Thanks Alan for that comment and info. It does appear that the Hong Kong market has the same speculative content that Japan did have as well as the excessive property values. So it seems that maybe this "correction" there was inevitable and needs to be completed. And maybe the consequences will be more painful than I thought, especially to the local banks, and perhaps to a lesser extent, Japanese and European banks.
I guess the question is whether this will precipitate a world wide market "crash". It may be a good excuse for the markets to tumble more and it may yet happen. But I don't think it's a good reason, because there's still plenty of liquidity world wide, and the US banks and bond market are in very good shape. If some type of rescue was needed, ala Mexico, I think it could be handled fairly well. So I hope and believe that the situation can be worked out with minimum of damage. I think Mexico's problems were (or are) more severe than Hong Kong and Southeast Asia's problems.
Could you give us a quick update of how the actual economies are over there? I guess I was under the assumption that this is more of a currency and financial (or real estate) crisis than a recession. Is this incorrect?
As to direct effect of this on US corporations, I just heard on CNBC that the average company gets less than 1% of its earnings from the area. So even if they were to drop in half, which I doubt, they would only suffer about .5% drop in earnings. This is what I guess I really meant by saying this should not have a big effect on the US market. But the market has a mind of its own and may decide to panic over it anyway.
It appears though that this continuing currency slide over there will make CREAF even more attractive. In fact, I beginning to feel a little guilty because, as a CREAF shareholder, I'm in fact profiting off the problems of others. I'm going to have to think about this some more.
P.S. I hope you are doing well and these problems don't hurt you.
Dennis |
