To: Earlie who wrote (63425 ) 1/31/2001 11:36:11 AM From: John Pitera Read Replies (1) | Respond to earlie, i've noticed strength in the Argentinian, Brazilian and Mexican stock markets recently and thisthese indexes have outperformed on expectations that both the Bank of Korea and Taiwan's Central Bank of China (CBC) will follow the Fed with a friendlier interest rate environment. With both central banks having all but confirmed these expectations, foreign investors have plowed in on the back of reflationary capital flows. Of interest, foreign investors have purchased a net 2.5 tln worth of Korean shares since the beginning of the year, having already exceeded the total for all of 1999 in less than a month. Not to be outdone, qualified foreign institutional investors (QFII) have been net buyers of Taiwanese stocks in every trading day thus far this year. These gains run in sharp contrast to the deflationary forces that have surrounded most of the export-oriented currencies to compensate for excess capacity at home, and a pullback in consumer and corporate spending abroad . In fact, it was just yesterday that Korea reported that industrial production rose a scant 4.7% year on year in December, down from a 6.2% pace in November, and a final 16.6% annual clip for all of last year. Despite the pullback however, inventories still surged nearly 17%, with some help from a pathetic 2.2% increase in wholesale and retail sales. the market's faith in the ability of the Fed to counter the cyclical slowdown in the information technology arena. While the same can be said of Taiwan, we would note that additional credibility has come from the fact that despite a recent bout of CBC buying to support the greenback, the NT$ has recently violated its new 32.50 "floor" (remember, the lower the USD/NT$ rate, the stronger the NT$).
