28/01/2014 Asia Business Report

decisions it took during the financial crisis. It has announced

that top management will not get bonuses this year. Now for Asia

Business Report. Emerging markets and investor

concerns. We find out what is driving the fall of Asian markets.

All eyes on India. What will the country's Central bank do next to

spur on economic growth while keeping inflation in check? Welcome

to the programme. This is Asia Business Report. We begin with a

look at the Asian stock markets and how they are doing in mid-morning

Tuesday trade. Shares fell overnight after concerns of the Federal

Reserve. There has also been trouble in Latin America and Argentina where

the country's sliding currency sparked a sell-off on Wall Street,

which has spread all the way to the region. Today, we have a mixed

reaction to the developments on Wall Street overnight.

Are emerging markets in real trouble? Earlier, I spoke with our

guest and asked him what we expect to see in the weeks to come. 2013

was a great year for everyone. Right now, we have a hangover. It was a

great party and people are feeling some pain. We believe this hangover

will soon go away and the situation is not dire. Emerging markets have

many problematic points. In general, the contagion effect of 1997 and

1998... We just don't see that happening in this environment.

Focusing on the current crisis in Argentina, how important are the

Latin American markets to Asian companies? Certain individual

companies can have increased exposure but overall, the effect of

Argentina on the Japanese economy is frankly negligible. How China is

doing, how the US is doing, Japan's first and second largest trading

partners are the most important. For south-east Asian Nations, it's about

Japan, China and India. They are the three drivers of the emerging

economies in the region. Good swings in Latin American, -- Latin American

economies trickle down to other small economies in the region? Some

companies can be impacted, yes, but this is part of our overall theory

that 2014 World Cup stock picker's year. -- will be a stock picker's

year. Individual stock movements up and down will be much more dramatic

and we believe there is a chance that the indices may potentially

rich below negative single digits. Apple has reported better than

expected earnings for the October to December quarter. The company's

shares were down in extended trading in the US after it failed to reach

expectations for sales of its iPhone. 51 million units were sold,

down from 55 million expected by many analysts. The sales outlook is

also lower for 2014, concerning investors. However, double-digit

revenue growth was recorded for the period in China and Japan. Where is

the investor disappointment coming from? This is less about current

results as it is about the upcoming quarter full of having made

announcements about the partnership in China, analysts were expect them

continued growth in iPhone sales in the Chinese market. We also expect

sales going up globally in the coming quarter. Apple has indicated

slightly lower than expected growth in numbers for that coming quarter,

and that is what is bothering the stock market. But investors should

not be bothered about the growth in China, coming forward, and this is

before China Mobile started selling the iPhone in earnest. It is a

tremendous opportunity there and it will drive iPhone sales over the

next quarter. However, in the announcement, Tim Cook was cautious

about the growth of iPhones in the upcoming quarter and that is what

has kept analysts worried about the future of Apple and growth in the

coming quarters. And lower iPhone sales will cast a long shadow over

the smartphone industry because we also have some sound warning of weak

earnings. -- Samsung warning of weak earnings. It indicates that they may

have reached a plateau. People are not replacing their smartphones as

quickly as the analysts and defenders would like. There is a

slowdown in the replacement cycle. I believe the pace of innovation has

slowed. We have to accelerate that case if we need to keep the top end

of the market. On the one hand, we have not done enough in the emerging

markets like China and India, where there is a large population still

yet to be tapped for smartphones. Shares in Japan's Electronics giant

Sony have fallen by as much as 3% in the US after its credit rating was

reduced to junk status on Monday. Shares were also slightly down in

Japan in morning trade. Moody 's said it was concerned about the

television and PC business, both of which face tough global competition.

The operators of the virtual currency Bitcoin have been arrested

in the US. Robert Faiella and Charlie Shrem has been charged with

money-laundering. Authorities said the pair were engaged in a scheme to

sell more than $1 million of Bitcoins to users of the Silk Road

website, which was shut down last year. The Royal Bank of Scotland may

face losses of as much as $30 billion after it said it faced more

than 5 billion for claims join the financial crisis. The bank's boss

said the scale of the bank's bad decisions during the financial

crisis meant that some problems were still just emerging. Indian

conglomerate Tata's shares have dropped significantly after the

death of its chief executive, Karl Slym in Bangkok on Sunday. He was in

Thailand to attend a board meeting of the company's local affiliate.

The Indian economy comes into focus today as the central bank decides on

the cost of borrowing and its battle against rising prices. It will also

present its report card on how the economy performed in the final three

months of last year. We look at the challenges to the country's economic

prosperity. Stitching together the various pieces of the economy, that

is the basic task of any central bank. It's no different in the case

of India but unfortunately for the Reserve Bank of India, the pieces it

is trying to put together have not been cut to the same design.

India's manufacturing sector is the key driver of the economy. It has

slowed over the past few years, dragging down overall growth. Among

the issues that have hit the sector are high interest rates. India's

central bank has raised interest rates twice since September last

year, making it more costly for businesses as well as consumers to

borrow money. Critics argue that the moves have dented domestic demand.

For its part, the central bank has so far resisted calls to lower rates

to try to spare on the economy. It's reason is the stubbornly high

inflation in the country. Rising consumer prices have been a major

issue in Asia's third-largest economy and the country's key gauge

of inflation hit a 14 month high in November. A week Indian currency has

only added to the central bank's headache as it looks to keep price

rises in check. Supporters of the policy argue that lower borrowing

costs may do more harm than good. The subtle bank has a difficult

decision to make. -- central bank. Does it move to encourage economic

growth or does it stand firm to keep price prices in check? It will

somehow have to fit together a compromise to please most of the

stakeholders. However, that is easier said than done. Thank you for

investing your time with us. Goodbye for now. This is BBC News. The

Ukrainian president has agreed to scrap controversial anti-protest

laws. Egypt's top military council has

said the army chief and Defence Minister should listen to what it