18/09/2014 Asia Business Report


18/09/2014

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

:00:00.:00:17.

America's central bank makes it clear it is in no rush to raise the

:00:18.:00:23.

cost of borrowing. The largest e`commerce site in the world,

:00:24.:00:27.

Alibaba, gets set for what could be the biggest ever public share

:00:28.:00:34.

listing. Welcome to Asia Business Report.

:00:35.:00:39.

Is the American economy strong enough to survive without emergency

:00:40.:00:44.

help Western interest rates have been at record lows since 2008 and

:00:45.:00:48.

billions has been pumped into the economy. In Washington, the US

:00:49.:00:57.

Federal Reserve made it clear while stimulus measures might be ending,

:00:58.:01:00.

it's not rushing to raise the cost of borrowing.

:01:01.:01:08.

Here at the central bank, the focus was on whether change would be

:01:09.:01:10.

occurring in the language to describe a rise in interest rates.

:01:11.:01:17.

That's because the Fed has insisted it won't raise rates until

:01:18.:01:20.

considerable time after the end of its economic stimulus programme.

:01:21.:01:27.

With that expiring next month, tension shift to when rates might

:01:28.:01:36.

rise. The chair of the Fed insisted that guidance of considerable time

:01:37.:01:38.

shouldn't be linked to a specific date. I want to emphasise that there

:01:39.:01:44.

is no mechanical interpretation of what the term considerable time

:01:45.:01:51.

means. As I have repeatedly said, the decisions the committee makes

:01:52.:01:55.

about what is the appropriate time to begin raising its target for the

:01:56.:02:01.

federal funding rate will be dated depending. What's the point of

:02:02.:02:06.

forward guidance if not linked with a date? The Fed needs to adapt to

:02:07.:02:12.

changing economies. Unemployment is falling, inflation coming back in

:02:13.:02:18.

line, but it needs the flexibility to adapt to changing economic

:02:19.:02:23.

conditions. Raising rates too quickly could choke an economic

:02:24.:02:27.

recovery. Keep them too low for too long and the economy could spiral

:02:28.:02:33.

out of control. America has been awash with cheap cash through low

:02:34.:02:35.

interest rates and economic stimulus. Those emergency measures

:02:36.:02:43.

can't last indefinitely. Shares in Sony have fallen by 12% in

:02:44.:02:48.

Tokyo today after they said it stands to lose $2 billion this year.

:02:49.:02:55.

That's more than four times its forecast of just a few months ago.

:02:56.:03:00.

The company blames a downturn in mobile phone business for the

:03:01.:03:05.

estimated net loss. Sony has promised a turnaround but will it

:03:06.:03:12.

deliver? I spoke earlier with a partner at frost and telephone and

:03:13.:03:17.

asked him if Sony's troubles were linked with a smart phones `` Frost

:03:18.:03:24.

and Sullivan. It is a balance sheet. They are taking the goodwill they

:03:25.:03:26.

had in the business. Having said that, the forecast has been lowered.

:03:27.:03:34.

The positioning is muddied. They aren't at the top end. They aren't a

:03:35.:03:42.

follower. They aren't acting at the low end. They are in a muddled

:03:43.:03:47.

position. It isn't the first choice of the customer. Zero at the mass

:03:48.:03:54.

market. Any indication they are addressing the issues? Apple has

:03:55.:04:00.

released new products. Samsung will react. There are so many other

:04:01.:04:05.

brands in the market. I don't see that changing. They are launching a

:04:06.:04:11.

new product. I don't see anything that will make it a category leader.

:04:12.:04:18.

I don't see anything that will attract it for the small market.

:04:19.:04:24.

They don't have a strategy if you look at what they have done. They

:04:25.:04:29.

will continue to muddle, begging the question, should they be in the

:04:30.:04:35.

business? Official figures in Japan show exports fell by 1.3% from one

:04:36.:04:39.

year ago. The data shows Japan shipments to the US declined in

:04:40.:04:46.

August, adding to concerns of the third`largest economy mightn't be

:04:47.:04:49.

able to rely on a pick up in trade to help recover from the April tax

:04:50.:04:54.

hike. News Corp demands of the European Commission have a tough

:04:55.:04:59.

approach with Google. They say the search engine has

:05:00.:05:01.

become a platform for piracy and that powers increase in every day

:05:02.:05:07.

with Google. Google said it tackles piracy rigourously.

:05:08.:05:12.

EBay has been compromised with users who clicked on some links diverted

:05:13.:05:17.

to a site designed to steal their credentials.

:05:18.:05:22.

It was set up to look like eBay's welcome page. Motorists in the UK

:05:23.:05:25.

are warned about the dangers of using smart watches while driving.

:05:26.:05:32.

