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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (30848)	8/10/1998 1:06:00 PM
From: cardcounter	Read Replies (1) of 132070

followup on Templeton funds and their HK exposure We discussed them and value investing when there's 'blood in the streets' a little bit friday. Templeton funds loaded up on HSBC although they seem abit more reluctant in picking up anymore 'values'. They are really exposed to HK in a bad way. thestreet.com HSBC's disappointing results last week are just the beginning. We reiterate our recommendation that absolute-return investors sell short Hong Kong banking stocks. The territory is heading for price deflation and a further cascading down in real estate values. This will inevitably demolish banks' loan portfolios, given the enormous exposure of these banks to what has been the most overvalued property market in the world. That the consensus still does not grasp this fact is mind-boggling. Greed and Fear retains the view that the peg to the U.S. dollar will, in due course, go as Hong Kong falls victim to a retail panic. The renewed rise in the risk premium (the three-month Hong Kong interbank offered rate rose 89 basis points Monday to 11.14%) and the intense pressure on the renminbi in the Shanghai black market make it abundantly clear that the pressure is growing. The other swing factor is, of course, the yen. There is huge potential for a downside breakout of the yen should the currency decline below 147 against the dollar.

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