06/01/2014 Asia Business Report


06/01/2014

Live from Singapore, the essential business news as it breaks and a look ahead to the news that will shape the business day.


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

:00:00.:00:00.

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

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

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predictions in the world of business. What one investment bank

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

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

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

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

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

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points. In general, investor confidence has been driven by

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government initiatives to boost the economy, encourage expansion and the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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election will be closely watched by the business community and

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

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

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

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competitor have been making public appearances. Russell Dravid took

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centre stage to address the country's business community last

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

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

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ministerial candidate of the opposition held his summit,

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

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

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

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

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

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industrialists from lavishing their praise. He remains a divisive

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

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UK and other Western governments suspended ties with him for many

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

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

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enter Parliament after the general election but voters will not simply

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

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

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

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balance of power, this fiercely fought competition promises many

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

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thousands of officials were investigated for corruption last

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

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

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

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

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

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

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

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

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

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

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

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back of increased worldwide consumption. Interesting or

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outrageous? There are plenty of predictions being made about what

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this New Year will bring. One technology giant believes everyone

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

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predictions? What about emerging markets and the US technology

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

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

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various things with the hope of greater growth. Particularly US

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

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injected into emerging markets as the interest rates of the developed

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

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

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growth and with the Federal Reserve tapering that quantitative easing,

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

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

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yield. This is not what technology companies in particular would

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

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

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manufacturers and suppliers? Not necessarily a huge negative affect

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

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

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

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

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

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markets? The Indian and Indonesian currency is depreciating against the

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

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

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

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

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

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Looking at Asian stock markets again. Investors have been by

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

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

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

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

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

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

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little sign of progress,

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