01/06/2016 Asia Business Report

Could there be relief for Japanese consumers? PM Shinzo Abe is poised

to bring another rise in the sales tax. And, we look at the business of

investing in valuable linkages. -- vintages. Good morning, it is

Wednesday, glad you could join us for this edition. We kick off with

Japan, and it is one of the key planks of the PM's promised reforms

aimed at reforming his country's ailing economy. But now a hike in

the sales tax from 8-10% is possibly going to be delayed.

Earlier, I spoke to achieve Japan economist, who was in a Tokyo

Studios. I asked him if the increase could cause debt levels to

increase. Considering the stability of Japanese government finance, it

is not a good thing. If you consider the current situation in the

Japanese economy, I definitely think the decision is the right thing.

What could be the repercussions for Japanese economy if the sales tax

hike is delayed? As full a positive reaction, the possible negative

impact from the sales tax hike will be cancelled. We think about 0.3% in

terms of GDP growth rate, but on the other hand we must consider that

some agencies could improve credit ratings of sovereign debt. But I

don't think this would lead to rising... Australia is in the midst

of an election campaign and the economy as a key issue for both

sides. That means there is a focus on the latest economic growth

numbers, which are due soon. We were told we could see some better than

expected data. A very strong result yesterday, to begin directly to GDP

today. There is a 1.1% starting point, making the GDP numbers are

nice chance of beating what economists have read easily

predicted. And the government will definitely put the best possible

spin on this GDP number. But if you break it all down, what are the

reality is that you see from the economic numbers? There will be

something for everybody in today's numbers. The headline number is

almost certainly strong, which is good for the incumbent government.

For the opposition, domestic demand numbers are likely to be soft to

week, so they will be looking at those numbers and saying the export

number is good, but the domestic demand number remains weak. That is

a real question on these numbers. How strong is the domestic economy

performing? The export industry is the automatic stabiliser, if you

like. But the domestic demand question is still there. Is there

enough inherent growth in the local economy to sustain us if and when

the exchange rate changes. A Japanese mobile character will

unload $7.9 billion in its stake in Alibaba. The deal will bring its

stake down to about 20%. This is one very small part of China's huge

pharmaceutical retail industry. There are generic drugs and more

specialist over-the-counter treatments. The drug industry here

was worth 115 billion US dollars last year, second only to the US

market. The forecasts are that those figures are only going to go one

way, and that is up. It is because China's population is growing, it is

ageing, the people are demanding they need more drugs and better

quality of drugs. The government he has two priorities. To keep costs

down because it needs to be affordable for the government, but

it also wants to ensure that these drugs remain affordable and

accessible to everyone in the country. Over the next five months

we are seeing an aggressive push. Everyone involved in the process

wants to ensure that they are keeping the price of these drugs at

the level they have pledged to keep it out. It is also trying to

cultivate its own Chinese domestic pharmaceutical manufacturing base.

It is difficult to do that if you are keeping the costs down. You have

to look at some of the evidence for the end of 2015, when the drug

market in China stalled. In fact, it contracted by 1%, which is not a

figure that aspirin Chinese drug manufacturers want to see.

Would you have a glass of good wine or a single malt Scotch on the

rocks? What is better value for money as an investment. A corruption

crackdown in China has caused the industry to buckle, and many areas

have been wound down. Is it for drinking or investing?

That is a question for Ted Hodgkinson, a lifelong lover of fine

wine. It was really only about ten years ago when I saw the prices of

wine going up but I thought I needed to invest, because of consumption

and protecting my position, but also for the long-term gains. At his

peak, he had 1000 bottles of Australian and French wines in his

portfolio. In 2011 the one investment market slumped due to an

anticorruption drive in China. This bottle now costs just $400, much

less than its heyday five years ago. And this can be had for $725, far

cheaper than at its height in 2011. TED still drinks wine, but he no

longer buys it for invest in. Instead, he has just bought another

tipple, single malt whiskey. It is a market even smaller than the one for

investment great wine, but over the last five years, benchmark fine wine

prices have fallen by a third. At the same time, rare whiskey prices

have more than doubled. This man is a wine distributor, who started a

$10 million whiskey fund that is now largely closed to new investors. You

have witnessed first-hand the wine investment market and the bubble

burst just a few years ago. Why is whiskey any different? When the

world has a shortage of old and rare single malt whiskey. It has been

going on for about ten years and we think will continue for at least the

next five years. Analysts say it is a very liquid market. The so-called

passion fund is not intended for the average investor. It is a niche

sector with potential for big gains and losses.

Before we go, here is a quick look at the markets. As you can see,

another lacklustre day for Asian trade after US equities close down

overnight. The Nikkei down 4.9%, and the All Ordinaries giving back 35.

The top stories this hour: The deposed former

Prime Minister Yingluck Shinawatra returns to the public eye