06/01/2014 Asia Business Report


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


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,


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