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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (33861)	5/18/2003 1:37:47 AM
From: LLCF	Read Replies (1) \| Respond to of 74559

I've been meaning to buy India fund for quite some time, and haven't pulled the trigger yet. I see it hasn't done much... I guess I'm hoping for a downdraft when the US crashes. DAK

To: TobagoJack who wrote (33861)	5/18/2003 3:20:16 AM
From: Maurice Winn	Respond to of 74559

Hi Jay. <The same phenomenon can happen to any exporter based in Asia or Australia or NZ who has sizable exports to US. They will not be able to increase the dollar price of their goods as fast as their currency appreciation. If the script plays the way you write it, and the way I understand it, equity markets all over the world will be doomed, atleast as long as USD continues its move down. In fact the only companies that might do well will be the one producing in US. ( I am talking about strictly commodity type producers, not the tech stocks and other wishful stocks). > I'll start replying and see where I end up. Let's start with BHP New Zealand Steel, which is near Auckland and a major steel exporter. They were my biggest customer [for lubricants] a decade ago during my Castrol era. They were always financially dodgy but managed to get by. A year or two ago, King George II decided to whack some serious tariffs on steel imports. There was whining around the world. Since then, the US$ has dropped a longggg way against the $NZ [40%] so BHP must be really in trouble [for that part of their business anyway]. USA steel companies must be really happy. I would not buy NZ steel producing shares. I'd buy USA ones [though of course I'm not interested in that and the price will long ago have included the effects]. The same principle applies to other stuff people produce outside the USA. Now, thinking about QUALCOMM. They produce ASICs which they sell to Samsung, Kyocera and others. The ASICs are made by contract ASIC factories to QUALCOMM designs. Samsung buys the ASIC from QUALCOMM, includes it in a cyberphone, sells it in Korea, China, Japan, NZ, OZ and elsewhere, including the USA. Assuming the Yen, Kiwi$, OZ$ etc cost of the phone stays constant, since they sell for what the market will bear in competition with other options, then when Samsung pays the royalty to QUALCOMM, it must convert to a bigger amount than it did before the US$ slide. I think the net outcome of the swings and roundabouts is that QUALCOMM banks a lot more US$ in ASIC sales and royalties. Which makes a much fatter bottom line. And bigger dividends, which, unfortunately, will shrink when converted to the Mighty Kiwi$. Overall, I think it must be good for QUALCOMM since the staff get a pay cut as measured in other money such as the Mighty Kiwi$, but QCOM revenue goes up when converted to US$. Since there are vast amounts of oil and gas and coal and competing products are competitive at $25 a barrel, there's a lot more downside in energy prices than upside. When Iraq starts pumping, that could make quite a difference to supply, meaning prices could drop a lot. That's not good for USA oil and gas producers. I've maintained for years that the biggest beneficiaries of Saddam were the the USA oil, coal and gas producers [and nuclear etc] who enjoyed higher prices thanks to sanctions and OPEC supply restrictions. I wouldn't depend on those for my profits. Mqurice