Good morning, everyone. Here's my take on some of the stories driving the debate in politics, finance and social issues across Asia today:
The Federal Reserve's exit from quantitative easing could burst Japan's bond ``bubble.''
That warning comes from former George Soros advisor Takeshi Fujimaki, who won a seat in Japan’s upper house of parliament last month. Fujimaki's nightmare scenario would involve two steps. First, Prime Minister Shinzo Abe delays increasing the nation's sales tax, something that would worsen Japan's debt profile. Two, Fed tapering efforts cause a fresh credit crunch that slams Japan's bond market. Japan has the highest ratio of public debt to gross domestic product, and yet enjoys the world’s lowest borrowing costs. Reality, when it comes, could bite.
Li Ka-Shing, Asia’s richest man, is turning to Europe as Hong Kong property slumps.
You know things are bad in the greater China region when the head of Cheung Kong Holdings and Hutchison Whampoa is optimistic about crisis-wracked Europe. Sure, increasing his telecommunications market share in Europe could be a shrewd move to buy up some distressed assets on the cheap. Li, nicknamed ``Superman'' by the local media, can be a brilliant market timer. Yet as an indicator of confidence -- or lack thereof -- in China's shaky economy, Li's shift in focus is telling ... and worrying.
Philippine bonds are rallying on speculation Moody’s will be the last of the three major rating companies to elevate the nation to investment grade.
The real question here is, what is Moody's waiting for? The big criticism lodged at credit raters in recent years was being too generous with grades. In the case of the Philippines, the problem is one of stinginess. The Philippines may be the only one of Southeast Asia’s five-biggest economies that still has a junk rating at Moody’s, yet its 10-year bond yield of 3.61 percent is the second lowest after Singapore’s. Markets are responding to resilient Philippine growth, an improving fiscal profile and a current-account surplus under President Benigno Aquino. It's a wonder Moody's isn't.
The widest swings in India’s rupee in 19 months have investment banks predicting the currency will slump past 62 per dollar.
Let's call India's challenge what it is: a currency crisis. World markets have been registering a vote of no confidence against the government for weeks, but now the negative momentum is taking on a scary life of its own. Both Societe Generale and Macquarie Bank are betting on new lows for the rupee and desperate measures by the central bank to tighten the cash supply. Trouble is, saving the rupee will slam a broader economy that is already expanding at the slowest pace in a decade. If India hopes to attract more foreign-direct investment under these crisis conditions, it's dreaming.
China is getting some unique help from the World Bank as Premier Li Keqiang steps up efforts to restructure the economy.
The lending institution plans to draft sweeping proposals to privatize a major bank and allow farmers to sell their land, according to the Wall Street Journal. That's encouraging news on two fronts. One, it suggests China is keeping an open mind by reaching out to an institution often seen as an extension of the U.S. Treasury Department. Two, it indicates that President Jim Yong Kim's pledge to shake up the World Bank and think out of the box isn't just talk. Anything that refocuses the lender on poverty-reduction efforts and helps China to boot isn’t just good for markets, but all of humankind.
(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)