"Isn't China a big market for Cube? Can anyone tell me if this Hong
Kong crisis can affect the economy in China and therefore the markets
for Cube?"
Michael,
I was thinking about this yesterday... first, the HK crisis will probably not affect china all that much, but lets assume it will.
Let's assume there's an economic slowdown in China ans South East Asia too. Given the weakening currency of Taiwan, CUBE manufacturing costs should drop (In dollar terms.) Now the issue is whether CUBE can continue selling their chips to VCD player manufacturers.
If the economy goes into a blown out depression (highly unlikely), I would assume CUBE's business would not do too well. However, the likelihood of this happening is minimal. I say this because HK still has a pegged currency and they have not fallen into a deep recession as did Mexico in 1994.
Now, lets assume a scenario where China's economy slows down a bit due to Hong Kong. From what I gather, VCD's are like fresh air in China, and assuming less disposeable income during the Chinese New Year, I am tempted to believe that Chinese are more likely to spend $120 on a VCD player for the new year than $300 on a new Tv or some other more expensive item. This is quite positive for CUBE then I believe.
Finally, if China is unaffected, growth will continue as planned. Not sure whether scenario 2 or 3 would be better for CUBE.
Jp |
