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Strategies & Market Trends : Value Investing
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To: jeffbas who wrote (3047)1/15/1998 11:29:00 AM
From: Jyoti sharma  Read Replies (2) of 78653
 
Jeffrey,

Chinese devaluation or Hkg peg being broken will force another round of currency devaluation in SE Asia. IMF will not be able to stop the defauts in Indonesia, Philippines, Thailand and Korea. Japanese bank have lent very heavily in Asia. Defaults will force them to write off their loans. Japan will be forced to bring their money home from USA. I have seen speculated on other threads of Japanese owning a trillion dollars in US secrities. Even the likelyhood of a small portion of these funds repatriated will cause US markets to tank. Oct 27 was just a foretaste of what can happen to a overvalued market. No one can really predict what will really happen or what the Fed will do to stem the waves of selling in US markets. My perception is of course based on the premise that US markets are way over valued. I can be wrong. I have been wrong. I got out of the market in 94 and missed a large portion of the greatest bull market in history. I am a chicken and my pain threshold in investment losses is very low.

For years I thought Asia was way over valued. In 1996, in my travels in SE Asia I was shocked to discover how expensive Seoul, Hong Kong Singapore and Bangkok had become . Every thing was booming, people had a sort of superioity complex and over confidence. Now the pendulum has gone the other way. It will take some time for them to adjust and long time to bounce back. Chinese devaluation or Hkg peg break them even longwer to recover.

BTW I do not expect Hkg peg to go or chinese to devalue this year. Chinese are very smart people. They will be very cautious and slow in making major monetary policy changes. In my post I was commeting on mike's remark about Hkg peg and not predicting it.

Jyoti
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