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Politics : Idea Of The Day

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To: halfscot who wrote (15945)	12/25/1997 10:47:00 PM
From: IQBAL LATIF	Read Replies (2) of 50167

Halfscot- Thanks for your reply may I have your further input on following? 1- You must have seen that total revenues generated by some of the big names in ASEA are 29 billion $ now I was comparing ASEAN exposure of revenues of INTC TXN MOT to get to some sort of solid figure if you compare ASEAN revenues of these three companies with that of their total revenue I just don't think that all of this is not properly priced, we have lost 40% or more on semis but revenue growth will be affected in the order of may not more than 25% of ASEAN revenue that as percentage of total revenue is minimal. May be I am not looking at something which you can help me to identify.I have also written to editor of Forbes. 2-Now lets look again at the 'dooms day' article by the way I was cursing my self for posting this darn link on a Christmas day later did I realise I should have not posted a link with such a negative caption on a very holy day.The logic is that Koreans and other ASEANs equipped with new found strength of devaluation will sell memory chips at far less a cost and will out price US companies, now the little experience I have with soft economies is that devaluation if on one hand makes your exports cheaper on the other your imports become more expensive- now most of these economies are dependent on value added exports Japan Korea and even Malayasia need to import what they export out now 'devaluation' does not mean that they have added productivity or have become more competitive rather this whole economic meltdown if any reveals that strucural changes required in all these countries. They will not be in a position to use currency weakness to increase productivity or competitivenss the input costs will also increase and so will be the export prices at the end of the day they need to serve their loans and for that iftheir exposure is in won their interesrt cost is astrnomical also not like US dollar 6% but somewhere around 23% on won. 3- Okay even if we assume the assumption of Forbes to be right that chip producers will bury LRCX INTC or TXN AMAT my next question is that article completely ignores the fact that INTC alone produces 1/3rd of its CPU in ASEA- now Forbes article overlooks all the strength but fails to mention the strength many of these companies are not only sellers albeit small in relation to their they are big manufacturers they will certainly benefit from lower costs and since their costs are in soft currencies and 100% of this manufactured products are exported in hard currencies they may stand to make some decent money like Koreans are expected to do. 4- I have not been able to find answers to these queries but even looking at US 20% exports in ASEA and 2% of GDP exposed to ASEA even a 25% reuction in imports by this region will only reduce exports by 5% and .2% of output will be affected- now this is really required BCA which until last issue was harping on inflation in its latest issue is talking about 'deflationary' threat or overcapacity looking at unemployment capacity utilisation and industrial production none of these threats are real so faer in numbers- rather for me a drop in output will be a blessing in disguise, we were loking at monetary brakes now we see actual brakes coming from markets I also seethat Europre the weak link during last few years is about to resume or rather have already resumes its activity on 'growth' path. We are at a strange cross road- I think we will be loking at some stability finally emerging from these markets but sooner the better Japan and China for me are the main players and if they pull out we will be looking at entirely different picture.

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