Japan Warns of Intervention to Curb Yen Rise

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello to our viewers all over China.

You're watching “Asia Market Daily”, co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel and here are the top stories across Asia today.

The yen's strength continues to be a big concern.

The Japanese currency touched a 15-year high against the dollar but retreated on speculation the Bank of Japan and the nation's government will act to stem the currency's advance.

Finance minister Yoshihiko Noda said today that Tokyo will respond appropriately to the yen's one-sided moves, when necessary.

But analysts caution that the impact of unilateral intervention could be muted.

(SOT) Arjuna Mahendran, Managing Director, Head Investment Strategy Asia, HSBC Private Bank:

“It takes 2 hands to clap, in terms of managing currencies, and unless Japan's trading partners in particular the United States, the Fed actually collaborates and co-operate with the bank of Japan, to insure a steady depreciation of the yen, it's very difficult for BOJ to achieve that alone."

The Nikkei is also reporting that the Bank of Japan's considering additional steps to loosen monetary policy and could hold an extraordinary meeting before September 6 to discuss any moves.

Meantime, latest data shows Japan's annual export growth slowed for the fifth straight month in July as a surging yen and sluggish overseas demand threatened to hurt the export-dependant economy.

Japan exports rose 23 and a half percent in July, more than forecast, but imports failed to meet expectations, with its 15.7 percent rise.

(SOT) Arjuna Mahendran, Managing Director, Head Investment Strategy Asia, HSBC Private Bank:

“When you look at the real effective exchange rate, which is basically the measure of how the movements of the yen had affected the competitiveness of Japanese exporters, it hadn't been that averse the last 3-4 years, mainly because Japanese inflation has been so tepid and in fact they have been in a deflation in most of last decade, so Japanese cost of production has not risen as fast as its competitors. To that extent, a dearer yen need not translate anymore into a bad export performance, so I think that's another reality the BOJ takes notice of.”

And now for a closer look at the financial markets.

A down day for most stocks in the region, extending Wall Street losses overnight.

The Dow saw a triple digit loss and ended its fourth straight session in the red with stocks at 7-month lows - the negativity on the back of existing home sales data which plunged by a record amount in July to a 15 year low.

Wall street losses and slowing export growth in Japan spooked Asian markets.

The Nikkei 225 closed down by almost 1.7 percent below the key 9 thousand mark; it's lowest in 16 months.

Exporters were the hardest hit as disappointment spread over the lack of policy action to rein in the yen.

Meantime, South Korea's KOSPI also on a downtrend — losing almost 1.5% half percent.

Samsung shares slipped on BOK's report that South Korea's consumer confidence fell for the first time in five months.

And Kumho Industrial slumped after a capital write-down plan.

In Australia, the S&P ASX 200 also closed down, losing more 1.4 percent.

BHP Billiton the world's biggest miner, reported a 47 percent rise in second-half profit on Wednesday, in line with analysts' forecasts,

That may give the company some firepower in its bid for Potash.

BHP is targeting Potash with a $130 a share offer to power its next phase of growth.

The aviation industry is slowly emerging out of a global downturn as more passengers take to the skies.

IATA's latest data shows global passenger traffic in July is 3 percent higher than it was in the pre-crisis levels in early 2008.

The Asia Pacific continues to be a key driver of growth with regional carriers outperforming the industry with 10.9% growth in July.

(SOT) Giovanni Bisignani, Director General & CEO of the International Air Transport Association (IATA ):

"What has happened in the last couple of months is we have seen business travel picking up. In the months of July, business traffic had gone up by 17 percent, leisure traffic went up by just 11 percent. On the corporate level that's very good sign, we make money in the front of the plane."

Citibank is making some bold moves to expand its presence in China. And it's also hoping to change the way Chinese consumers think about banking.

Earlier today, CNBC’s Cheng Lei caught up with Citigroup's regional CEO Stephen Bird.

(Package starts)

Lei: Your new branch is in People's Square, China's busiest metro station. Up to a million people pass through everyday. Is it a shift in strategy, going mass market?

Bird: Well to us shift in strategy is continuation of our transit strategy. We have the Octopus partnership in Hong Kong, with SMRT in Singapore, and today we open here in Shanghai Metro. Though simultaneously today we also launch digital banking, the latest fashion of Citibank online, which means that you can see the digital presence here in the station. A million people a day are going to see the digital presence and hopefully engage with it. But no matter where they are in China, they can also transact, get the information and advice from Citi.

Lei: Are you hoping that's going to offset your weakness compared to your rivals in terms of size, profitability?

Bird: In China, we are very profitable as Citibank, the total local bank business. We don't separate from the consumer business, which is still in the investment phase. The number of branches is actually a red herring. We have the digital banking you see today, iPads, smartphones, the smart banking technology you see in the branch. It's a mix of bricks and

clicks. But even the bricks are hi-tech. So in this branch, which is wireless and paperless, it has an iconic presence where speed simplicity and convenience are at the core of the offering.

Lei: But in China, customers still prefer to go to counters and physical outlets and that's why the local plays such as ICBC and China Merchants Bank even your foreign rivals such as HSBC are all ramping up the number of outlets but you've been relatively slow.

Bird: Banking is digitizing, and it's true that the legacy of having 2, 3000 of branches in the country. That is the legacy. That has been the historical pattern of banking. But we are in the digital business. Banking is ones and zeroes by definition and we have to embrace that because our customers as you can see today are embracing that. They are sitting and looking at smartphones and using iPads. That's exactly what you can do with smart banking. We piloted in Tokyo and we already see an increased activity in smartbanking versus conventional banking. Today is the first production reaction in China. It's interesting. We haven't launched it in New York yet. We have launched it in China because China lies in the heart of emerging market strategy. That is the way of the world now. Things are happening first in China because this is the world's best growth opportunity.

Lei: so no change in your expansion strategy Asia Pacific-wise 70 new branches by 2011.

Bird: We are investing in a pace faster than any time in history. This year we'll expand our network across the whole Asia by 10%.

(Package ends)

Well, that wraps up today's business highlights this Wednesday.

I'm Saijal Patel from CNBC.

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