28/06/2016 Asia Business Report

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

Asian stock markets fall and the Japanese yen continues to be strong.

We met an exporter in Japan feeling the reaction to the UK's vote to

leave the EU. And more bad news for the UK as markets take another

tumble. It has stripped off its AAA credit rating and the pound sees

further falls. -- it is stripped of. Good morning, Asia, hello, world. It

is Tuesday. Glad you could join us for this edition of Asia Business

Report. I am Rico Hizon. We kicked off with Brexit and market jitters

are continuing in the region in the wake of the UK's vote to leave the

European Union, the major markets opening lower again this morning. As

you can see on your Tokyo. Yesterday we saw a relief

rally but now it is down. Indeed, it has really been a

for investors here. On Friday, the Nikkei fell by nearly 8%. And as you

mentioned yesterday, we saw a bit of bargain-hunting, and today it opened

sharply lower. Most of the exporter 's' shares are down and that is

because the Japanese yen continues to strengthen, not just against the

British pound but also against the US dollar and all the major

currencies. And that hurts exporters because the strong yen makes their

product more expensive overseas. I went to visit one factory in Tokyo

to see how the result of the EU referendum may affect his business.

In an economic cycle of peaks and troughs at small companies like this

struggle the most. For 40 years this man has been supplying parts for big

Japanese exporters. During the global financial crisis he had to

close one of his factories. Now he is hit by the strong yen as a result

of Brexit. TRANSLATION: We were envious of the EU being a single

market. There are no tariffs. So it is hard to understand why the UK

want to leave, and the strong yen will affect us. When it hit 99 on

Friday it was a real shock. The consensus here seems to be confusion

over why the UK it wanted to leave the EU at all. And Japanese

companies are not just affected by the strong yen. They have been

investing heavily in the UK, with many basing their European

headquarters there. So will they pull their money out of the UK?

Europe, you know, is likely to do some soul-searching. A lot of rules

and regulations are likely to be changing. From here there are likely

to be calls for additional referendums in other parts of

Europe. So if you are a businessman, I don't have a lot of time, I need

to focus on what I can rely on, so I am going to leave Europe and I am

going to go to Asia. So it is going to be sayonara Europe and welcome to

Asia. But the yen is where investors like to park their money when things

get risky. With the strong yen already hurting Japanese exporters,

authorities are trying to reassure investors that they are ready to do

whatever it takes to stabilise the currency. And the Japanese yen is

currently trading at around 101 yen against the US dollar. That factory

owner who I spoke to yesterday said 105 to 110 is a comfortable level,

and that is why when he saw 99, the double digit, he got really shocked

and he said it reminded him of the global financial crisis back in 2007

and 2008, when the yen strengthened even further, to the 80s, and that

really affected his business and the rest of corporate Japan. So the

authorities have repeatedly said that they are ready to intervene if

we see another violent swing strengthening the Japanese yen.

Thank you so much, Mariko Oi. 101 yen, a level not seen since 2013.

And while the yen has surged, some Asian currencies have slumped

following the vote, among them the Indonesian rupiah and the Malaysian

ringat. Philip is an expert from London. She said the slump could

lead to a co-ordinated response from central banks. I think what we might

see that continues is a co-ordinated, either a co-ordinated

currency intervention or a co-ordinated liquidity intervention

so central banks acting in concert to make sure there is liquidity in

the market. I think what is important to recognise is that it is

not just about currency intervention as such. Many of these currencies

have already faced multiple shocks including the lower oil price, for

example, that has been hitting oil exporters and commodity exporter 's.

So this Brexit vote really adds to the risks that have been on the

radar screen for a lot of these countries to begin with. In a sign

of further uncertainty, ratings agencies have downgraded the UK's

ratings. Standard and Poor's has stripped them of their last AAA

rating, cutting theirs from double A+ 288. It indicates that there is

at least a chance in the next few years it will go down again -- to

AA. They could be a number of triggers, it could be the weaker

economy, it could be slippage on the fiscal side, you could have higher

government debt, you could have external side payments, or you could

have further downward pressure on the constitutional risks. And of

course that is much discussed in the country right now, that is the

reaction in Edinburgh that there might be another Scottish

independence referendum, which would leave you with a situation where you

have two very challenging situations to deal with at the same time.

Leaving the European Union is something no one has ever attempted

before while at the same time, they are testing the wheel of the people

north of the border to leave the UK. -- testing the will. Given the

environment of policy-making right now, there are great challenges,

great uncertainty is so lots of opportunities for things to go

wrong. It doesn't have to happen that way but we think there is a

decent chance things might get tricky and that is why we are

keeping a negative outlook. The Brexit vote has continued to occupy

the minds of his best leaders meeting at the World Economic Forum

in China's city of Tianjit. There is a warning that the effect of the

global economy might last a decade. We have seen Chinese companies

heavily investing in Britain. Are they now reconsidering their

investments? Well, when you speak to companies here at the World Economic

Forum and ask them about the likely impact of Brexit on their investment

decision-making, it really does depend on the company and depends

also on the industry. We heard earlier from the chairman of a major

carmaker saying that not only would there be no negative impact but it

was looking to increase but there is a major emphasis on hi-tech here,

and when it comes to start-ups and other companies trying to get into

Europe, it is a different story. For example, we heard from a CEO of a

Shanghai -based investment company which pumps money into start-ups

here, and this is what its CEO had to say. I think part of that impact,

at least in the short term, might be concentrated in Chinese companies

that have been going global. So a lot of Chinese companies are looking

at investments overseas, have been setting up offices overseas and have

been doing trade and investment building up in economies which are

mature and emerging. So a Chinese company thinking about an EU

platform for that new market opportunity might no longer think

about setting up in London or in the UK and then it will be focused

mainly in France or Germany. So a lot of uncertainty there. As you can

see people are still trying to weigh up what the impact of the Brexit

might be in China. Now people thought they were prepared for this

but as the reality of it is dawning on Chinese companies having to come

to terms with it, and looking around and deciding what are they going to

do, there is a lot of debate about what will come in the coming weeks

and coming months. Thank you for joining us from Tianjin, at the

World Economic Forum. Thank you for investing your time with us. Asian

stocks in negative territory, goodbye for now.

The top stories this hour: Britain's credit rating is downgraded,

as the referendum prompts warnings of a sharp slowdown in growth.

A group of British MPs have challenged China's record on human