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Technology Stocks : Creative Labs (CREAF)
CREAF 0.4480.0%Dec 18 4:00 PM EST
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To: john p. carney who wrote (4775)10/23/1997 10:32:00 AM
From: Dennis G.  Read Replies (2) of 13925
 
Hi John. Here's my take on the Hong Kong situation. Care to comment?

It seems to me that it's really a local problem, as much of their assets are tied up in real estate, which is valued in their currency and which they can't sell. So they're selling their equities, which I think is somewhat short-sighted as their economy is not that bad. It's just that the currency is being devalued and so they're buying US bonds to protect what they can. It is a natural reaction on their part but I don't see any reason it should do any long term damage here.

In terms of systemic problems, Thailand and some of the others (not Singapore) are more serious, but their plunges have by and large already occurred and they had neglible effect over here. I think the European markets over-reacted to this last night because they didn't have Wall Street to look to and because some of their companies have some assets tied up in Hong Kong.

On the plus side, look how much our long term rates have dropped today. Lower rates mean the market is a better value today then it was yesterday.

My broker at Merrill says they expect the Hang Seng to hit 7000, but they will start buying at 8500 as they say the rebound will be fast and it will be hard to buy the bottom. If your a trader, there might be a opportunity there if you're nimble enough.

Dennis
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