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Technology Stocks : BORL: Time to BUY!
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To: Neil Booth who wrote (7021)10/29/1997 10:54:00 PM
From: Paul Corbett  Read Replies (1) of 10836
 
A note on "Asian volatility"

The long term impact of this on Wall Street will be small.

Why? Because the markets will get used to it and factor it
in,just as "volatility" in exchange rates is factored in.

If a market for example level everyday for a year and then falls
15% it produces a shock wave... or if you like the proverbial
"butterfly" in the chaos theory.

If the same market habitually trades at + or - 15% it will do
nothing.

Traders in that market or those exposed to it can cover by using
put and call options or buy and sell futures or similar
instruments.

It is really amazing how quickly people adapt to change.

For example gold miners frequently use sophisticated financial
instruments to stabilise their selling price even when the gold
market collapses.

Another example is exporters who hedge against exchange rate
movements in a number of ways of which you are all familiar.

It is only a matter of time before traders in volatile markets
hedge as well.

Some further comments on the HK market.

I think it is about the world's six biggest after US Japan UK
Germany and France.

There are massive US and UK mutual funds in the market - I think
something like 60 billion $US.

It will be interesting if it can retain 6th position and all
these funds after the last few weeks...I think not.
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