28/07/2017 Asia Business Report

management organisation that ran the block are likely to be

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

It has been a bumper week of earnings fall the tech names, but is

on shares fall after earnings miss their mark. -- is on shares. --

Amazon. And as the US company on track to meet President Trump's

ambitious goals? Second-quarter GDP figures are released today. Hello,

and welcome to Asia Business Report. I'm Sharanjit Leyl. It has been a

big week of earnings from tech companies, household names, with

services that are very much part of a everyday lives. We have seen

fantastic quarterly results from Google's parent company, Alphabet,

as well as Facebook. But the latest, Twitter, has bucked the trend. Its

quarterly report card showed the company's revenue was down about 5%

and advertising revenue fell by about 8%. Now, the microblogging

service hosts about 328 million active users every month worldwide.

That is unchanged from the previous quarter. 79% of the accounts are

registered to users outside the United States. One third of those

are right here in the Asia-Pacific. And one more statistic. Eight out of

ten of those active users access Twitter via their mobile devices.

Meanwhile, Amazon just reported their profits fell more than 77% as

the e-commerce giant expands its footprint. One area is in Southeast

Asia. Amazon Prime office delivery service to the region, including

here in Singapore. It promises to bring products like groceries to

your door in just two hours by ordering on their app. It is the

current -- the company's first for a into this region, and it is going

head-to-head with China's Alibaba. Earlier I spoke to the chief of a

consumer technology website and asked them why these well-known

companies had a difficult learning season. You never know what happens

in the financial world. It is quite interesting in terms of the

innovation. For example, Amazon Prime, promising to our delivery

times in Singapore, that is quite exciting for the south-east Asian

market. We have never had anything like this before. Let's look at

Twitter. Twitter is failing to grow meaningfully beyond its 328 million

monthly active users, at a time when its rival, Facebook, has reached 2

billion users. So what is the trend? Well, it is still a growth market, I

think. Out of the top ten Twitter users in the world, the Asia Pacific

has about four or five of them. If you include Turkey in that equation,

or even Russia, that is a lot of growth potential for active Twitter

users in Southeast Asia alone you have Indonesia, the Philippines and

Thailand. They are very active on Twitter. It would be good for

Twitter to focus perhaps on this part of the world. They are losing

active users in the United States. I think they are down to 68 million

active users per month there, down from 70 million. I was thinking that

with Donald Trump's appetite for tweeting early in the morning,

unfiltered tweets, that they will actually attract more active users,

but that doesn't seem to be happening. Obviously Amazon's

problems, part of it is spending so much an expanding globally,

including here in Southeast Asia. You are at the launch of the is on

Prime service here in Singapore. -- Amazon Prime. Do you think it will

succeed? It is promising, if they can deliver in two hours. We have

never seen anything like that before. It adds convenience to

people who can shop at home and wait for their deliveries. That is a good

business proposition as far as I'm concerned. That was Tim Goh. So, how

has America's economy been doing lately? We should find out later

today when the latest GDP figures, the gross domestic product numbers,

are released. This will tell us how much the economy grew in the last

three months. It comes at a time in the current administration has been

promising growth rates of 3% or more. That is a goal that some

experts believe is pretty lofty. As candidate for president, Donald

Trump had ambitious goals for America's economy, believing he

could make the country's GDP saw. -- soar. We are bringing it from 1% to

4%. I think we could go to 5% or 6%. But the realities of governing the

country has the president singing in a more muted tone. The various

players on President Trump's economic team have suggested that

America's economy could grow around 3%. You would need productivity to

go back to levels seen only at the peak of the tech boom, in order to

get sustainable rates of growth, at 3% or 3.5%, or better. We have only

done that for a few years, in the entire post-World War II

environment. So I think it is very unlikely that anything on the fiscal

policy front will get us on a sustainable 3% or better. It was

fiscal policy that had the International Monetary Fund

downgrading America's growth prospects both for this year and the

next. In the IMF's opinion, whatever fiscal policy does get made may not

be as growth boosting as previously hoped for. The continuing saga of

repealing and replacing Obamacare has had a cascading impact on

President Trump's legislative priorities. Reforming this country's

complicated tax code, and passing a $1 billion spending bill, those

things that would have a direct impact on America's economic growth.

But the likelihood of getting either of those two things anywhere close

to the President's desk is looking highly unlikely.

In other news, Baidu 's net profits rose more than 83% as the company

bounced back after a crackdown on its core business by Chinese

regulators. Internet search company has been focusing on investing in

artificial intelligence and developing cloud capacity as it

reshuffles its core business. Earlier this month, Baidu partnered

with Ford and Nvidia to launch assault driving car platform.

Starbucks is spending over $1 billion for a full stake in the

fast-growing Chinese market. The coffee chain said it would buy the

remaining shares of its east China business from its joint business

partners. Starbucks is China's fastest-growing market outside the

US by number of stores. The deal would help the company reach its

target of operating 5000 stores in mainland China by 22 and one. --

2021. Singapore -based Noble Group has announced it will sell most of

its assets in the US to try to raise cash and focus on its operations

here in Asia. The firm has been hit by a collapse in commodities prices

and allegations of improper accounting. The Singapore -based

company has lost 75% of its market value this year. Its share price has

plunged by half after the company warned of a quarterly loss of around

$1.8 billion. Earlier I spoke to Simon Littlewood, the president at

consultancy house ACG about why the company is in such trouble. They

have made one mistake after another. It is ironic Singapore places so

much emphasis on commodities trading as a core industry. There are about

17,400 people employed in the industry in Singapore. It has

compound annual growth of about 7%. The trade minister last month was

talking about how important it is. Noble has got in all kinds of

trouble by basically expecting commodities to continue to go up. It

is not clear that they have a solution to their serious working

capital issues. They have raised a number of armed issues in the

market. They have burned through that money. The second quarter of

this year they lost a staggering 1.8 billion US dollars in one quarter.

The share price dropped by nearly 40% overnight. So the outlook is not

good. And the responses to that have been to sell-off elements of the

core business, essentially selling the silverware, selling capital

assets in order to fund what our innocence working capital problems.

-- what are in essence. And they have announced they will lay off

half their staff in Singapore. When a business lays off half the stuff

but carries on doing the same thing, you have to wonder what they were

doing before. They are going from 800 400, good news if you work for

them. Let's look at commodities. One of the reasons they are in trouble

is that they bet the wrong way on where commodities are headed. Where

do you see commodities going, and how will it impact on other firms in

Asia? There is a difference between soft commodities and hard

commodities. Soft commodities are essentially crops, things like

coffee beans and animals and potatoes, stuff like that. As long

as the human race continues to expand, which it does, and as long

as countries become richer and people have more context diets, the

basic level of demand this of commodities will continue to go up.

Jack complex diets. -- diets. So there are ups and downs in the

markets, but broadly it is positive. At commodities are different. Iron

ore is very important in Asia but is driven primarily by Chinese

infrastructure demand. That demand is tapering off. They have massive

-- massive overcapacity in their steel industry. They are seeking to

export that by creating foreign initiatives largely funded by

Chinese loans all across Southeast Asia and all across central Asia.

That will explore some of that capacity, but overall demand will be

softer for iron ore. That was Simon Littlewood, speaking to me earlier.

That is all for this edition of Asia Business Report. Thank you for