Asia Ends Lower on China Tightening Fears

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

Good evening, I'm Saijal Patel from CNBC and you're watching Asia Market Daily.

Asia has dismissed a slightly positive lead from Wall Street, with most of the key markets losing ground.

In Japan, a stronger yen saw the Nikkei tumble just over 2 percent, while South Korea's KOSPI lost just over 1 percent as investors booked recent profits.

But the Shanghai composite managed to reverse earlier losses to finish up more than 1 percent.

Banking stocks though were under pressure after the People's Bank of China temporarily raised the reserve requirement ratio for six banks by 50 basis points, to 17.5 percent.

It's the fourth hike this year, as the government tries to curb excessive lending.

Still in the region, and China's forex regulator says yuan reform doesn't necessarily mean a rise in the currency and warns the market to be ready for the yuan to move either way.

In a CNBC exclusive, Maria Bartiromo spoke with billionaire investor George Soros about the currency clashes, asking what can be done to persuade China to move on exchange rates.


George Soros, Chairman, Soros Fund Management:

"I think there's a pretty unanimous position that china has to move. Now you have to recognize that you now have a dual currency system, because China has capital controls and this gives China a tremendous competitive advantage because not only do they control their own currency, but actually they can greatly influence the exchange rate of other countries, because you know they stop buying the euro when it was at $1.60, they finally decided that they have to step in. They stepped in when euro was at $1.20 and it moved up very fast to $1.40. So they are now the dominant factor in deciding how the currencies of other countries move. So they put pressure on Japan. They bought government bonds of Japan. Japan was very upset, because they can't buy government bonds of China, so it's unequal."

Maria Bartiromo: So what should U.S. do, what approach should U.S. be taking?

George Soros, Chairman, Soros Fund Management:

"I think the Chinese missed their cue, they should have moved when they were not being pushed. Now they'll have to move when they are being pushed. And I'm sure they actually will do it."

Maria Bartiromo: Do you see this economy on a global scale improving in 2011 or is it really a 2012 affair?

George Soros, Chairman, Soros Fund Management:

"No, I think the economy is slowing down, the developed world is slowing down. China is also slowing down because they put strong stimulus and it really kind of overheated the economy."


And the currency debate has now shifted to the G20 summit in November.

In a First On CNBC interview, Chloe Cho spoke with Stephen Roach at the World Knowledge Forum in Seoul and asked him who exactly should take responsibility for global imbalances.


Stephen Roach, non-executive Chairman, Morgan Stanley Asia:

"Global imbalances are a shared responsibility, the world is dead wrong to blame it on China, the world is dead wrong to blame it on the U.S. or Japan or Europe. The broader global community needs to take, step up and take collective action to deal with imbalances. The currency fix is not going to work, it's especially not going to work for the U.S., which is in a highly political season, seizing on what I think is a combination of bad economics and lethal politics to hold China accountable for America's deficiency in saving. The U.S. has bilateral trade deficits with 90 countries. Nine zero, China is one of them. That means by higher math, there are 89 others. If we close down trade with China, as some leading politicians and prominent economists unfortunately are advocating, the Chinese piece just go somewhere else, until we deal with our fundamental problem, which is saving and that's not a way to fix anything for America, for its middle class workers and for the broader global economy."

Chloe Cho: What's going to work?

Stephen Roach, non-executive Chairman, Morgan Stanley Asia:

"What's going to work is the world gets together to fix its savings imbalances. It's not clear at all that currency tool is the right way to go about that. The U.S. needs to save more, it has lowest savings rate in the history of the world for a leading economy. China saves too much, it has to stimulate internal private consumption. The world should be putting pressure on China and helping China develop, design and implement policies that improve internal private consumption, not putting pressure on China to destabilize its financial sector by a sharp ridiculously irresponsible increase in the renminbi."


Microsoft's new Windows Phone 7 mobile operating system has received positive reviews following its launch in New York.

The world's largest software company says more than $100 million dollars will be spent on marketing as it takes on Apple and Google's dominance in the smartphone space.

CNBC's Jon Fortt has more.


Microsoft today launched their Windows Phone 7, their new operating system to take on the iPhone and Google's Andriod. It's coming to Europe first on October 21st, that's a week from Thursday. It's coming to Deutsche Telekom, O2, Orange, Telefonica, and Vodafone first. I sat down with Microsoft's CEO Steve Ballmer today and asked him a few things about Windows Phone 7 strategy. First up, what did Microsoft learn from the failures of the Zoo and the Kin phones that's going to benefit them this time around. Here's what he had to say.

Steve Ballmer, Microsoft CEO:

"I think what the world needs is another kind of phone. A different kind of phone which is really what we have to focus in on. The combination of the hardware and the software."

I also asked him whether Microsoft will do more mergers and acquisitions or stick to its R&D focus strategy. Here's what he said about that.

Steve Ballmer, Microsoft CEO:

"The most important thing is that we continue to do innovative work and drive earnings, and we're going to try to do that in the most sensible and efficient manner, from the shareholder perspective and we'll see where that takes us."

It sounds like he's going to stick with a R&D strategy though he leaves the door open. Now multiple handsets, Microsoft is coming to market with, I took to the streets of New York after the launch to talk to some real people about what they think about this versus the Android and the iPhone. I actually got a very warm reception for this. Actually a few wows and a few 'I'm going to get this'. So off the back, that sounds pretty good for Microsoft. We'll see how they do next week when this comes to Europe and whether they can actually make good on those good signals that are coming from New York today. For CNBC, I'm Jon Fortt.


That's all the day's top business news.

I'm Saijal Patel from CNBC. Have a good night.

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