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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (864)	11/12/1997 12:23:00 AM
From: Tom	Respond to of 2951

The following is an article by Barton Biggs, chief economist at Morgan Stanley. About Asia by Barton Biggs I freely admit to being a fan of Asia since I first went there in the early 1980s. For a long time the "Tigers" were stock-market tigers too. But I should have known better when the books started coming out gloriftying "Asia Rising" and "The Asian Way". Although I knew Thailand was in trouble, particularly after going there in January, and cut back on Asia twice this year, I never imagined the currency contagion would spread as it did. In retrospect, the mortal sin of Asian leaders and businessmen was hubris and remains hubris, and my mistake was in missing it. Almost always when I met an Asian leader, I saw immense arrogance, but I missed its significance because I was overwhelmed in the presence of a "great man." Always they lectured: No one was interested in an American point of view because they disdained the West and its "open society." There was basically no respect for foreign investors and no understanding of free markets. Singapore's Lee Kuan Yew, perhaps the greatest, was the worst in this regards, although Mahathir Mohamad, another great man with feet of clay, is a close second. The businessmen were almost as bad. Asian companies seldom delivered the advertised earnings per share growth, and public shareholders were often ignored, diluted, and cheated to benefit insiders. Asian companies were often family dominated and poorly managed by remote patriarchs. It will be interesting to see if this changes now.

To: Tom who wrote (864)	11/12/1997 2:13:00 AM
From: synchro	Read Replies (1) \| Respond to of 2951

The effectiveness of the currency board system was never in doubt. The problem is whether the Hong Kong authorities have the political will to see thru this. The next test of the H.K. peg is not going to come from the current bout of southeast Asian devaluation. That's in the past. The next test of the H.K. peg will take place when Japan finally devalue the yen. In my opinion, the Japanese are the ones that are running out of choices (banking and fiscal problems, et. al). When the Japanese devalues (the Yankees' howling be damned), then the Chinese would have to make a _political decision_ as to whether to devalue. If they do, the the Asian trading block's devaluation cycle would be complete. Btw, the way H.K. authorities "unpeg" from the U.S. $$ would be to announce a "re-peg" of the Hong Kong dollar to the Reminbi. There will be a host of reasons offered to the world why this is the "economically sound" thing to do. Don't believe a word of it. It's an "unpeg". Right now the whole currency devaluation thing is turning more and more political. Once that happens, rationality may not be something you can count on. All this just goes to show how fragile free trade & free markets really are. It would be tragic if the politicians make the wrong moves.