18/07/2017 Asia Business Report


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18/07/2017

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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Some head-teachers have warned of staff cuts to make ends meet.

:00:00.:00:00.

Labour's welcomed the extra money, but says it's not enough.

:00:00.:00:00.

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

:00:00.:00:20.

Netflix beats expectations by adding more than 5 million new users, but

:00:21.:00:26.

what about the bottomline? And, Grexit talks. The European Union is

:00:27.:00:42.

asking for one thing, clarity. Good morning, Asia, hello, world. I'm

:00:43.:00:53.

glad you could join us. Netflix beat Wall Street expectations after

:00:54.:01:00.

adding over 5 million new users, mostly from overseas. It has been

:01:01.:01:06.

put down to including non- English Netflix Provisionals are alongside

:01:07.:01:12.

its Western popular television shows. It's shares have jumped

:01:13.:01:19.

nearly 9%. Our North American technology reporter told me why

:01:20.:01:28.

investors are so up the. This is typically not a great quarter for

:01:29.:01:32.

them, normally it is quite slow and they told investors as much. But we

:01:33.:01:39.

have seen a huge growth in users, particularly in the US. You

:01:40.:01:43.

mentioned overseas subscriber growth, but hearing the US, they

:01:44.:01:48.

over 1 million new subscribers, much more than analysts had thought. They

:01:49.:01:54.

will be very pleased. It is a sign that their strategy of creating lots

:01:55.:01:57.

of original shows does seem to be working. But they must keep on

:01:58.:02:02.

making those, and to keep them very popular, they are investing $6

:02:03.:02:06.

billion in making original programmes over the next year. They

:02:07.:02:12.

need to keep up the quality to keep people coming to Netflix, rather

:02:13.:02:15.

than any of the other video streaming services. 104 million

:02:16.:02:22.

subscribers now for Netflix. Have these subscriber numbers peaked, or

:02:23.:02:27.

are there still more on the way? I think we will see a saturation here

:02:28.:02:32.

in the US. Many people think we have reached that already. It's's about

:02:33.:02:37.

international expansion. They are investing a lot into non-English

:02:38.:02:42.

programming. They are also investing in feature films, while they have

:02:43.:02:47.

the bench watching the side of television under wraps, they are

:02:48.:02:51.

looking at longer form films. They are working on about 40 films at the

:02:52.:02:55.

moment. I think that is where they will see their future growth come

:02:56.:02:59.

from. But the competition is huge, especially from Amazon, who are

:03:00.:03:04.

investing just as much in their original programming because they

:03:05.:03:08.

think they can muscle in on Netflix. When you compare the amount of

:03:09.:03:12.

people watching Netflix, subscribing, it is more than the

:03:13.:03:16.

number of people that subscribe to traditional cable television. That

:03:17.:03:20.

is a milestone I don't think we will see goal in the reverse direction.

:03:21.:03:23.

Everything is heading towards this new industry of video streaming,

:03:24.:03:29.

right now, Netflix was in front. But it may not be for the rest of time.

:03:30.:03:34.

Rio Tinto have aborted one of its primary areas of production. I nor,

:03:35.:03:49.

a major contributor to its earnings, matched last year's levels, but

:03:50.:03:55.

shipments were down by 6%. That has followed a typhoon in the first

:03:56.:03:59.

quarter of the year. This resource analyst told me that there were no

:04:00.:04:02.

surprises that that would affect their upcoming earnings report. I

:04:03.:04:13.

and all was down about 2% on the same half last year. That is on the

:04:14.:04:21.

back of what we would call cyclones here, which affected magnets on

:04:22.:04:24.

their rail network. Rail maintenance can be made up, but some of its

:04:25.:04:33.

kindly. We have now seen production for 2000 and 1714 and about 30

:04:34.:04:39.

million tons. That is at the bottom end of the range they were

:04:40.:04:43.

forecasting. From an iron ore perspective, a fairly satisfactory

:04:44.:04:50.

result. Copper was down about 21% at 209 million tons, that was primarily

:04:51.:04:56.

on the back of a strike. Not such a good result for cop. 12 weeks to go

:04:57.:05:02.

before the year ends, figures coming out in August. Could we see some

:05:03.:05:09.

exceptional numbers? With the half-year result, the operational

:05:10.:05:12.

side will not impact significantly on their half-year result,

:05:13.:05:16.

financially. We do think that when you have a look at the commodity

:05:17.:05:20.

prices, that is where they are going to get significant leverage for

:05:21.:05:24.

their first half results. We are expecting some very good numbers.

