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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: tom who wrote (9457)	11/29/1999 4:34:00 PM
From: Liatris Spicata	Respond to of 9980

tom- Yesterday I heard an interview with Leah Zell, Portfolio Manager of Acorn International Fund, on the radio program "Mutual Perspectives". The interview was a few days old. Ms. Zell noted that two of her contacts who monitor cash flows in Asia (I think they are independent companies under contract with Acorn) informed her very recently that cash flows from abroad into their respective markets (Singapore and Hong Kong) were picking up. Zell liked Japan and thinks the recovery in Japan is for real: Acorn has its second largest holdings in Japan. She also likes Singapore and, as I recall, Hong Kong, but is bit cautious about South Korea at the moment, given the impressive recovery in Seoul this year. Zell also noted that, in accord with Acorn's investing philosophy, she sees great opportunity in second tier Japanese companies. The ones, as she put it, that "break the rules". She mentioned one retailer- I forget the name- but they have become the largest discount retailer in Japan and to a great extent they eliminate the Japanese middle man: they have the audacity to buy direct from manufacturers. She thinks younger managers in Japan are more willing to change the way things have been done, and that this will help precipitate a secular recovery in the land of the Rising Sun. Of course, Acorn tends to buy smaller companies, so one might expect her to sing the praises of the non-Blue Chip Jap companies. Acorn does a bottoms up analysis to determine asset allocation. It is, therefore, noteworthy that her fund, which is up 44% in the past 12 months has an historically high percentage of its assets in East Asia (she didn't say it was the highest ever). Moreover, I thought she made an interesting point in response to a question about transparency in financial reporting in Asia. She noted that the two countries where she personally has experienced the worst examples of management acting contrary to shareholders' interests were the UK and the USA. She said those markets, particularly the USA, as so large it is relatively easy for shady types to keep a low profile and, if they don't go too far, avoid the consequences of unethical behavior. But smaller markets, like Switzerland, and, by implication, I think, many Asian markets, the reputation of corporate managers was easier to determine. She cited a company in Malaysia, Star Cruise Lines, which is to a considerable extent owned and I think operated by a family, as one where she felt comfortable investing her fund's money because she had worked with the family for years and had considerable confidence in the ability and integrity of its management. (Star Cruise Lines is one of her largest holdings). Of course, it would be difficult for the small foreign investor to gauge the responsibility of corporate managers the way a sizeable mutual fund can. I think much of the US government's regulatory functions work to undermine the importance of reputation, so I found her point to be thought provoking. Larry