Hi TM, I have gotten a PM on Asian Recovery from a pal in the US, and I have been listening to my pals here talking about the US recovery. The conversation often starts and stops with the price quotation of shares, and touch upon matters such as inflation/deflation, capital/trade flows, devaluation/interest rates, and opportunities for money. Every so often, the War Against Terror. The answers are nowhere and all over the place, reinforcing and at odds.
There is one matter everyone agrees on and that is US must recover soon, else the world is no more, as we knew it. I upset folks with, “but the US has not been cleansed yet”, and they argue back so ferociously. I do not know if they are right and I am wrong, but I am certain they are afraid:0)
I have also received recent (past two weeks) phone calls from friends in San Francisco, Toronto and Austin, wanting to know the opportunities available in Asia, and I have got friends forced to relocate back to their home (England and US), countries, or other countries (Japan) by the recessionary circumstances in Asia.
I speak with strangers while flying around, and they generally are in the legal or financial professions. Summary report, all quiet on the Eastern Front, from Korea to Japan, down through Taiwan, cutting across the Philippines, and straight through to Malaysia, after tip toe in and out of Singapore. Never mind about Indonesia.
Maurice had mentioned that cash, at 0% interest, is trash, and sooner or later, will come out to levitate his Q. He is right about the sooner or later cash will come out, but he is wrong about his Q, because the leader of one mania is never ever the leader in the next.
I have decided to buy into the real estate syndicate scheme I spoke about yesterday, buying up a basket of ground level shops in the busiest, and therefore unaffected, shopping district in Hong Kong surrounding a planned upmarket two city block development of hotel, office, and shopping center, with lots of parking (precious HK commodity). The complex should be up in 24 months (HK builds really amazingly fast) and mature within 12 months upon completion.
The fund will be leverage 1:1, totalling USD 40 mm. The funds will be committed and drawn upon as needed, with the first 25% down.
I have not decided on percentage allocation, nor have I decided on my own financing of equity. LTCM-like opportunity of infinite leverage is one option. Liquidation is during the seventh year.
By the time the effect is felt in Q, it should be as strong as a butterfly’s wing flap in Amazon, when felt in NZ. Yes, I know Maurice, aggregate wing flaps across the globe and you may have a trickle of rain drops on a sunny afternoon, and when correctly valued, against other competing investments, will see Q in the high single digits, and when accounting for expected future Q mismanagement, see Q in the low single digits.
I believe, when choosing between 4-10x from real estate and 4-10x from operating company’s stock, do not pick stock.
The proxy for HK real estate are the many real estate holding companies on the HK public market, and I understand they are also beginning to stir into action, some betting 50% of the NAV on new projects.
So, is Asia recovering? I do not know. Asia may only be resting on a ledge, pinned in place by Greenspudkaput’s leverage, awaiting the trip-wire to set off the next tumble.
In the mean time, cash is beginning to stir, especially for the special situations, because it is simply too cheap.
Nothing is as black and white as we would like it or make it out to be, but, looking at the big picture, I see …
Economically, Asia ex-Japan may have stopped falling, for awhile, simply because it has been falling, for a period.
Japan is not done yet, and will continue on its merry way after March, because of all the poison in the financial system.
Taiwan? Forget about the island. Just write off the whole island for the next 20 years, until in full happy embrace of the motherland.
SE Asia ex-Thailand? Tourist destination, but not until the endless War on Terror is over.
Thailand? Tourist destination, but for cheapskate Mainland Chinese.
Australiasia? Waiting to fall, when the US falls.
Russian Siberia? Yes, by all means, recovering and soon to boom.
Financial market-wise, Tokyo will hand on until it can no longer. HK will fall, either by devaluation or deflation. Rest of the region, not of consequence.
China? It will amble by and by, on the edge of precipice, as it since 1982, rewarding for some, trapping many.
The issues of cronyism, opacity, nepotism, sham accounting, ... is still in place, without the leverage, but soon to be boosted by truly cheap debt.
Nope, bottom line, do not see it.
Chugs, Jay |
