04/07/2016 Asia Business Report

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

A nation in limbo. Australia's election cliffhanger leads to

worries about economic uncertainty. And find out why this game in

Pakistan is raking in the sponsorship cash during the holy

month of Ramadan. Good morning Asia, hello world. It is the start of a

brand-new trading week. I am Rico Hizon in Singapore. Australia could

be facing the prospect of a sovereign credit rating downgrade in

the wake of the inconclusive federal election over the weekend. The

failure to produce a clear winner means possible Parliamentary

deadlock and unwelcome uncertainty. A chief economist at National

Australia Bank joined me from Melbourne earlier. I asked if the

result could cause instability in the economy. It is hard to tell. We

are probably two or three weeks away from knowing what the actual numbers

are going to be, and then it is really going to depend on how or if

the government can actually operate. We also have obligations in the

upper house, where it looks like there are a large number of

independents as well. -- complications. You need to put it in

the context that the Australian economy has been performing pretty

well leading into this, and it might cause some uncertainty for a little

while but I think ultimately hopefully people will look at their

own economic outcomes and react according to that. That is what the

history has been. A lot of different scenarios. What do you think of a

potential downgrade? Is that possible? It is possible that

Standard and Poor's might put us on credit watch but I think that is two

or three months away. What has happened is basically two of the

three ratings agencies came out and said basically they are not on

negative watch. One has not said anything. I think really you would

need to wait and see how this all pans out. And for me, if you were

going to put Australia on negative watch you probably wouldn't do it

for several months. So our fiscal position is pretty strong. Will this

mean the cost of money will be higher if there is a credit rating

downgrade for Australia? Well, Australia is already a fairly

expensive trip away so I suspect at the end of the day it is not really

going to make that much difference. Most people assume you get credit

downgrades and immediately the cost of money goes up. It will mean that

all the Australian big banks are double-A rated and they will

probably move down a notch, but I don't think it is a laydown is at

that it is going to happen and in terms of the actual cost of

borrowing I am not sure it will make a big difference -- lay-down misere.

Now to another vote which sent a shockwave across the world, the

effect of the UK leaving the EU are far reaching, including possibly on

those who would want to work in the UK. One law firm has seen 1001 %

rise in immigration enquiries. I spoke to the head of immigration at

one firm in the UK and she said it could mean opportunities for UK

workers. Traditionally the UK has looked to the Asian market because

it is recognised they have a high skill set. In the UK at the moment

we have skills shortages in certain areas and particularly in IT,

software development, and construction and engineering as

well. Those are the areas that the UK would look to the Asian market,

particularly as the European market is likely to become more restricted.

And briefly, what challenges ahead does the jobs market faced after

Brexit? Yes, so traditionally for many years the UK has had a ready

source of employees from the European Union. Now we can't say how

the European economy will shape up in the next two to ten years but it

seems likely that there will be restrictions on European migration

which will pose further challenges for businesses, who are likely then

to look further overseas towards the Asian markets to meet their

recruitment needs. Now to another major British story but not Brexit.

The world's biggest tennis tournament, Wimbledon, is under way,

and Kei Nishikori is doing well so far. And every time he is on the

stage, so is his sponsor. It is one of the few manufacturers who managed

to enter the realm of sports sponsorship. I asked whether the

success of the brand depends on the success of the players. Maybe it is

not the main point, there are many reasons for success in the market,

but they want the relationship are basically two reasons. One is

awareness, so you want to push the brand up and become part of the

competitive is that, if somebody doesn't into the store to buy

something, they think how about that Rand. -- goes into the store. --

that brand. And you need to benefit from the winning image of the

player. It is known for its quality products, does it really need the

global endorsement? Can rely on its popularity and the quality of its

shirts and trousers? I think it is a question of where your target group

is and who your target group is. I think in the case of Uniclo, it is

well known in Asia and maybe not in the rest of the world. Wimbledon is

something everyone watches anyway. When they sign a deal for $50

million, probably over a period of time, they say they were trying to

build him up as the face of Tokyo 2020 -- Uniqlo. It is a long-term

strategy which could benefit the brand in the player. For Japanese

companies overall, is it important for them to have an endorser,

whether local or international? I think it is. I think it is important

for any company, because as I said it needs to be a fit and it needs to

be an image transfer from the player, or for the brand in the

player. It is a kind of give and take. There are some companies such

as Toyota Sharp or Nissan, they don't really have any endorsers but

rely on the quality of their products. We see a trend of

endorsers more and more. We see celebrity culture going from Asia

into other markets, and we see more and more, they also have people but

we don't know them because they are Japanese. So we need to see who can

reuse, who was a good fit, who would give us that kind of exposure on the

global stage. Look at something like Turkish Airlines at Euro 2016. They

are a big sponsor, found in all the stadiums, on the shirts and

everything. So I think it really benefits if you have somebody that

can go out there, ring your brand out there, and it is not a brand out

there, but the celebrity. Television studios in Pakistan are crammed with

contestants hoping to strike it lucky on game shows. They are so

popular that they are more sought after by sponsors than TV

advertising. It is the hottest ticket in town. TRANSLATION: I come

here to enjoy myself and win lots of prizes. People are fasting but they

are also queueing to take part. A private TV channel is feeling its

Ramadan schedule with gameshows. They say it brings an extra $760,000

in ad revenue. All these expensive prizes like these cars, motorbikes

and home appliances are sponsored by different companies. When these

prizes are given away, the sponsor's name is announced repeatedly. This

young man is going home a winner. TRANSLATION: The question was very

easy. I knew the answer but I wasn't sure I would win the car. I am

feeling good that I have won a car. Inrun -- Imran Patel is also feeling

good. TRANSLATION: Gameshows run for two or three hours. There is higher

viewership of these gameshows. Sponsorship of these gameshows is

also bigger than TV commercials and they reach more people. But this

success has created problems. Firms have started to spend less on TV

advertising. TV owners took fright, and the compromises was agreed.

Firms sponsoring gameshows must also agree an advertising deal.

TRANSLATION: What the sponsor benefits from is that the host

endorses the product during the programme. They get the brand

endorsement and also the integration. On the other hand, TV

commercials have their own importance. It costs more than

sponsors buying airtime on TV channels, but all in all this is a

win-win situation for clients. This year it is estimated that the top

Pakistani companies are spending nearly $240 million on branded TV

commercials for Ramadan. It is the holiest time of the year, but also

the busiest one for TV companies and advertisers. And the markets, after

difficult trading last week we seem lost momentum for Asian markets,

they are down in early trade. Thank you very much for investing your

time with us. I am Rico Hizon. Goodbye