06/02/2018 Asia Business Report

I'm Sharanjit Leyl

with BBC World News.

Our top story.

Asian markets tumble

after Wall Street suffers

its largest decline in years.

Japan's Nikkei is down by 4%

after the Dow Jones closes down

nearly 1200 points -

its biggest fall since

the 2008 financial crisis.

The US Vice President Mike Pence

is starting a trip to Asia

which is meant to show solidarity

with allies and help South Korea

celebrate the launch

of its Olympic Games on Friday.

And this video is

trending on bbc.com...

Home surveillance video shows a dog

sneaking a leftover pancake,

but by doing so, the ignition button

on the stove came on,

causing something on top to ignite.

Luckily the alarm system called

first responders before

the fire spread

and a friendship ensued.

That story is popular on BBC.com

That's all from me for now.

Stay with BBC News.

And the top story here in the UK...

The EU's Chief Negotiator warns

the UK faces 'unavoidable' trade

barriers - if it leaves

the customs union and single

market after Brexit.

Now on BBC News, all the latest

business news live from Singapore.

Asian stock markets have lowered in

the wake of two days of heavy losses

on Wall Street.

I am here at the

Singapore air show as Asian

countries beef up defence spending I

have a lie in chief executive.

--

live interview. It is Tuesday, glad

you could join us for another

exciting addition of Asia Business

Report. We start off with a very

volatile and crazy global stock

market. And the rout has deepened

this Tuesday with Asian financial

markets heading lower this morning

on the back of heavy losses on Wall

Street. This is where things stand

at the moment. As you can see, the

Nikkei is down by over 4%. The all

ordinaries index is in the red by

2.6%. For a perspective on this

sharemarket rout I'm joined now by

our Asia business correspondent.

1000 points on the Nikkei today.

This carnage, this fall continues

from yesterday's rout.

As we have

been talking about all morning this

has come about as a result of rather

positive economic news coming from

the United States. It must seem

counterintuitive, right? Healthy

economic growth in the US and the

jobs market picking up with wages

growing slightly and then all of a

sudden money is being pulled out of

a US dog market and correspondingly

here in Asia. The reason for that is

that as the economy strengthens in

the US, the expectations for

inflation, the price of goods going

up, has increased. So traders are

expecting the US Federal Reserve,

the central bank Bear, to increase

interest rates at a faster and 30

pace than they expected initially.

That means the cost of borrowing

goes up and things could come more

expensive and money is buff pulled

out of the stock market.

It is a

delicate balance. It is like

investors wait, they are excelling,

that moment has not happened yet.

Many are probably selling as a

result of the fact that they are up

by so much. We have seen such a

sharp rise in US stocks out here in

Asia as well. Many people think let

me get out now and enjoy some of

that money. Go on a holiday, maybe.

Another reason why people are

selling is because other people are

selling. A herd mentality? Exactly.

There is a sense that maybe I should

get out of the market could things

could get worse. But many traders I

have spoken to with a long-term 's

perspective on US equities and Asian

equities they say if you have a

horizon of rival ten years these

blips in the market should be seen

as healthy correction, especially in

the US market, many were concerned

it was quite frothy and overvalued.

The Dow Jones was up 31% since

President Trump took over and you

have the S&P 500 are by 23% and the

Nikkei or at 26 year high as. The

big test now is monetary policy from

Asia-Pacific central banks.

Australia today and then the

Philippines and India later this

week.

When the US central bank had

lower interest rates over the last

ten years, Asian markets and the

Asian economy were some of the

biggest beneficiaries of that cheap

monetary policy, the easy monetary

policy. In reverse we now see that

era disappearing. No-one should

really be surprised, it has been

signalled for a year or so. Central

banks and governments now need to

find a delicate balance, tweak their

interest rate policies to make sure

they do not prevent growth but are

in step with the US at the same

time.

Thank you very much for that

update on the business markets here

in Asia. The share markets are

wobbly and Bitcoin is showing even

more volatility. The currency is

falling over 15% on Monday, slipping

below $7,000 for the first time

since November. Meanwhile, a South

Korean intelligence agency

reportedly told the country's

National Assembly that North Korea

likely played a part in last month's

massive theft from a Japanese

cryptocurrency exchange service

provider. Moving out of the

Singapore air show and companies are

planning to beef up defence spending

an aircraft because of the South

China Sea and North Korean ballistic

missile threats. But who is buying,

what are they buying and how much

are they expected to spend? Joining

me now is Mariko.

Over 1000

companies are here and we're not

just discussing commercial airlines

defence sector as well. We have seen

robust growth in defence spending in

the region. I have a little report,

let's have a look.

While most

Western countries are slashing their

defence budgets, many Asian budgets,

governments are throwing money at

it. China and India have doubled

their spending in the last 20 years

as well Southeast countries like

Indonesia, Vietnam and a poor.

Keeping some perspective here, the

US still comfortably spend more on

planes, missiles and tanks than

anyone else. Over 600 and $40

billion last year. Asia now accounts

for over one quarter of the world's

defence spending. So what has

changed? Simply, there are economies

are growing and in this part of the

world there is a lot going on. Think

North Korea's nuclear missile

threat. China's actions in the east

and South China Seas. And

insurgencies throughout South East

Asia like the fighting in morale we.

So what are Asian governments

buying? -- fighting in the

Philippines. There is investment in

combat aircraft as countries expand

and modernise their air force. And

with the repeated tests by North

Korea, many countries in north-east

Asia are beefing up their ballistic

missile defence. And while Asia is

the biggest importer of weapons in

the wild, countries such as China

and South Korea are starting to

become major arms exporters. It is

not easy when your neighbours are

increasing their defence spending.

No country wants to be left behind.

You will take a brave government in

Asia to slow down. One company that

is likely to benefit from that is

Salas and I'm joined by their chief

executive. Were talking about robust

growth in defence spending in Asia.

How has that affected your company

and can we expect some announcement

this week?

Defence spending is have

started to increase almost all over

the world and in particular in this

region.

Why would it be? Is that

because of growing economies all

territorial disputes in the region?

Yes. And this generates a greater

need in terms of protection and

safety.

We have countries like China

and India are doubling their

spending in the last 20 years as

well a South East Asia. Were

starting to see some slow down. It

is still growing but we are

heartened to see a little slow down

recently. Are you concerned about

this lowdown in the region?

Not

really. We are acting on long-term

contracts and our markets are

long-term. We are not concerned at

all.

What kind of things are Asian

countries interested in buying? In

layman 's terms?

As far as we are

concerned, investment in their

infrastructure. Aviation, air

traffic control, high-speed lines,

this investment is there to sustain

urbanisation and globalisation of

the world.

And while Asia is still

the biggest importer of of those

weapons, countries like China and

South Korea are starting to export

as well. And Australia just

announced they want to boost export

as well. Are you worried that they

could potentially pose a threat to

your business?

Not really because we

are more local. We have seven or

eight Singaporeans working here and

we benefit from a highly talented

base here in the region. We recruit

the best engineers to develop a

local solution for the market and

for regional economies and markets.

At this hour show we are seeing many

of the latest technologies. Are you

worried about cyber security?

Yes

and no. It is a direct consequence

of digitalisation. We inject more

and more artificial intelligence

into our wine markets and as a

consequence you need to deal more

and more with cyber security.

Thank

you so much for joining us. That is

all from us here at the Singapore

airshow. Join us later. She will be

joining us all week from the

Singapore airshow and we are looking

forward to that. A quick look now at

the Asian market. A big hit after

overnight falls in the United

States. Thank you so much for

investing your time with us. Sport

Today is coming up next.