09/09/2014 Asia Business Report

Tax hike pain, as we await fresh numbers on household spending in

Japan, we look at the prospects for the next planned tax rise. And Apple

shares dip on the eve of its big launch, is it a sign of what is to

come? Welcome to Asia Business Report on BBC World News. I am Rico

Hizon. After posting its worst performance since the end of the

financial crisis, we expect fresh data on the state of the Japanese

economy. Later today we will get a measure of consumer confidence. It

comes after news that the world's felt largest economy shrank at an

annual rate of 7.1% in the three rounds ending in June. Compared to

the same period in 2013 `` three months. Japanese households have

been cutting back spending followed a 3% rise in the tax in April. I

asked our correspondent in Tokyo weather today's numbers will be as

bad as the GDP. We think it is quite possible there are some negative

sentiment that flows through off the back of the poor GDP numbers. But as

investors, that doesn't give us so much cause for concern as we see it

as an opportunity. We think the bank of Japan will respond very

forcefully if consumer confidence dips too much, and if the economy

continues to weaken. But in the meeting last week, the bank of Japan

just held back on monetary policy and did not make any moves in terms

of steamy leading the economy. When are we likely to see this

materialising tube boost consumer confidence? If we start to get

everyone panicking over bad numbers, you will see a move `` to boost. But

when the GDP came out, the stock`market still went up is. So

much of this was already priced into the market. Second`quarter numbers

were going to go and down, everyone had accepted that. They were a

little bit worse than expected, but not dramatically so. So if we have a

third`quarter rebound, as we expect, we are back towards 2.5, 3% GDP,

then the bank of Japan will likely not feel the need to take any

action. With the current state of consumer confidence do you think

that Shinzo Abe should still push through with the next land tax hike

from eight to 10% next year `` planned. That is more of a

challenge, we will need to see how the third and fourth quarter go to

see where he is politically, to see whether that is a priority or

something that he puts aside in 2015. After a decade of delays and

disagreements, fresh hope in Australia and China that a

free`trade deal could be signed by year's and. Trade between the two

sides has already doubled in the last five years, and a free`trade

arrangement would boost this even further. From Sydney, Phil Mercer

has more. China's demand for iron ore and other natural resources

helped Australians avoid the worst of the global recessions. Trade

between the nations is only growing. Today China is a

straight's largest trading partner in terms of imports and exports.

2`way trade is worth more than $140 billion. Australia is china's sixth

largest training partner `` trading partner, with almost a quarter of

Australian exports heading to China. Although natural resources have

traditionally dominated trade, future prosperity will depend in

large part on the education and tourism sectors which hope to

attract more of china's wealthy attract more of china's wealthy

middle classes. In Sydney, the Foreign Minister has held talks with

his counterpart Julie Bishop, who says that bilateral relationships

are mature and strong. We are on track to sign a free`trade agreement

with China later this year, which further strengthen this

relationship. Over the past year, Australia has sealed free`trade

agreements with Japan and South Korea. Canberra's close ties with

Tokyo has caused some annoyance in China, but not enough to derail a

prosperous economic relationship. TRANSLATION: China may not be a

Australia's closest friend at the moment, but we can surely become

your most sincere friend. Australia says it often challenges China over

human rights in Tibet. Canberra's 60`year`old relationship with the US

might be another source of tension. But diplomacy has allowed Australia

to court close economic ties with Beijing while pursuing an even

closer security relationship with Washington. In other business News,

Facebook's market value, topped $200 billion, making it one of the

world's biggest companies. Shares in the social networking site rose to

$78 per share at close in New York, following investor optimism about

the future of mobile advertising for the company. That makes Facebook the

22nd largest company in the world, ahead of Toyota motor. For Apple

enthusiasts, the wait is almost over. This time tomorrow the new

iPhone shed six will not be shrouded in secrecy. Along with all the

hype, should we expect a bounce in their share price? Actually, no. The

share price typically dips on the date it releases a new phone. Its

stock even dropped on the eve of this latest launch. Our analysts

said this is part of a trend. Always ahead of an announcement there is a

build`up of expectations and the hype, what features will it have?

Will have solar charging, a laser pointer, a new size, all these

expectations built up and then people look for excuses to take

profit when an announcement come out, or if that doesn't meet

expectations, and this time around, you have either cloud data leaks,

new smartphones `` iCloud. And Amazon has also come out with a

price cut on its new phone from $200 to 99 cents. Competition becoming

tougher year after year as Apple releases its new iPhone. Now you

have new competitors in China, as well as the competition from

Samsung, which has already seen its revenue falling due to the major

competition from the cheaper manufacturers. Yes, you are seeing

the stage set up for another's similar thing to what we have seen

before. And in China, the big Chinese telcos cutting back on

subsidies to the tune of around $5 billion. That is bad news for

handsets and more leveraged for Chinese manufacturers to take market

share. The advantage of Apple is that it has its own operating

system, compared with Samsung which uses the Android operating system.

So what is the future of Apple going forward? We will watch very closely

to see of Apple will come up with any differentiating features. If the

iPhone will integrate with its upcoming line of variables, and

whether I payment. With users already locked into the system, how

that will play out with the payment system, and whether that gels

together towards a lock in for more users. Could this be the most

expensive video game ever created? Destiny is reported to have cost

$500 million to make, and is touted as the most significant release

since the next generation of consoles arrived late last year.

Destiny is a game set 700 years in the future, but it is the next ten

years that the publisher Activision will be most concerned about. The

older games, call of duty and World of Warcraft aren't selling as well

as they used to. The company is not taking any chances and spending $500

million on making and marketing this game. We know that it is going to be

a triple a blockbuster. So it is not a risk, it will be heavily marketed,

we will work closely with retail and we think we have done all of that.

Obviously Destiny is a massive new title for Activision. Tell me what

it is all about. What is again going to be about? At its heart it is a

first person shooter. You will be involved in a lot of firefights,

whether that is on your own in a campaign or you can fight with

friends. There will be multiplayer activities, fighting against other

guardians in the game. You will also be going out and exploring different

planet as well, and fighting the enemy of birth. So as I say, at its

essence, it is a game where you are a guardian, protecting the last

those city on earth `` enemies of earth. You have to go out and

explore the planet and become legends. Obviously what happens to a

lot of games on launch day is that the servers can't cope. How

confident are you? It is a loosely critical, this is a persistent,

shared, online world. We are confident that once the servers are

turned on, as they have been, as people are enjoying playing it in

Australia as I speak. We have tested this at length. We have in excess of

4.6 million people on the beta test, and that is exactly what we

wanted. To test the robustness of the service. We are confident that

everyone will have a fantastic time and everything will be fine. And you

can read more about Destiny on our website. Here is a quick look at the

markets. Asian stocks are lacklustre in mid`morning Tuesday trade after

Wall Street closed mixed overnight. Japan is currently on the rise, as

the Japanese yen continues to weaken against the US dollar, which is

benefiting exporters. Australia also in positive territory but Hong Kong

lower by 50 points. On Wall Street, the Dow Jones ended lower after a

drop in energy shares. The top stories this hour: Iraq's

parliament has endorsed a new, more representative government. The

United States has called it