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Strategies & Market Trends : Thai Funds

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To: Heretic who wrote (3)	9/9/1997 7:08:00 PM
From: Polartee	of 107

Thanks for your well thought out comments, especially on the unique advantage these funds have as plays on Thailand. Actually, I would also consider myself to be bullish on the country's long term prospects and market along with all or most emerging markets. If Thai stocks rally, then the premium should decline to previous levels so I won't be hurt too badly, e.g., NAV up 30%, premium down to 25% from 60%. If the Thai situation improves I won't keep a short position open for long (no pun intended). But anyone buying these funds now is really handicapped in their bet by paying an extreme premium to NAV. In some ways these funds are almost like call options - if so, then if volatility subsides then the call (or fund) premium should also subside. I think this is generally what happens. I've thought about the arbitrage approach myself but it is hard and expensive to implement using stocks and there's no open end comparable mutual fund to buy. I'm sure there must be some smart investment bankers out there that look at the big premiums as signifying excess demand for Thai funds. They'll want to issue a new closed end fund on Thailand and that would help crush the discount. Hopefully, Templeton will bring this result about. Assuming that doesn't happen I should set a target premium for covering my position. I probably would cover in the 10-20% area although I should examine the historical premium/ discount pattern to decide if that is a good premium to cover at. I'll also cover to cut my losses if things get out of hand and we get a surprise upward burst in the NAV but unlike yourself I don't rate that scenario as likely. Anyone know of a good reasonably priced historical dataset on closed end funds? Regards, John P.S. I'll be away from the internet until Sunday or Monday so I won't be posting again until then. I hope I don;t go into withdrawal.

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