01/10/2014 Asia Business Report

disappeared just over a month ago. Now on BBC News, all the latest

business news live from Singapore. Hong Kong's umbrella revolution is

set to swell. Retailers brace for a dip in national holiday sales.

And, a pickup in business confidence among manufacturers in Japan.

Thank you for joining us. Hong Kong's stock exchange is closed

this Wednesday, perhaps a welcome break after two days of losses

triggered by pro`democracy protest concerns. Speculation is growing

over whether Beijing will impose economic pressure to put a lid on

the protesters' campaign. For more about the response I spoke to Gavin

Perry, a managing director in Hong Kong.

Economic sanctions, they are one way, hypothetically, that the

mainland could increase pressure on Hong Kong to get some movement to

come to a negotiated settlement. There is a lot of talk that China

could remove its 50% retail luxury tax, which would hurt the flood of

tourists to the city. The last round of protests against anti`subversion

legislation, that was one of the rumours that went around. That the

arbitrage tourists, tourists in relation to the luxury tax on the

mainland, was something that was tabled. Hypothetically, the mainland

could look at decreasing that, which would stem the flow of tourism and

retail purchases in Hong Kong. Any kind of economic pressure and

sanctions could undermine Hong Kong's status as a global hub. And

they each need each other. They have made a show that Hong Kong is the

golden goose for them. One of the main aspects is the connect

programme between economies. We have been concerned in Hong Kong of a

growing probability of an international port in Shanghai. When

they revamped the board in Shanghai, we assumed that would

become the international bourse. With the Hong Kong stock exchange,

China is putting Hong Kong forward effectively as the international

Shanghai. That was Gavin Perry in Hong Kong.

Mainland China begins trading between the yuan and the euro as it

encourages the use of its currency. The euro will become the sixth major

currency which can be exchanged directly in Shanghai.

Our correspondent explains the significance of this development.

This is another step to try to internationalise the Chinese

currency, to make it more widely available outside China. It has

deals with America, the UK, Australia and Japan, so the euro is

an obvious partner. China is trying to make the yuan available through

the people's bank of China through the European ECB. The Hong Kong

dollar is at a six`month low against the greenback, could we eventually

see the unpicking of the Hong Kong currency against the US dollar? I

doubt it. Hong Kong has been through theese turmoils before. They are

trying to break the linkage between the Hong Kong dollar and the US

dollar. But Hong Kong is resilient. It will be able to maintain that no

matter what. Business confidence among

manufacturers in Japan has improved since. `` back for the first time in

2/4. There has been a pickup in the three months till September.

Sentiment worsened more than expected. A Japan expert and chief

Asia economist at the bank of Singapore explains what we should

take from these mixed numbers. On balance, it was quite poor. There

was a small bounce in manufacturing. If you look at industrial

production, that stalls. Confidence shouldn't improve. The drop in

nonmanufacturing confidence told you that the rise in sales tax that we

had a few back has hurt the economy more than people expected. As we can

see, there is a double edged sword for the weakening Japanese yen

against the US dollar. It is a benefit for exporters but not good

news for small and medium`sized enterprises. Clearly, it squeezes

margins for some people. In many ways a weaker yen means they have

very few options. They have `` the yen pushing the lower, stimulating

labour demand and hopefully at some point consumption, they are pinning

their hopes on that I mention. In the second quarter we saw a

contraction in the economy. Could we see a technical recession, meaning

two consecutive quarters of falling economic data? You may see it. It

isn't likely that the second quarter was so bad that you would expect a

short term bounce. More worrying is the fact that indicators,. Exports

and so on, are at lower levels than they were a year ago. That shows you

how much the economy is installing. And where does the Bank of Japan go

from here? How can they boost the economy for Shinzo Abe? How could

they boost the Economy? They are in trouble. They have very little

chance of hitting their 2% inflation target next year. When they revise

the target in October, they will have to recognise the economy is off

track, step up stimulus and perhaps move into negative interest rates.

They need to try harder. Due to the weak Hong Kong report,

the Japanese yen is now at 110 against the US dollar, a level not

seen in more than six years. This is due to expectations that the central

bank will ease monetary policy to jumpstart the economy.

Moving onto it other news and Thailand's factory output fell in

August, Keating by 2.7% compared with the same Year 1 year ago ``

keeping. That is at a slower pace than the light, thanks to a drop in

car production which is blamed on weaker domestic and overseas demand.

E`commerce site eBay plans to split its payment system PayPal into a

separate company. News of the initiative expected to be completed

in the second half of 2015% of their shares soaring by 7% in US trade.

Microsoft discloses the details of its next system, windows ten,

skipping version nine. It will run on a range of devices from phones,

tablets, PCs and Xbox games and consoles and will bring back a start

menu which was removed from Windows 8. Hopes are high in India that a

meeting between Narendra Modi and the President will bring significant

returns for the economies. India is counting on US investors for big

infrastructure projects and investors are keen to see Mr Modi

cut red tape and combat corruption. This report from Washington.

It has been a hugely successful trip for the Indian leader.

New York was about showcasing brand India and brand Modi. Telling

America that India business. In Washington, the effort

was to underscore the common US and Indian values, and a striking up a

chemistry. Security was tight around the White House, as the two leaders

got down to business. Prime Minister Modi and President Obama sat

side`by`side and talked on a list of issues, ranging from the Middle East

to Ebola but the economy was central. Last night during our

dinner we spent most of our time talking about the economy. We agreed

that in both countries, one of our primary goals is to improve

education and job training so that our younger people can compete in

the global marketplace. Modi did not shy away from raising issues on

trade disputes, nuclear cooperation and visas, which have dogged the

relationship for some time. TRANSLATION: I also sought the

support from President Obama for service companies in the US market

that are from India. Experts say it would be miraculous

if all these disputes can be resolved overnight, but the two

leaders do seem to have made a promising start. They have agreed to

set up a new agenda to revive this flagging relationship. While Mr Modi

has a strong domestic economic focus, and the US supports that, it

also expects India to be an effective and strategic partner on

global platforms. If the two can fit both on the same page, that

called a success. There has been a jump in sales in

China's in cinemas. `` Chinese cinema receipts. It is a more

successful year than 20 13. The best movie so far is Transformers Age of

Extinction, the new movie. Before we go, a quick look at the

markets. Some stocks move into positive territory despite unrest in

Hong Kong hurting sentiment. The Nikkei is up by 37 points as the

Japanese yen has crossed over 110 on the US dollar, the weakest level in

6.5 years. Thank you so much for investing your time with us. Goodbye

the now. `` for now. I'm Mike Embley.

The top stories this hour: crowds of protesters are still on the street

in Hong Kong as China's national day begins.

The US diagnose as its first case of the Ebola virus on American soil.

The man is an American back from West Africa and is treated in

isolation in a Dallas hospital. Police investigating the death