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

GILLEM TULLOCH, FOUNDER & MANAGING DIRECTOR, FORENSIC ASIA

1. REPORTER OFF CAMERA SAYING:

'The Indian Industrial Production number for March has come in at 2.5% versus 0.6% in February, are you seeing a gradual recovery going ahead?'

2. GILLEM TULLOCH SAYING:

'No, I don't think so. You can't read too much into one month's number and we'd have to see the breakdowns to see what was driving it. But we think it's more likely that industrial production will continue to slow for the rest of the year.'

3. REPORTER OFF CAMERA SAYING:

'What are your expectations from the RBI's monetary policy for the rest of the fiscal year as the central bank has been hawkish in its recent policy?'

4. GILLEM TULLOCH SAYING:

'Yep. Inflation expectations are still quite high. We think that there's the possibility of another 50 basis point cut this year. But given inflation, it's difficult for them to aggressively reduce interest rates.'

5. REPORTER OFF CAMERA SAYING:

'Given the current political situation in India, how confident are you in the government's ability to take concrete steps to revive the economy?'

6. GILLEM TULLOCH SAYING:

'We're not confident at all. The government is mired in political corruption scandals. They seem to have lost a lot of moral authority. And it's difficult to see how they can really push through anything at this stage.'

7. REPORTER OFF CAMERA SAYING:

'The yuan closed at a fresh record high. How much more appreciation will the PBOC allow, with the yen having broken the symbolic 100 per dollar mark?'

8. GILLEM TULLOCH SAYING:

'We don't think it's too relevant contrasting the yen and the yuan. Both countries compete in very different export markets - one's higher and one's lower. And so I don't think just because the yen is depreciating, it means that the yuan will stop appreciating.'

9. REPORTER OFF CAMERA SAYING:

'With lots of focus on Japan right now, how do you see China vis-à-vis Japan?'

10. GILLEM TULLOCH SAYING:

'Well, unfortunately we think that Abe's economic policies could be disastrous for Japan. But we also think that China has its own specific set of problems. So unfortunately while we recognize that the depreciation of the yen is likely to re-lead to a stock market rally, tactically yes, play it, but make sure that you don't stay in Japan for too long. So we're not very positive on either China or Japan. Where we are positive is on Southeast Asia where corporate solvency levels and returns on equity are extremely encouraging. And we think there will be a continued investment up cycle in those markets.'

11. REPORTER OFF CAMERA SAYING:

'What about for South East Asia - any countries in particular that you like?'

12. GILLEM TULLOCH SAYING:

'Well, I mean in Southeast Asia - Thailand, Malaysia, the Philippines, and to a lesser degree Indonesia - if you look at corporate solvency, balance sheets are extremely sound. And you're having a credit up cycle in all of these four major ASEAN markets. And with corporate balance sheets so solvent, it means that they can continue to sustain this for a number of years. And that's simply not the case in North Asia. It's not the case in China, it's not the case in Korea, and it's not the case in India as well. Balance sheets are insolvent - or they have solvency issues, I should say. And they're experiencing free cash outflows. So you can't have a sustained investment up cycle in those major markets. But you can have a continued sustained investment upswing in Southeast Asia.'