Report. Chinese shares on a global index. We look what this could mean for investors in asia and around the world. And what are the big spenders from the Aviation Industry eyeing off at the Paris Air Show . It is tuesday. Good morning asia hello world, glad you could join us for Asia Business report. We start off with chinese stocks. After years of discussion, msci it will announce whether it will include chinas a shares, the mainland shares traded in china, in its emerging markets index. This is the fourth time that msci is looking into the possibility. It could mean potentially a lot of investment going into mainland issues. Our correspondent has more from a rainy day in beijing. China is chasing a globalfinancial day in beijing. China is chasing a Global Financial benchmark here. Inclusion for its eight shares, leading shares here would mean that they attract by investors and responsible for trillions of dollars of investment. There would no doubt bea of investment. There would no doubt be a boost to those shares although it is hard to quantify exactly what that would be. To more significance to the chinese authorities is that they would regard a yes vision here as being a vote of confidence in the financial sector. This is, however, the fourth time they have asked. In the fourth time they have asked. In the past what has been an impediment has been the old familiar tale of reciprocal access. It is not easy forforeign reciprocal access. It is not easy for Foreign Investors to invest here in china and buy shares. Authorities have taken measures to try and make that simpler but it is still the case that if you wish to purchase shares you need to deal with quotas from the Regulatory Authority or you can invest via a linkup with the Hong Kong Stock Exchange which has a linkup with either here in shanghai oi linkup with either here in shanghai or another city. A note of warning, chinese Stock Markets unnoticed speculative peril are known for speculative peril are known for speculative peril. They have not had a good 2017, they are up by 6 half way through. Broader economic context, the authorities are trying to do and the insurance sector to make sector has clamped down on shadowy products being sold, particularly Wealth Management products. And in housing, what many regard as a bubble here in this country, authorities are still in the process of bringing in restriction on the selling and buying sides. If this was a yes, however, there is no doubt that the chinese authorities would see it as a big tick in a box in terms of being trusted globally. 0ver now to australia where the cost of Home Ownership has turned out to be risky business. That is one of the main reasons that the Ratings Agency moody s has downgraded its long term ratings of the banks in the country, including the biggest fall. Currently the banks down in syd ney fall. Currently the banks down in sydney trading. To tell us more about this downgrade and the outlook for the banking sector, im joined 110w for the banking sector, im joined now from moody s. Frank, great to have us. So, 12 banks have been downgraded. What will it take to improve ratings again . We need to see a period of relative stability. We need to see a period where income sta rts we need to see a period where income starts to write in Household Debt does not increase of march. That gives households a chance to reduce their leveraged and if those mortgages start to perform in line with expectations, then that is of benefit to the banks. If that trend continues for a while then there could be upward pressure on bank ratings. How long will these banks ta ke to ratings. How long will these banks take to get back to that level . I think it will take some time. If you look at at forward projects and is and predictions for income growth, it takes a while, even at the current levels of debt, just to bring the leveraged down. You need a few years of the current loans so people start paying them down, and income rises to come through as well. At that point you may start to see some benefit. Looking at these 12 banks, are some worse than others . The ones we have downgraded, we have primarily downgraded because of the Household Debt level and the exposure that the banks have. 0bviously some banks are much smaller and have lower flexibility. They will find it more difficult to respond if things mature or improve they will probably not improve as quickly where is the larger banks with more flexibility to reduce costs a nd with more flexibility to reduce costs and raise capital, they have more Pricing Power and are better placed to take advantages of an improving operating environment. How about the latest rate hike from the us federal reserve. There could be another one before the end of the year as well. Could this have an impact on australian banks and their profitability . Potentially. If us investors start to look at higher prices to buy a Stream Bank Debt than that impacts profitability. But most than that impacts profitability. But m ost swa p than that impacts profitability. But most swap back into australian dollars so it depends on the cost. If there is a rapid rise in Swap Cost Tha n if there is a rapid rise in Swap Cost Than it does not have a Material Impact we will have to wait and see. Thank you for those inside in other business news. Time warner and snap have agreed to create original dramas for snapchat. Warner brothers will also advertise on the augmented reality and messaging platform. The deal is reportedly worth around 100 million us dollars. President donald trump met with the head of 18 Us Technology Companies Including apple, amazon and microsoft, seeking their help to make the governments competing systems more efficient. The white house wishes to update Government Information Technology systems, cut costs, eliminate waste and improve service. Mr jumpstarted costs, eliminate waste and improve service. Mrjumpstarted said it estimates that the government could save up to 1 trillion over ten yea rs save up to 1 trillion over ten years through such initiatives. The wars biggest airshow has kicked off in paris where manufacturers are showing off their newest aircraft. 