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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.660+5.2%3:44 PM EST
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To: Madharry who wrote (324)12/12/1997 6:08:00 PM
From: Frank Chen  Read Replies (1) of 1418
 
You got to realize the risk in DSWLF is the Asian crisis.

I heard the Chinese government is seriously thinking about devaluation of RMB and HK$. The reason is because the pricing pressure from other Asian countries that have already devalued. Since China is not making anything other than commodity, low-tech products, those foactories can easily move to Indonesia and Thailand to take advantage of the lower labor cost.

Even though the currency devaluation means lower labor cost for DSWLF, but the potential of increasing competition from other countries do post a risk at present.

With other currencies down 50%, the RMB could go down 20%-30% to stay competitive.

I think it's wise to wait out the present storm and get back 2 weeks after the Chinese New Year, when the possibility of devaluation plays out itself.

Frank
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