15/01/2016 Asia Business Report

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

Indonesia is a nation in shock after the first terrorist attack in

Jakarta for six years. Led by China, it is a big weekend for the Asia

infrastructure investment bank. Good morning. Glad you could join us

for Asia Business Report. We start with Indonesia and South East

Asia's largest economy is counting the cost of shock attacks which

rocked the capital, Jakarta, yesterday. Seven people were killed,

including five attackers, and 20 were injured in a gun and bomb

assault in the heart of an area popular with locals and foreigners.

How much damage will these developments do to the country's

already weakening economy? We're joined IR business reporter. And the

head of equity strategy. Thank you for joining us. The attacker was

jury is still out whether this will and for the rupiah currency,

jury is still out whether this will have an impact on the Indonesia

economy. That's right. The stock market fell 2% immediately after the

attack, but somewhat recovered afterwards, and only surplus 5% at

the end of the day. That has been similar to previous attacks

including after the 2009 attack in Jakarta. The bigger impact will be

on the actual economy, for example the impact on tourism. We have heard

from some of the region's large carriers saying that passengers can

now change their flights to and from Jakarta without having

fee, indicating that some people are reconsidering their trips to

Jakarta. Tourism accounts for 9% of the country's economy, which is not

as big as compared to Thailand, but the government has been trying to

increase that. This attack would be a big blow to that. You lived in the

Indonesian capital during the turbulent times of the late 1990s,

the Asian financial crisis and the violence that took place during that

period. Do you think this attack on Thursday will have an impact on the

economy? I lived there in the 1990s, and there would earnings in those

days. All kinds of things going on. At that point in time, I was

surprised by the resilience of the Indonesian people and its economy.

It went through a massive downturn and it was a different story. But

people were able to get by and make their way through that turbulent

time. My initial idea is that even though this is a tragic event,

especially for the families involved, for the broader economy, I

think this is a temporary issue. That is what the bank is suggesting

on its website. It is a challenging time for the president. To calm

investors' fears, but only around these terrorist attacks but also the

economy. You could call it a test of the administration among investors,

because Widodo was elected with the hope he could address issues like

the economy and terrorism. Critics could argue this is yet another

example that the president has not been able to address those issues.

Widodo has not really lived up to expectations. What

clients right now who are asking questions of what they should do

with their Indonesian assets? It is true that the expectations they came

straight after it is election were very high, but I'm not sure we can

blame him for this, but they need to spend more money. We see that is

slowly taking place. It would be nice if it was faster, but even if

the money is there in Indonesia, getting things off the

ground takes a bit of time. What about the cut in interest rates by

the central bank? Was this able to boost the economy from where it is

at the moment? It should be supportive. The rates in Indonesia

have been high. There will be cuts coming through in the second quarter

of this year. The deficit is there, that it is not alarming. The economy

seems to be OK, and hopefully the impact of that fiscal spending will

come through. We think a rate cut was appropriate, and the central

bank thought the terror attacks were probably a temporary thing. You have

attacks in Jakarta including the potential for Islamic State threads

in the region, as well as the other risks, especially lower oil prices

and concerns about the Chinese economy. That is the sentiment right

now? Are investors starting to pull out their investors from emerging

market economies in the region? I have not seen data yet. There are

stories going around, but people are nervous and markets are down. That

is when redemptions take place. The core of this are the changes to the

rate in China. The head of equity strategy of HSBC, what are you

telling them? Should they be fully invested in stocks or cash? Through

the first part of this year, we will have volatility. With the exchange

rate, things will be frontloaded at the beginning of this year. We'll

have to deal with some of that volatility. We can equate that to

events we cannot forecast like what we have seen in Jakarta. Late in the

year, money flows back into markets and that will support some of the

equity markets. Are there any particular sectors that stand to

benefit in the midst of all of this risk? Benefit is difficult. I would

say there are particular sectors which irrespective of what is

happening will do well. Some of them are policy related, China related,

wind and solar industries with clear policies, the Internet, which is

growing in China, but also the Philippines, Indonesia, there is a

growing trend. Banks reinvest the money people put in them. It is a

growing trend that happens irrespective of what happens with

the economy or on the political side. Those themes are something

people should look at. Thank you both for your insights. Let's take a

look at will rebound in in Asian trade after an eight-day drought

that saw it fell to $30 a barrel -- oil. There are worries Iran will add

more oil. This is how prices are now trading in Asia. Brent crude

currently at $30.82 per barrel. The rebound in oil has given a boost to

the Australian oil companies. Running -- man climbing -- one

company has climbed 6%. The collapse in oil prices has put pressure on

BHP, despite a write-down, they still have plans to invest $1.5

billion in the onshore US assets this financial year. Let's have a

quick look at shares. Intel plunging 5% after investors were not

impressed at the fourth quarter. They have been looking for growth in

the data centre in it to account for the slump in demand for chips used

in computers. The Asia infrastructure investment bank

ceremony this weekend. We have more in Beijing. China felt it did not

have enough clout in the Washington -based institutions like the IMF and

World Bank. Clout commensurate with its growing economy. It's now has

its own institution in Beijing. China does not have more than 50% of

the shares, but clearly, an institution in Beijing with a big

save from the Chinese government will give the Chinese love and

power. -- Chinese government. If countries come here

expand their hydroelectric schemes are road systems, will there be

political strings attached to the cash being doled out? Also, will

fund is here divert funds from other institutions? There has been a broad

welcome to this bank everywhere apart from the government in

Washington. Allies of the US government are involved. Thank you

for investing in your time with us. Goodbye for now.