Pesek's View on Asia
Good morning, everyone. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
Sony told billionaire Daniel Loeb to take a walk, rejecting his call to sell a portion of its entertainment business.
The board's decision to send activist investor Loeb and his Third Point hedge fund packing was unanimous. Now, Sony can return to the task of making flat-screen TVs and other electronics nobody wants and Will Smith movies no one watches. Loeb doesn't have all the answers, nor was his idea of selling as much as 20 percent of entertainment assets in an initial public offering a silver bullet for Sony. But the company's biggest problem is an insular business culture more wedded to the past than open to the innovative future it could own. Sony once changed the world with its Walkman and Trinitron television. Today, it's eating Apple's and Samsung's dust. It will fall further behind if it doesn't embrace some fresh thinking.
China's yuan is near a 19-year high as the government fine-tunes plans to open up the nation’s capital markets.
Funny how Lindsey Graham and Charles Schumer are silent as the currency both U.S. senators slammed as wildly undervalued grinds higher. Amid growing gloom about China's outlook, Beijing's tolerance for a stronger exchange rate is great news. It's fine that the government ordered 19 industries to cut excess production capacity this year as part of Premier Li Keqiang’s pledge to reorganize the economy. It's even more important that China build an open and international financial system so that credit and risk are properly priced and managed. Progress in liberalizing the yuan is a key litmus test of whether China really is changing.
Japan's nuclear crisis, the worst since Chernobyl, is flaring up anew 135 miles north of Tokyo.
Fifteen months after a giant tsunami crippled the Fukushima nuclear power plant, the spin in Tokyo is that Japan's radiation nightmare is over. Shinji Kinjo, head of a Nuclear Regulatory Authority task force, begs to differ. He told Reuters contaminated groundwater around the facility has breached underground barriers. It's now rising to the surface and exceeding legal limits of radioactive discharge. Worse, the ``sense of crisis is weak'' at Tokyo Electric Power Co., which runs the plant. ``This is why you can't just leave it up to Tepco alone'' to grapple with the disaster. ``Right now,'' he said, ``we have an emergency.''
India's cash crunch is rapidly catching up with banks whose profitability is already at a five-year low.
To the list of troubles facing Prime Minister Manmohan Singh -- a rupee flirting with record lows, an exploding current-account deficit, scant foreign investment -- we must add banking troubles. Fitch Ratings predicts the industry's profitability will weaken even further as a cash shortage forces banks to pay more to attract deposits even as loans grow at the slowest pace since 2009. Soured debt in the banking system swelled to 3.7 percent of total loans at the end of December, the highest in at least five years. The slowest growth in a decade is dragging down a key sector that should be contributing to growth.
Is it time for Singapore to start buying babies to stabilize the city-state's falling birthrate?
Former Prime Minister Lee Kuan Yew asks this provocative and timely question in his new book ``One Man's View Of The World,'' according to the Straits Times newspaper. Were he still leading Singapore, Lee would try an experiment: announce a baby bonus equal to two years of the average salary. Ultimately, Lee doubts it would boost Singapore's 1.2 child-per-woman fertility rate. Rather, it would prove the baby drought is about changes in lifestyle and mindset, not high costs. I'm not sure many Singaporeans would agree, but it's nice to see some out-of-the-box thinking is still taking place in high places in Asia.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)