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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (2324)	12/16/1999 5:44:00 AM
From: Step1	Respond to of 3536

Henry and Chris, I believe I was the one who made the original comment on the fact that non-yen assets (my comment was about individual foreign currency deposits in response to a question about Citibank by Henry) had been extremely dissapointing to the small investor. Mostly because they were reacting to the rapid weakening of the yen and the extremely low interest levels to be had. Again, I was talking about the small investors, whom it may be a lot harder to get info about, while larger institutions would either have more info published about them... >>>Viewing the performance of non-yen assets from the Japanese point of view, and seeing that they have done poorly, is merely observing the fact that the Yen has strengthened. Similarly, viewing the performance (e.g.) the Nikkei from a U.S. perspective and seeing that it has done quite well from a USD point of view significantly affected by the fact that the Yen has strengthened. <<< Sure, a lot of the gain or loss comes from the currency appreciation. It is a loss nevertheless and (as I was commenting on small investor sentiment, besides they play with their own money...) they are likely to thread water very carefully after such a debacle... I am not suggesting it will have an influence on the yen though. >>>agreed, that is all I was trying to convey. But to argue that, since Japanese equities have done well for Americans, Americans ought to and will continue to buy Japanese equities, seems like a foolish argument to me.<<< For one thing, who is buying J equities? Institutions, right? Trading desks? yeah, I don`t know. What I can sense though, even being an expatriate and not even dipping my toes back home very often at that, is that North Americans are mesmerized by the market. It is so often part of the talk to the ex-pat parties I go to (and I don`t even work in the financial industry) . Therefore, a bit long winded , but my point is that people in N-Am will seek diversification and will invest abroad through funds. I don`t think the small market players here are doing that at all, especially after the latest appreciation which really took a lot of people by surprise and also hurt some pretty bad. So, my opinion is that the small investor will stay in a Japanese boat even as/if it sinks... >> I agree but I wasn't making that arguement. Fwiw I think that one needs to be very cautious about investing in Japan. But this is a personal view. <<< Same here but I am a wounded hurting bear as we speak... And yet another tidbit of anecdotal info; just had an informal meeting to discuss some important school business being decided as I write this. This one was really push through and the people I work with were pretty upset about the whole thing and the implications for the future. The school I work for has over the years amassed a sizeable amount of capital which is mostly held in a local credit union. Seeing the dereg of government guarantees on deposits over the equivalent of 100,000 us, they are eager to move at least some of it to a safer place , just in case ... Where? Land, (sold by the prefectural gov as it scrambles to keep its head above water having invested in a "3rd sector" service company (golf club, hotel, giant water amusement park, conference center...) which is bleeding red ink, anyway long story short, they are intending to move part of the amount (sizeable chunk) into real estate only they can only purchase the property if they build on it . The business of being in education here is getting tougher by the minute (less customers i.e. kids and no improvement in sight as far as the birthrate is concerned) . It is also heavily regulated and has to cope with overcapacity while being unwilling to downsize or unable to (through government guidance as to who can do what ) . Therefore a land purchase conditional to an expansion into a market that is getting smaller is seen by many in the rank and file as suicidal. I guess the two points I wanted to touch on were the demographics and movement of capitals due to safety concerns over financial institutions... It`s getting late, so I `ll sign off, all the best Stephan