23/06/2017 Asia Business Report


23/06/2017

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.:00:17.

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

:00:18.:00:28.

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

:00:29.:00:34.

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

:00:35.:00:40.

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

:00:41.:00:43.

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

:00:44.:00:46.

ordered a group of lenders to assess the exposure to offshore

:00:47.:00:50.

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

:00:51.:01:02.

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

:01:03.:01:08.

Shanghai correspondent asking why authorities are so worried. There

:01:09.:01:11.

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

:01:12.:01:20.

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

:01:21.:01:29.

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

:01:30.:01:32.

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

:01:33.:01:37.

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

:01:38.:01:44.

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

:01:45.:01:50.

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

:01:51.:01:54.

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

:01:55.:01:59.

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

:02:00.:02:05.

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

:02:06.:02:08.

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

:02:09.:02:13.

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

:02:14.:02:19.

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

:02:20.:02:24.

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

:02:25.:02:28.

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

:02:29.:02:37.

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

:02:38.:02:40.

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

:02:41.:02:47.

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

:02:48.:02:58.

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

:02:59.:03:05.

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

:03:06.:03:14.

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

:03:15.:03:18.

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

:03:19.:03:23.

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

:03:24.:03:29.

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

:03:30.:03:32.

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

:03:33.:03:37.

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

:03:38.:03:42.

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

:03:43.:03:47.

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

:03:48.:03:51.

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

:03:52.:03:58.

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

:03:59.:04:05.

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

:04:06.:04:09.

bounced back yesterday ever so slightly after hitting ten month

:04:10.:04:15.

lows. The market sentiment remains negative because oil producing

:04:16.:04:19.

countries refused deeper cuts despite a global supply glut.

:04:20.:04:27.

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

:04:28.:04:33.

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

:04:34.:04:36.

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

:04:37.:04:45.

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

:04:46.:04:52.

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

:04:53.:04:56.

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

:04:57.:05:02.

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

:05:03.:05:12.

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

:05:13.:05:16.

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

:05:17.:05:20.

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

:05:21.:05:26.

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

:05:27.:05:33.

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

:05:34.:05:38.

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

:05:39.:05:42.

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

:05:43.:05:49.

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

:05:50.:05:55.

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

:05:56.:05:58.

will remain relevant despite security challenges. A persistent

:05:59.:06:04.

criticism of large contractors is military hardware does not do much

:06:05.:06:07.

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

:06:08.:06:13.

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

:06:14.:06:18.

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

:06:19.:06:24.

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

:06:25.:06:34.

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

:06:35.:06:37.

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

:06:38.:06:48.

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

:06:49.:06:54.

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

:06:55.:06:58.

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

:06:59.:07:02.

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

:07:03.:07:06.

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

:07:07.:07:14.

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

:07:15.:07:21.

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

:07:22.:07:29.

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

:07:30.:07:36.

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

:07:37.:07:42.

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

:07:43.:07:47.

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

:07:48.:07:52.

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

:07:53.:07:59.

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

:08:00.:08:07.

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

:08:08.:08:16.

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

:08:17.:08:28.

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

:08:29.:08:32.

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

:08:33.:08:36.

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

:08:37.:08:42.

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

:08:43.:08:47.

preferential policies and is trying to speed up approvals and

:08:48.:08:51.

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

:08:52.:08:58.

year, Kazakhstan soul protesting against a controversial land reform

:08:59.:09:02.

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

:09:03.:09:09.

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

:09:10.:09:13.

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

:09:14.:09:21.

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

:09:22.:09:28.

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

:09:29.:09:31.

different statements about China. Traditionally, inside of our

:09:32.:09:39.

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

:09:40.:09:43.

an increasingly important influence here. At this Chinese language

:09:44.:09:49.

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

:09:50.:09:54.

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

:09:55.:09:59.

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

:10:00.:10:05.

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

:10:06.:10:10.

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

:10:11.:10:16.

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

:10:17.:10:20.

Ordinaries Index in Australia is slightly higher and is doing well

:10:21.:10:23.

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

:10:24.:10:28.

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

:10:29.:10:31.

That is it for

:10:32.:10:32.

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