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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Richard Ruscio who wrote (30254)	10/17/1999 4:25:00 PM
From: Jacob Snyder	Respond to of 99985

re: investing in Asia: I'm bearish on U.S. stocks, but not bullish on Asian stocks. Although the liquidity crisis of last year is largely resolved, there has been little fundamental reform. Japan and South Korea have done some necessary restructuring, and the other countries, none. Japan still has a mountain of debt on the books that has been uncollectible since 1990. Malaysia is still xenophobic. Indonesia is still an ethnic tinderbox, without the rule of law. China (the big one) still has thousands of insolvent state companies, and is also increasingly xenophobic. The leadership in Peking thinks we are at the beginning of Cold War II, this time between them and the "hegemonic power" (that's us). Taiwan has edged to the brink of declaring independence. Peking has said, consistently for 50 years, that that would provoke a war. We are sliding down the slippery slope of nuclear proliferation, with regional powers (and very unstable ones at that: Pakistan, N. Korea) getting the bomb, and the means to deliver them. There will be lots of individual exceptions, but overall, I don't think that region is a safe place to invest. Europe looks better. They seem to (finally) be understanding the need to make labor/capital/goods markets less rigid. The Communities' economies seem to have bottomed. And, most of all, they are stable democracies. If you're feeling the need to gamble in emerging markets, I think the best bet is the first tier of countries adjacent to the European Community: Poland, Check (sp.) Republic, Hungary, Slovenia (not Slovakia), Lithuania, Estonia. They are trying very hard to get admitted to the Community. That means they must become stable democracies with market economies, and a predictable business environment. And (unlike Asia) they have shown a willingness to accept some pain, in order to reach those goals. My second preference would be Latin America. But the U.S. is still the best place in the world for a business to have its home office. Most of my "foreign" investing is in companies who make a lot of profit, sales, and production in East Asia and Latin America, but have a corporate headquarters in San Jose (the one in California) or Seattle.