01/12/2017 Asia Business Report


01/12/2017

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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in the year to June.

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Now on BBC News, all the latest

business news live from Singapore.

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Oil cartel OPEC extends its supply

cut arrangements. We find out what

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this means for oil prices. And world

leaders focus on a major challenge

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to the global economy, getting more

women into the workforce. Good

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morning, Asia, hello, world. It is a

Friday. A weekend just ride around

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the corner. Glad you could join us

for another exciting addition of

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Asia Business Report. I'm Rico

Hizon. Let's start off with oil, and

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OPEC has wrapped up its meeting in

Vienna. Saudi Arabia's Energy

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Minister told members of the press

they have finally hammered out a

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deal.

The decision has been

unanimous. It is a solid decision,

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that I think many of you have been

urging us to make, which is to roll

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over and extent the deal through

December 2018.

Oil prices remaining

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steady after the news of the

announcement. OPEC members say the

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decision to keep oil production cuts

in place moving forward will be

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based on prevailing market

conditions and the progress achieved

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towards rebalancing the oil market.

But they may have their work cut out

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for them. Earlier, I spoke to senior

analyst Geoff Haley about why the

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decision did not have a greater

impact on oil prices.

To a certain

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extent it was priced in. Brent,

which is what most international oil

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is priced in, not WTI, was up

overnight. Really it was priced into

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the market.

But as you say, the

nine-month extension has already

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been priced into the market. What

could move oil prices from current

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levels?

I think a very large

expansion in US production, which

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may be driven by the pricing that we

are seeing now. Also geopolitical

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tensions. You mentioned Saudi Arabia

and Iran. There are any number of

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permutations of that among the OPEC

members. Also I think the direction

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of the US dollar going into 2017 -

2018 may have a part to play as

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well.

And you mentioned about US oil

production, and it is currently

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soaring, fast approaching 10 million

barrels per day. And this is a

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concern for OPEC.

Yes, and I think

this is part of the reason they

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don't want prices to climb too much

further from here, because that

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would encourage more US production

and probably weigh on declines among

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the OPEC members themselves as they

fight to hold their market share.

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But how serious are these OPEC

members with compliance?

I think

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they have been very good so far.

When you have a look at what their

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compliance levels have been over the

previous parts of the agreement so

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far it has been in the high 90s. So

complaint has been excellent but a

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year is a long time.

But the

producers, Jeff, also signal a

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possible early exit from the deal if

the market overheats. At which level

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do you think are they looking at for

an overheating of the market?

I

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think if you saw oil heading up

towards the $75 - $85 a barrel you

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would start seeing a lot of noise

from the group in about an early

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exit from the deal. They don't want

oil to go too high, because that

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would encourage more US shale

production. So they are trying to

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balance a few things in the air at

the moment.

Geoff Haley, upmarket

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specialist. In other news, New

Zealand dairy giant has been

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required to pay a competitor damages

over a baby formula scare. The huge

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pay-out came after fears about

contamination in supplied

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ingredients forced global formula

recalls, including these brands. The

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US Federal Reserve meets later this

month to decide whether to raise

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interest rates for a third time this

year. The US ventral bank's policy

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is meant to keep the American

economy on track, but it has a

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significant impact here in Asia,

especially on the Hong Kong real

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estate market. For more on the

property market in Hong Kong, we're

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joined now by bike colleague and

business reporter Matt Morrison --

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my colleague. So what is the state

of the residential property market?

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The residential property market is

booming and overvalued. Now, you and

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I have both lived in Hong Kong and

every month we have to pay our

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housing cost.

Not cheap!

Not cheap

at all and it has been going up for

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about nine consecutive years. So

where do interest rates play into

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all of this? This is what the IMF

have been warning about, saying that

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if interest rates go up that could

cooldown housing values. This is to

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do with this balancing act of

monetary policy, would be tied to

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the US dollar it is acting in a bit

of a lockstep. So when US rates go

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up Hong Kong is slowing although

there is still a gap. It is closing

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the gap and therefore borrowing

costs are more expensive for

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would-be owners. You would think

this would make prices go up, but it

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is on top of an 11% rise this year.

I should also point out this is not

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the first time the IMF has made such

a warning. They warned of a

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dangerous bubble in 2009, during the

financial crisis. Prices have been

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going up ever since.

Many mainland

buyers purchasing property in Hong

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Kong. What about the commercial

property market?

Also redhot. In

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fact, a new report out saying Hong

Kong is overtaking London for the

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first time since 2013 as the most

expensive office real estate. A

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workstation, one employee for the

course of the year, will cost

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$27,000. That is about $5,000 more

than London, with the currency and

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Brexit and all of that. And Japan,

the next Asian city, come down at

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around $9,000 below Hong Kong.

Familiar names at the end, New York,

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Paris and Sydney here in the

Asia-Pacific. When you look at that

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in terms of employee numbers, 100

employees in Hong Kong equates to

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about 300 in Toronto, 500 in Madrid,

and 900 in Mumbai. Here in

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Singapore, we may do a little mental

calculation, the numbers add up.

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Maybe even not enough space to sit.

Thank you so much. Well, the Indian

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city of Hyderabad has been in the

spotlight, where the US President's

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daughter, Ivanka Trump, made her

debut in the world stage. Along with

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1500 delegates, Ivanka called for

getting more women into the

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workforce as a way to improve

economic growth. But how bad is the

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problem? Our correspondent went to

find out. This 35-year-old woman is

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a software engineer, and loves her

job. But, a few years ago, she was

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ready to join 19 million women

living in India who are educated,

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but choose not to work.

Previously I

said that, the thought of quitting

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the job, because of this hectic

traffic.

According to one study,

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just 27% of women in India are

informal employment. The main reason

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is a lack of adequate infrastructure

to commute to and from work. For

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Naveena, and many other women,

working in Hyderabad, this small

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start-up has become something of a

lifeline. The private bus service

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cuts down Naveena's travel time by

half. But also gives her time to

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relax. According to a World Economic

Forum report, it will take two

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century is to bridge the equality

gap between men and women in the

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workplace. India is taking this

issue very seriously. In the global

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entrepreneurship summit organised

here, the majority of business

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leaders were women. One issue

discussed was the pressure to raise

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a family. Something the delegates

agreed is common in emerging

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economies. Few child-care options,

and a higher crime rate, also deters

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women from pursuing their careers.

This Afghan entrepreneur says one

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solution is to provide tailored

funding and support to women looking

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to found start-ups.

Once the woman

has started to make money, with the

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respect for the tradition and the

culture, then they have the power.

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Products like this baby monitor

could help women manage their

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families and careers. It allows

mothers to track their children even

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when they are at work. Technology

and women focused funding is a

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start, and engaging such a large

chunk of the population into the

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workforce can only mean good things

for business.

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workforce can only mean good things

for business. And before we go, here

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is a look at the markets, and Asia

is in positive territory before the

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weekend break, after the Dow Jones

industrial average skyrocketed more

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than 330 points, to finish above

24,000 points for the first time

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ever. Also surging, the broader S&P

500 index, as the Senate tax cut

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plan moves closer to passage. And

let's have a look now at the Asian

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markets, currently all in positive

territory. Thank you so much for

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investing your time with us. Happy

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