear more from the minister of energy in Kazakhstan, tune into


Talking Business from Astana this weekend. A quick look at the


markets. The Nikkei is a little bit low. Rebounding today. The All


Ordinaries Index in Australia is slightly higher and is doing well


because of the energy-related stocks and resource related shares doing


better with the rising oil prices. We will be telling you about that.


That is it for


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