:05:25.:05:29.

Unfortunate, volumes will take a little bit away. Pricing is going to

:05:30.:05:34.

be the reverse of what we have seen in many years.

:05:35.:05:37.

In other headlines, the Trump administration has outlined calls

:05:38.:05:43.

for renegotiating the North American Free Trade Agreement. Getting access

:05:44.:05:49.

for American products to Canada and Mexico to improve the trade deficit.

:05:50.:05:53.

They are worried that too many Americans have been hurt by closed

:05:54.:05:58.

factories, exported jobs and what they call broken political promises.

:05:59.:06:03.

Formal talks to renegotiate the deal are expected to begin next month.

:06:04.:06:09.

Ministers from the EU and the UK have been getting down to business.

:06:10.:06:14.

Wretched negotiations continue in Brussels. The clock is ticking for

:06:15.:06:18.

the deadline in March 2019 for Britain to leave the EU. Several

:06:19.:06:24.

issues are on the agenda. Number one, the rights of more than 3

:06:25.:06:29.

million EU citizens, currently living in the UK, and about 1

:06:30.:06:34.

million living in the EU. -- 1 million Britons. The British

:06:35.:06:41.

chancellor confirmed that Britain would honour its's debt. And

:06:42.:06:51.

finally, how they will address the traffic of people across borders.

:06:52.:06:59.

So, a mixed bag. You can see hear how that has affected the markets. I

:07:00.:07:08.

asked why this response has been so muted. Investors don't really like

:07:09.:07:14.

uncertainty, so until we get a resolution, you always have this

:07:15.:07:19.

hanging over the market. The UK is an outstanding geopolitical issue.

:07:20.:07:22.

We still have the US and potentially, trade tax against the

:07:23.:07:28.

Chinese. GDP was up yesterday, and the UK, EU and US markets shrunk

:07:29.:07:38.

back. We look at flows, there is still a somewhat negative sentiment

:07:39.:07:42.

towards China. That is correct. A lot of factors for investors to

:07:43.:07:46.

digestive. Even though we had better than expected growth. What could

:07:47.:07:53.

really turn the tide in these Brexit negotiations? Perhaps some kind of

:07:54.:08:03.

trade agreement. We saw a trade agreement in terms of the Japanese,

:08:04.:08:08.

but that took years to be finalised. We need some agreements like that

:08:09.:08:13.

from an economic perspective to alleviate some of the tension and

:08:14.:08:18.

perceived stress. Why are we seeing is doubt about the Chinese economy,

:08:19.:08:26.

despite 6.9% growth? I think it is concerned about the underlying debt

:08:27.:08:30.

situation. The people's Congress is going to be important to the

:08:31.:08:37.

Chinese. Investors did not take the news positively. And liquidity

:08:38.:08:46.

access in China and Hong Kong? Yes, it is a wait-and-see approach. Given

:08:47.:08:53.

all these landmines in the investment landscape, where do you

:08:54.:08:56.

tell your investors to put their money? The Chinese consumer, it

:08:57.:09:04.

makes a lot of sense, companies that can access strategies in China.

:09:05.:09:07.

Chinese companies are becoming more innovative. Some very good

:09:08.:09:10.

opportunities in that part of the market. Uber is facing more trouble,

:09:11.:09:23.

they are halting business in Macau as of Saturday because of local

:09:24.:09:29.

regulations. It faced problems in Taiwan earlier in the year, it

:09:30.:09:36.

suspended operations but resumed after setting up a partnership with

:09:37.:09:42.

a local company. Another recap of the markets. Japan and Australia are

:09:43.:09:46.

in negative territory because Chinese markets are depressed. We

:09:47.:09:51.

will watch how that welfare when it opens in about 45 minutes. Black

:09:52.:09:58.

Monday yesterday, nearly 500 shares suffered steep falls. The plunge

:09:59.:10:05.

came after regulators flagged an extended crackdown on the financial

:10:06.:10:09.

system. Investors were rattled even though China had better than

:10:10.:10:16.

expected growth numbers, 6.9% in the April- June quarter. The rest of

:10:17.:10:20.

Asia is currently in negative territory. Having a look now at Wall

:10:21.:10:24.

Street. The NASDAQ continues to break record highs for an eight

:10:25.:10:31.

consecutive session. Thank you for investing your time with us.

:10:32.:10:40.

Senior Russian and US officials have been locked in talks,

:10:41.:10:44.

over whether to hand back two diplomatic compounds seized

:10:45.:10:46.

by the Obama administration last year.

:10:47.:10:50.