SHOWS: HONG KONG, CHINA (April 10, 2013) (REUTERS - ACCESS ALL)

ADRIAN FOSTER, ASIA-PACIFIC HEAD OF FINANCIAL MARKETS RESEARCH, RABOBANK

1. REPORTER OFF CAMERA SAYING:

'What do you make of the risk out of North Korea for Asian equities and investors?'

2. ADRIAN FOSTER SAYING:

'I think certainly we're all coming to grips with the modus operandi, if you like, of the third in the lineage of Kim leaders in North Korea. Very hard to know exactly what is going on there. I can't help but think though that this is most likely a replay of periodic episodes that we've seen through the last sort of decade or two: saber rattling, possibly a domestic political agenda that this also plays into. And, I guess, extracting concessions from trading partners or partners such as South Korea and indeed the U.S. So my take is that it's unlikely to escalate into something more dramatic.'

3. REPORTER OFF CAMERA SAYING:

'Do you think this is a storm that will pass?'

4. ADRIAN FOSTER SAYING:

'To be honest, I think that is the most likely outcome. I guess to sum it up, it's a small probability, or small likelihood of a very significant event unfolding. And so it's very hard to position around that. But I do think the most likely outcome is that it's a storm which passes.'

5. REPORTER OFF CAMERA SAYING:

'China trade data just came out and we saw a deficit. What does it signal of global recovery and monetary policy focus in China?'

6. ADRIAN FOSTER SAYING:

'I think you want to be cautious overanalyzing these data. The market's quite comfortable with the idea that the January-February period has a few distortions because of the changing Lunar New Year. And I think that's flowed into March this time. So of course we saw imports quite weak in February. That was the Lunar New Year effect there. And we've seen a bounce back in March, and that's been the main factor which has pushed the trade accounts into that small deficit. I think we need to see another month's data just to get a firmer take on the trend. But I guess what we can say is that rebalancing's occurring, China's external surplus is shrinking. But I think a month or two's time we'll look back, we'll see that it's still in a reasonably robust surplus.'

7. REPORTER OFF CAMERA SAYING:

'With Japan's massive stimulus - will this be a game changer for the country? Does it steal the thunder away from China or add to the wider competition between Asia's two largest economies?'

8. ADRIAN FOSTER SAYING:

'I think it does add to the competitive dynamic, if you like, around the region. But in terms of that, does it put China slightly in the shade? I think perhaps the more interesting question is does it put the U.S. slightly in the shade? Because for the last couple of years now since 2009, we've seen Ben Bernanke wheel out his policy bazookas: so-called QE1, 2, 3 - Operation Twist extended, rolled into QE3 - example. And the U.S. dollar now on a trade-weighted basis is right where it was in 2009 when QE1 was introduced. So there's been no discernible impact on the currency from all these monetary machinations in the U.S. And suddenly we look across to Japan and we see that they've indeed have pulled out a bazooka, and had quite a significant impact on the yen. And I think that's really the more interesting element out of this: why the BOJ's been successful when the Fed really hasn't.'

9. REPORTER OFF CAMERA SAYING:

'What impact will the weakening yen have on South Korea's competitiveness?'

10. ADRIAN FOSTER SAYING:

'Clearly that they are in competition I think is the bigger force there. They're slightly complementary. But I think competition is the bigger force. And interesting if you look to the Korean won, it has weakened recently. And it's weakened because of the yen weakness, I think. And clearly because of these tensions on the peninsula. I think the tensions blow over - that's the most likely outcome, I think. But when they blow over, and if they blow over, I don't think that we're going to see much of a reversal in the Korean won. And that's because of this competitive force from Japan, from the weaker yen. I think the Korean won will stay weaker even after these peninsula tensions pass.'

11. REPORTER OFF CAMERA SAYING:

'Which currency pair provide the best returns under the weakening yen?'

12. ADRIAN FOSTER SAYING:

'If you think about the competitive force between Japan and Korea, Japan and Taiwan as well, and to an extent Singapore - and of course Singapore's got the trade-weighted mechanism. With the dollar moving higher against the yen, I think the dollar probably moves higher against the won, the Taiwan dollar, the Singapore dollar as well. So I think the dollar's really the play there. Southeast Asia we're seeing a slightly different dynamic in the Thai baht, for example, is quite firm. I think that probably continues although not dramatically further from where we are. The Malaysian ringgit as well, so there is a North-South dichotomy panning out as a result of this yen weakness.'