06/01/2014 Asia Business Report

heavy rain, strong winds and high tides in the coming days. People

living close to the coastline are said to be particularly vulnerable.

Japan's stock market had a stellar performance last year. Outrageous

predictions in the world of business. What one investment bank

is watching out for in 2014. Thank you for joining us. We begin with

the Japanese stock market, which opened earlier today for the first

time this year. Investors will be watching very carefully after the

Nikkei recorded its biggest annual rise in 40 years. So far, it's not a

good start to the New Year for the Nikkei. It is currently down 340

points. In general, investor confidence has been driven by

government initiatives to boost the economy, encourage expansion and the

weakening of the Japanese yen against the US dollar. Thank you for

joining us. They have done a great job from having the tightest

monetary policy in the world to the loosest. The yen has collapsed,

which has helped exports and tourism. Will it get even cheaper

this year? I think so. The yen is going to keep coming down. As we saw

in the past year, it is a simple dynamic. We saw the stock market

rise by almost 57% in 2013. Can this be sustained with Abenomics? We

believe it can go up but possibly not at the same rates. The point is

that so far, we have not had any premium in there for Abenomics. It's

all about what monetary policy does for profits. There has been no... It

is not like in the US. If genuine reform comes in, there is more room

to grow. This is a critical year because consumption tax will be

raised up to 8%. Could this stifle consumption? Not on its own.

However, the real issue is whether Shinzo Abe will deliver on any of

these reforms. He has been promising and talking and not much has

happened. Just lip service. Will we see genuine action this year? What

will push him to do that? If something pushes him, it will be the

concern about being overtaken by China. That will focus attention on

more uncomfortable reforms. I will not say it's impossible. We have to

be sceptical. But at the moment, he is riding on the benefits of the

weak currency. In India, whoever wins the general election this year,

there will be a new prime minister. Manmohan Singh announced that he

will not seek a third term. The country's economic crisis means the

election will be closely watched by the business community and

investors. The battle for Indian votes has already begun but the

general election is expected to take place soon. The 42 -year-old sire of

India's powerful Mary Gandhi dynasty -- Nehru-Gandhi dynasty. He and his

competitor have been making public appearances. Russell Dravid took

centre stage to address the country's business community last

summer. -- Rahul Gandhi. His speech focused on economic growth and

public-private partnership. On the other hand, when the prime

ministerial candidate of the opposition held his summit,

corporate and foreign officials and lined up to support him. He is seen

as one of India's most dismiss friendly leaders. He is known for

efficient local governor and a lack of red tape. Critics say that growth

has not been shared broadly enough. Some states have done better than

others at bringing down poverty levels. But that did not stop

industrialists from lavishing their praise. He remains a divisive

figure, having been Chief Minister during the deadly riots in 2002. The

UK and other Western governments suspended ties with him for many

years and has only recently renewed their relationship with his states.

Rahul Gandhi and his competitor are widely seen as the front-runners to

enter Parliament after the general election but voters will not simply

be choosing between these two men. Indian politics is much more

complex. Their backgrounds will play a part as will their plans for the

economy. However, with small regional parties likely to hold the

balance of power, this fiercely fought competition promises many

surprises in the months ahead. China's state news agency says that

thousands of officials were investigated for corruption last

year. They were allegedly involved in more than 27,000 cases. Since

coming into power just over one year ago, the new leadership has taken a

tough stance on corruption, warning it could ruin the party. Shares in

HTC are down by as much as 2% today after the company reported worse

than expected profits on Sunday. HTC has been losing ground to its rivals

and said that the net profit in the three months to December was $10

million, compared with more than $33 million during the same period last

year. In Japan, a giant bluefin tuna sold at option on Tuesday for a

significant amount less than the price paid for a similar fish last

year. $70,000 was paid for the fish in Tokyo. It's a steep fall for the

price amid worries that bluefin tuna numbers are being depleted on the

back of increased worldwide consumption. Interesting or

outrageous? There are plenty of predictions being made about what

this New Year will bring. One technology giant believes everyone

will eventually have a smartphone. But what about some big economic

predictions? What about emerging markets and the US technology

industry? These are the effects of the US Federal Reserve's qualitative

easing policy. Money is looking for yield anywhere and is piling into

various things with the hope of greater growth. Particularly US

technology. Emerging markets as well. We have seen lots of money

injected into emerging markets as the interest rates of the developed

world lingered at 0%. People have been looking for yield everywhere.

With the US appearing to come out of what has been a long period of low

growth and with the Federal Reserve tapering that quantitative easing,

and with higher interest rates on the horizon, they are now focusing

more on fundamentals. Blue-chip companies with a high dividend

yield. This is not what technology companies in particular would

normally produce. They tend to be high-growth companies that do not

pay high dividends initially. What impact will this have on Asian

manufacturers and suppliers? Not necessarily a huge negative affect

on Asian manufacturers and suppliers. What you may find is that

this stress is felt in industries that are more exposed to the US

interest rates rising, which in my opinion would be the property sector

that. US technology manufacturers and suppliers... As long as Gross

holds its course, I don't see much of a change there. The currency

markets? The Indian and Indonesian currency is depreciating against the

US dollar? The hot money that has been in the search for yield has

flowed into emerging markets. When you paid your currency to another

country's currency, you effectively import their monetary policy. Most

of Asia, for example, has been running at a 0% interest rate. What

about the Japanese yen? The end of the quarter, it will be much lower.

Looking at Asian stock markets again. Investors have been by

jesting comments by the Federal Reserve -- digesting comments by the

US Federal Reserve. South Korea is bucking the downward trend on

bargain hunting. Thank you for joining us. Goodbye for now. This is

BBC News. The headlines: a stream of bitterly cold arctic air is sweeping

through the US, where temperatures are expected to fall to record low

levels. As negotiations to resolve the conflict in South Sudan show

little sign of progress,