27/07/2017 Asia Business Report

Foxconn announced a ten million dollar investment to build a

manufacturing plant in the United States. On Facebook reports a major

bump in profits. Hello and welcome to Asia Business Report. I am

Sharanjit Leyl. Taiwanese electronics manufacturer Foxconn

just announced plans to build a flat panel screen plant in the United

States. At an elaborate press conference in the White House a

short while ago, Foxconn said it is investing million -- $10 million. I

asked our correspondent how big a deal this is for the US economy.

President Trump campaigned on the idea of bringing manufacturing jobs

back to the United States, especially in America's heartland.

So certainly from his perspective, and from his base's perspective,

this is a really big win. You see this company coming in, investing

$10 million, that is going to create 3000 jobs, and is just beginning.

From the perspective of the governor of Wisconsin, where the plant will

be built, he has said this is going to then explode into up to 13,000

jobs. So there is certainly a lot of hope with this company coming into

Wisconsin. All right, lots of jobs being generated there, but we know

these are going to be expensive jobs. These companies are going to

have to pay American workers a lot more than they would their workers

elsewhere. So presumably costs are going to go up for these firms. Do

they know quite what they are getting into? So that of course is a

concern, so there was one local politician who really called this as

sort of package, because just how many tax breaks Foxconn was offered

in order to come to the state of Wisconsin is something around $3

billion in tax breaks. So it is possible that those kinds of lures

really helped to get Foxconn into Wisconsin. All right, and I guess

this would be seen to be a bit of a victory for President Trump. Has he

been revelling in it, and seems really happy with it? Absolutely. It

was really quite an event. You had the head of Foxconn at the White

House, accompanied by the Governor of Wisconsin, by the vice president

of the United States, either House Speaker, Paul Ryan, and of course

President Trump himself -- by the house speaker. He said if I was not

elected, Foxconn would not be investing $10 billion. Facebook is

again beating analysts' expectations. They just reported a

71% jump in profit in the second quarter. Facebook's revenue rose

more than 44%, to $9.32 billion. Their push into video ads helped

boost growth in their advertising business and worldwide the social

media giant has 2 billion monthly active users. That is about one

quarter of the world's ovulation. One in three Facebook users fall

into the age group of between 25 and 34, an advertising is the key driver

of Facebook's earnings, amounting to 97% of total revenue last year. I

asked our correspondent what she thought of the numbers. I think that

Facebook is one of the most amazing companies on earth, and even though

they have 2 billion monthly active users, there are at least 7 billion

people on earth, and many of them are now... More and more of them are

coming to the internet for the first time because of mobile. Particularly

in Southeast Asia, with Indonesia, with the Philippines, there is tons

of growth, and it is great to hear that video advertising is coming to

Facebook, because there is a lot of room to grow, particularly on video.

Video, for the first time, if you think about it, in developing

countries, there are still a lot of optimisation that can be done. So I

do believe that Facebook will continue to grow, particularly with

video advertising. Now, you mention that 2 billion people, surpassing

that mark. But the near saturation, though, in the United States, just

about everybody is on Facebook, so where else can they look for growth?

You mention Southeast Asia, countries around here, but of course

the one place they are not in its China. Yes, I think no matter how

much mark running in front of Tiananmen Square, April we will be

awhile before Facebook can enter China -- Mark. There are also

countries with over 1 billion, like India, Indonesia, the Philippines,

and these are countries with huge populations and Facebook has been

doing a lot of work in India and trying to provide free internet. I

think all of these moves will continue to help them to grow in

terms of monthly active users, which will also equal advertising dollars

for them. Right, now let's talk about those advertising dollars, the

majority of their money made from mobile advertising. Where else can

they look to continue to sustain this sort of growth? Well, there are

a few other things. Facebook have not yet completely monetised on some

things yet, one is WhatsApp, the huge acquisition they made with

WhatsApp. They kept that intact, and I imagine once they start monetising

WhatsApp there will be huge opportunities. In other news, the

chairwoman of Hewlett-Packard has stepped down from the board of

directors. She has been named as a possible contender for the top job

at Uber. She is leaving the computer maker after a tumultuous time on the

desktop PC market, which has hit the company hard. Boeing's shares have

climbed after reporting better-than-expected quarterly

earnings. Shares in the aerospace giant finished up nearly 10%. The

result showed how cost-cutting has helped offset the effects of lower

commercial plane deliveries in the first half of the year compared with

a year ago. And Amazon joins the $500 billion club. Its market value

climbed just a little past that yesterday. The US -based company has

expanded its services beyond goods, to include cloud computing services

for a broad range of companies. The e-commerce giant recently announced

it is increasing its footprint in Southeast Asia by launching its

services here in Singapore. Over in the United States, the Federal

Reserve has left benchmark interest rate unchanged, which pleased

investors, because if you take a look at how the Dow Jones ended up,

it was actually at a record high at the close. And the central bank was

widely expected to keep monetary policy steady. Fed chair Janet

Yellen laid the ground work for wound winding down the stimulus in

September. Earlier I spoke to a correspondent in Sydney and asked if

there was anything to worry about in the Fed's recent statement. Just the

risk of lower than expected inflation derailing the programme,

to raise rates and withdraw that $4.5 trillion in funds they pumped

into the global monetary system. They have pointed to other key

risks, and the wording that as long as the economy evolves as expected

clearly implies there are some risks. Markets have immediately left

to the potential for the debt ceiling in the US to not be raised

by September. If that is the case, we could see another government

shutdown, and turmoil in markets generally, and especially bond

markets. If that were the case Fed would likely step away from its

programme. And we saw that equity markets seemed relieved by the

prospects of lower borrowing costs and the chances of another rate hike

in September being discounted. When do you think they will hike rates

again? I think December will be the first, and we will see that in

September when the meeting minutes a release. The Fed estimates there

will be one in December and three next year and nothing in the

statement today suggest they have moved away from that rather hawkish

view for interest rates. Michael McCarthy speaking with me earlier.

The push for cleaner and greener cars is gaining momentum, with of

course the industry looking to clean up, and to move away from emissions

standards. And in China they have already started that. China is the

world's diggers car market, and they are requiring tougher emission

standards for all cars by 2020, investing heavily in electric

vehicles. France banned petrol and diesel cars as part of the

President's plan to make the country carbon neutral by 2050 and the

British plan, similar to the French one, is part of the government's

strategy to curb air pollution. We have to get rid of petrol and diesel

cars off our roads if we are going to deal with not only the health

problems that air pollution causes, but to meet our climate change

targets and the good news is that the car industry is already moving

in this direction. The Chancellor has authorised more than ?200

million of additional spending to help local authorities come up with

the right approach in order to deal with air pollution on the roads. And

that was the UK Environment Secretary. Looking at the markets,

we have some Asian markets currently open. Tokyo has opened flat.

Australia making some strong gains, up 1% and taking those cues from the

strong gains on Wall Street. It was mainly due to the good corporate

earnings we have been seeing. We have also seen oil prices rebounding

somewhat, and that is helping a lot of the commodity reliant stocks in

Australia. That is it for this edition of Asia Business Report.

Thank you for watching. The top stories this hour:

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