Pesek's View From Asia
Good morning, everyone. Here's a look at some of the stories Asia has been focused on today. I'm going to be away the next couple days, but the updates will return on Monday:
India's new central banker won't get a honeymoon.
Standard & Poor's put India's deepening financial crisis in stark relief: There is more than a one-in-three chance the country will be downgraded within two years, a risk that will grow as officials in New Delhi dither ahead of a May election. Until then, all eyes will be on Raghuram Rajan, India's new central bank governor, who starts tomorrow. If the respected economist hoped for a honeymoon period, a chance to get his bearings, he can forget it. The rupee is flirting with 70 to the dollar, and with politics paralyzed, the onus for action has fallen on him. Rajan will have to impress world markets right out of the gate if he's to have any hope of success.
Fitch calls Malaysia out for economic baby steps.
In July, the ratings company cut its outlook for Southeast Asia's third-largest economy to negative, citing rising debt and lack of budgetary reform. More recently, as the market turmoil engulfing India and Indonesia ricocheted Malaysia's way, Prime Minister Najib Razak curbed subsidies that were stretching government budgets. Yet Fitch isn't impressed. “Further steps to improve fiscal sustainability and long-term macroeconomic stability could see the ratings revert to stable outlook,” says Fitch analyst Andrew Colquhoun. At a time when global investors are scrutinizing national balance sheets more aggressively than in the last 15 years, Najib must do better than fiscal baby steps.
Is China's Li the second coming of Zhu Rongji?
Reform-minded Chinese officials hope so. But Premier Li Keqiang is pledging to do two contradictory things: execute a top-to-bottom shift in the nation's export-addicted economy, while maintaining 7 percent-plus growth. If this balancing act sounds impossible, that's because it is. To succeed, Li needs to develop some of the toughness demonstrated by Zhu, the man who held his job from 1998 to 2003. Zhu knew that making China more innovative, productive and stable meant creating a vibrant private sector, and he was willing to cause pain -- throwing tens of millions of Chinese out of work -- to get there. Li is still talking as though China can reform without suffering markedly slower growth. That's wishful, not wise thinking.
Sony's 'sense of crisis' makes it takeover target.
Poor Sony just can't get a break. The one-time innovative powerhouse this year finally introduced a smartphone some Japanese want to buy and hopes to bring the Xperia global -- just as the market for pricey handsets has become saturated. “We have a high sense of crisis," Yasuhiro Ueda, a Sony senior vice president, tells Bloomberg News. As the company that once changed the world with the Walkman fights irrelevance, shareholders may may have to take hope from Microsoft's purchase of Nokia. With each passing year, content-rich Sony's only real future is as a takeover target, especially as its board digs its head into the proverbial sand. Nimbler rivals Apple and Samsung have the hardware, Sony owns music and movies galore. Merger, anyone?
Myanmar is behind schedule on stock exchange.
This will sound like bad news to many. Multinational companies and investors alike are clamoring to cash in on Myanmar's opening after decades of isolation and economic neglect. But it's best if Burmese officials move carefully and methodically to ensure they are ready for the coming onslaught of capital. Myanmar needs a stable and deep capital market to thrive and it turned to Japan to help build an equities bourse. Tokyo-based officials say Myanmar is behind schedule to open trading by 2015. And that's fine; it's more important to get things right than meet an arbitrary deadline that's more about today than tomorrow.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)