The wrist device are covered by other laws designed to stop people

:05:33.:05:35.

checking gadgets on the move but officials say any accidents caused

:05:36.:05:40.

wide drivers distracted by the device will result in severe

:05:41.:05:43.

penalties. Currency and market watchers are

:05:44.:05:46.

waiting to see how Scotland votes in its referendum on Friday. Some tip

:05:47.:05:52.

the pound to head for a fall if it is a yes vote. I spoke earlier with

:05:53.:05:59.

Tony Nash from Delta economics. If there is a yes vote there will be

:06:00.:06:06.

volatility, some say 10%. It depends on how people calibrate the value of

:06:07.:06:11.

that pound. What is the GDP contribution? What stays with

:06:12.:06:17.

England? The separation isn't for some time. The volatility we will

:06:18.:06:22.

see is people figuring out the calculation. There are so many

:06:23.:06:30.

unknowns. The issue of currency and what Scotland users, sharing the

:06:31.:06:37.

pound, the euro, that isn't decided. That isn't decided yet. Until it is,

:06:38.:06:41.

it will be difficult to assign a value. Do you see the pound falling

:06:42.:06:49.

as much as 10% as some predict? It is possible but it depends on the

:06:50.:06:52.

tone from both sides. If you assume a yes vote, is there an agreeable

:06:53.:06:58.

tone? Many small countries don't have their own country, it currency.

:06:59.:07:06.

`` their own currency. Discussion has said that Scotland can't use the

:07:07.:07:10.

pound when a lot of other countries do that with other currency. An

:07:11.:07:15.

agreeable tone would help to calm the market and ease volatility. Lots

:07:16.:07:22.

of countries hold foreign currency in the pound. What impact in the

:07:23.:07:29.

region? Depending on the value and volatility, if there is a devalued

:07:30.:07:35.

pound, countries could look at their allocation of the pound, the

:07:36.:07:38.

third`largest reserve currency globally. If people retain a certain

:07:39.:07:45.

value to their reserve holdings, they might up their holdings or

:07:46.:07:48.

switch to other currencies. Not too long and we will know the outcome of

:07:49.:07:53.

the referendum. One of the world's biggest offerings will take place in

:07:54.:07:57.

New York with China's leading e`commerce site Ali Bubba expected

:07:58.:08:00.

to complete it they'll all shares to investors on Thursday `` Alibaba.

:08:01.:08:06.

Trading opens on Friday to the public. What can the company expect

:08:07.:08:13.

from investors? The big apple, America's financial

:08:14.:08:18.

centre. New Yorkers have a reputation as a tough crowd to

:08:19.:08:22.

please especially with investment as massive Chinese company at Alibaba,

:08:23.:08:27.

will soon discover when shares begin trading here at the New York stock

:08:28.:08:32.

exchange. In 20 years trading, it has been one of the biggest events I

:08:33.:08:38.

have witnessed. Inside this emblem of capitalism, Alibaba, trading and

:08:39.:08:45.

Alibaba, is about to have what could be the biggest stock offering on the

:08:46.:08:50.

planet, bigger than Facebook. Such is the anticipation for this trader

:08:51.:08:54.

who has had a request for shares by a Chinese social media. I am active

:08:55.:09:00.

on Chinese social media and I have had people chatting with me asking

:09:01.:09:04.

if I can connect them with their IPO team because they want to buy two `5

:09:05.:09:09.

million shares of the IPO. Why all the hype? This internet analyst

:09:10.:09:17.

explains. The company is poised to take advantage of the largest

:09:18.:09:21.

emerging middle class in the world, China, and the largest consumer

:09:22.:09:24.

class in the history of the world, China. Alibaba's success has made it

:09:25.:09:30.

the biggest force in Chinese internet. It's helped turn its

:09:31.:09:36.

founder Jack Meagher from a teacher into one of China's richest men. ``

:09:37.:09:45.

Jack Ma. Investors have been told to trust Jack, but should they? This

:09:46.:09:50.

company comes with unusual risk, including a unique owning structure,

:09:51.:10:02.

giving Mr Ma control. Despite the risk it appears there isn't a

:10:03.:10:08.

shortage of investors in the world largest economy covering for Alibaba

:10:09.:10:12.

in the rise of the world's second`largest economy.

:10:13.:10:19.

A look at the market and you can see the turnaround in trade this

:10:20.:10:23.

morning. The Nikkei is up, the Hang Seng and Australia are down despite

:10:24.:10:26.

those comments from the Federal Reserve in the US. That is it from

:10:27.:10:30.

this edition of Asia Business Report. Thank you for watching.

:10:31.:10:38.

Report. I am Mike Embley with the main news

:10:39.:10:44.

stories. With hours to go before polls open,

:10:45.:10:47.

both sides in the Scottish referendum campaign have held

:10:48.:10:49.

rallies as they made their final efforts to win over undecided

:10:50.:10:52.

voters. President Obama says American forces

:10:53.:10:56.

won't have a combat mission in Iraq, the day after his top general

:10:57.:10:58.

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