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Technology Stocks : Pacific Century CyberWorks (PCW, PCWKF) -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (4454)	1/10/2001 3:44:04 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 4541

JP Morgan favours selling won while US economy slows JON OGDEN -------------------------------------------------------------------------------- There is still mileage in selling the South Korean won against the US dollar, a trade which has already been a big hit for JP Morgan. "Of emerging Asia, our favourite trade would be buying dollars and selling Korean won," said Singapore-based currency strategist Rebecca Patterson. "We have been suggesting that investors buy dollars and sell the won using three-month forwards. "The forward market is pricing in the won to be steady. We think that if expectations in the US continue to fall, that tends to feed over to sentiment in Korea because of the link in the economies." JP Morgan began recommending the trade last month when the won was 1,186 to the dollar. It closed yesterday at 1,255.1. "We think it has more to go," Ms Patterson said. "If the [Japanese] yen stays steady or even weakens slightly and the US moves according to our forecasts, we think dollar-won can go up as high as 1,330 by the end of March. "If you have a weaker yen, there is less pressure on the Korean authorities to intervene. Domestic sentiment in Korea is likely to remain pessimistic for a few more months. People on the ground are worried about losing their jobs." Another idea was buying the Australian dollar and selling the yen. "There is good carry there. The interest rates in Australia are substantially higher than they are in Japan," Ms Patterson said. While the yen was expected to hold at current levels of 116 against the US dollar this year, the aussie could appreciate from 56 US cents to 62 cents, JP Morgan said. The investment bank expects US growth to recover in the second half of the year, a boon for Korea and Taiwan which are particularly geared to the US. "Another trade to consider if you are bearish on the yen is long won, short yen," Ms Patterson said. "I think that will be a trade for later in the year as Korea starts to recover a little bit . . . and [Korean] restructuring feeds through." The euro, meanwhile, would be a game of two halves this year. It should stay strong in the first half as the US economy surprised investors with its weakness. JP Morgan is expecting zero US growth in the first quarter and 1.8 per cent over the year. Investors in the US "will get a few slaps in the face, a few turbulence warnings, in the next few weeks", Ms Patterson said. "We are looking for the euro-dollar to test parity by June. I think the risk is it comes sooner than that." Ms Patterson said the euro would end the year at 90 cents as 175 basis points of interest rate cuts by the Federal Reserve would spark fresh US growth, causing a shift back to dollar assets. The Indonesian rupiah and the Philippine peso were interesting ideas because of the high interest they offered but liquidity problems made it tough for investors. "The fact that you have fewer macro hedge funds out there providing liquidity, the fact that countries are trying to move trading onshore from offshore, and the fact that investors are a little bit nervous since the crisis means you don't have as much volume," Ms Patterson said. markets.scmp.com