0n showing off their newest aircraft. On monday, boeing launched the latest version of its 737. It will compete with the air bus a three to one. So what are asia Pacific Carriers purchasing . I asked that question earlier to flight globals financial editor. The boeing 737 max ten, the latest in the long line of 7375 ten, the latest in the long line of 737s launched yesterday and we have seen that asian carriers are pleased a large role in that. Line a announced major commitment of 50 aircraft will stop we have also seen many asian Leasing Companies, cdp asian leasing and finance, owned by cdb leasing, has committed to this. They obviously see that there is Great Potential in the asian market for this longer 737jet. Great potential in the asian market for this longer 737 jet. So why are we seeing more leasing of aircraft rather than direct purchase of these planes . At the moment it is a Good Environment for Leasing Companies to pick up the aircraft. 0ne Environment for Leasing Companies to pick up the aircraft. One of the reasons that airlines to deal with Leasing Companies is that it takes away a sense of risk for them because, ultimately, they dont have to put a lot of capital into the aircraft and so they can get a Leasing Company to do that and that makes it easier for them to Leasing Company to do that and that makes it easierfor them to run their business and focus on running an airline rather than being a financial manager. So the airbus a380 also getting a lot of attention at this paris airshow. Do you any of the Regional Airlines to make major purchases . Ba 380 has been very interesting. They show an 8380 plus, it has a package of enhancements. These will not flow through till 2020 so it is hard to say that will have much interest in the region. They speak about reduction in fuel burn with all of the enhancements to the wing and a few other things. That would be quite appealing to Many Airlines but it will only be for new aircraft so many of these airlines would be up for taking the new a380 in that time frame. At the end of this paris airshow, who will have the upper hand in terms of orders . Knowing or air bus . At this stage, boeing has come out was a new aircraft to launch, traditionally, paris is a Big One For Airbus so we will have to see what happens towards the end. I think it will be close. Lets have a quick look now at the markets and asia is rising for a second day with the japanese market up. The all 0rdinaries is flat to hire at this point, because all Big Four Banks In Australia are in negative territory due to the downgrade by moody s. But overall, the mood is positive after the dow closed at record high overnight. Tech shares had strong gains. The table at the dow and the nasdaq. They are both in positive territory. There is a suggestion that investors think there may be a rival bid for whole foods after amazon placed theirs. Sport today is next. The top stories this hour. 0tto Warmbier the american student who returned home from prison in north korea last week in a coma has died. The Muzzle Council of written the Muslim Council of britain has condemned the Finsbury Park attack, the Finsbury Park attack, saying this was the most Violent Manifestation Today Of Islamophobia and called for more to be done to protect mosques. Theresa may has announced extra police to be deployed around mosques as our security correspondent Frank Gardner reports. This attack targeting british muslims, has been labelled one of britains most violent incidents of islamophobia today. It took the government just eight minutes to call it a terrorist attack. It was an attack that once again targeted ordinary and the innocent. The Prime Minister called it as sickening as the other attack this year and repeated her intention to set up a commission to counter extremism. But while police and Emergency Services were soon on the scene, there are suggestions that Policy Makers may have underestimated the threat from far right extremism. The whole counter extremism agenda has focussed on islamist extremism and we have seen a growing concern around the far right and individuals who adhere to extremist ideologies, but havent been tackled. Far right extremism in britain is a growing problem. In 2012 to 2013, 172 extremists were referred to police. By 2015 to 16 it has increased. Less is known public about these cases, there isnt the same level of of propaganda as that put out by jihadistand of propaganda as that put out by jihadist and there is no International Organisation driving the narrative. Lone wolf terrorist plots are harder to detect and prevent. The very nature of these, a lone individual using a rudimentary tool to launch a range of potential different targets, if they had not told anyone what they are going to do, it is difficult to intervene. Surveillance of far right individuals is now likely to be looked at again with some earlier assumptions re examined. Tracking far right extremists is the job of the police and national counterterrorism. The challenge they face is very similar to the one faced by m15 in tracking jihadists. They are dealing with lone individuals were not part of a network. And knowing when they move from ideas to action is difficult. Hello, this is sport today, live from the bbc sport centre. Coming up on this programme. British and irish lions coach Warren Gatland insists places are still up for grabs in the first test against new zealand on saturday. Nick kyrgios is an early withdrawal from the Queens Club Tournament due to injury. And germany beat australia 3 2 in their first match at the Confederations Cup in russia. Hello and welcome to the programme where we start with rugby union and the news that British And Irish Lions head coach Warren Gatland insists theres still an opportunity for players to force their way into the reckoning for the first test against new zealand which takes place on saturday. The lions play the chiefs in the coming hours with all six of the recent call ups from scotland and wales among the replacements. Irelands rory best will captain the side as maz farookhi reports. Going through final drills ahead of the last warmup match. Rory best will be the fifth captain for tomorrows six game on tour. The whole squad, in fact, if sharing the workload. The six additional players drafted in, straight into playing and straight into bench ahead
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