I think everyone should know that crisis in Asia is very far from over. In addition to Dai-Ichi failing today, Sanyo Securities went under yesterday. In Hong Kong, in the past two days we have had a full scale bank run on International Bank of Asia, to the point where yesterday the HK Monetary Authority had to step in and guarantee the deposits of the bank or it would have gone under (deposits are not insured here.) In addition, everyone is bracing for another attack on the currency before Christmas. The peg really doesn't matter much now, the currency is being devalued as we speak by the plunge in the stock market, the property market, etc. and it will continue. The ongoing problems with Japan have been documented on this thread. The department's contacts in Japan have never been more pessimistic about the economy. With interest rates at 1/2 percent, Japan doesn't have any monetary tricks left to stimulate trade with its Asian partners, and is left to rely solely on its trade surpluses with the US and Europe. The more imminent disaster right now is Korea. You all know of Hyundi, which sells cars in the US. Actually most of Hyundi's sales go to SE Asia, and there are about three other Korean auto manaufacturers that sell almost exclusively to SE Asia. During the years of the phenomenal growth in the Tiger economies, these firms borrowed heavily to ramp up production to sell their cars to the insatiable SE Asian markets. They used massive amounts of debt to finance the expansion, and carry debt/equity ratios of a thousand or more, something absolutely unheard of in the West. So did many of their suppliers, particularly the big steel makers. Well now, with their economies slumping and their currencies devalued, none of Korea's SE Asian trading partners can afford Korean cars anymore, and these firms have fantastic amounts of debt outstanding with no downstream cashflows to pay it back. Wholesale massive bankruptcies are looming. The reason you haven't seen it so far is that the Korean government has by far had the most aggressive intervention program to prop up the sagging currency, but its ability to do so may have just about run out. It doesn't matter anyway, the future bankruptcies are a near certainty.
How much all of this will impact Cymer directly, I don't know. The stock is so washed out that it may not matter much. However, the general market environment will make it very difficult to recover lost ground for a while.
jess. |
