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Strategies & Market Trends : Asia Forum

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To: Stitch who wrote (5677)	8/19/1998 8:14:00 PM
From: tipol	Read Replies (3) of 9980

I have been lurking here for some time and enjoy the quality of discussion on this thread. I have not bought into Asia yet but as a hard core value investor I'm tempted by several situations. My criteria for stocks: First of all, I want companies with no debt (or very little) this way they can survive. Second I want companies with reasonable managements. Third I want reasonable stability in the country. Basically I find that in Singapore there are many good companies trading for far less than their net current assets per share ("net-nets") and a decent number of companies trading at less than their net cash per share. These companies will survive almost anything that happens. The country seems to be the best managed in Asia (that maybe like being the largest pygmie but I don't think so). Singapore's banks will survive all but the most severe meltdown -- they are highly rated and have massive reserves. The Singapore Dollar is the strongest currency in the region and they have massive foreign currency reserves. Politically, the conflict with KL poses some risks and you have to ask about succession in the long term. But the Ben Graham side of me says the stocks (net-net or net-cash) are too cheap even taking all the risks into account. Having said all that I still haven't bought any SE Asian stocks yet because I'm trying to time it (this has saved me money). When the stocks get so insanely cheap that I feel I can't lose I will buy and put it away and only look at the prices once every 6 months. I am looking at these stocks with a minimum of a 5 year time horizon and it's actually more like twenty. In my investing I just want to buy a dollar for fifty cents; in this case it is like buying one for 20 cents or less in some cases. As for the other countries in the region I'm bearish on Hong Kong because everything there is still expensive (especially property) and because government intervention turns me way off. Malaysia: the government is insane--I can't believe what they're saying and have said and they may interfere too. Not touching it. Indonesia: If they get debt relief it becomes a very interesting possibility considering how insanely cheap stocks there are in dollars. Still a lot of political risk. Wait and see. Thailand and South Korea: Certain companies could be good investments at the right price. Japan: Lots of companies selling at net-net or net-cash but also they've got to sort out the banking mess. Still some of these stocks have done well in the last few months amazingly enough. I like the non-life insurers which have a massive surplus of capital. Still not buying yet. I'm definitely a contrarian so that explains my views. In short, things may and probably will get worse but some stocks are so cheap that you'll still probably be alright especially if you try to buy them right. Thanks for your input and I hope you guys can tell me about any flaws you see in this logic. In fact, I can count on it. PS: Marc Faber who called the Asian crash has a piece in Forbes (8/10/98 issue) describing why he's buying some Asian stocks. It's titled "Ben Graham in Asia." I don't always agree with him but the approach he takes in the article is not unreasonable. I'm trying to get good businesses at a great price (Buffett style). I think buying the indexes is stupid when there are a lot of much cheaper stock out there.

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