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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Richnorth who wrote (3643)	11/29/1997 11:44:00 AM
From: Alex	Read Replies (2) \| Respond to of 116859

Market Monitor: Mark Holowesko Of Templeton Worldwide PAUL KANGAS: My guest Market Monitor this week is Mark Holowesko, Chief Investment Officer for Templeton Worldwide. Welcome back to NIGHTLY BUSINESS REPORT Mark. HOLOWESKO: Thanks very much. KANGAS: This steep sell offs and continuing volatility in the Asian stock markets recently must be an absolute nightmare for international money managers like yourself. Give us an update as to your assessment where these Asian markets stand now and where they're likely to go. HOLOWESKO: Well I think in terms of assets values, they're going to go down farther. But I think prices already reflect that in some countries. They have serious problems. There is too much debt, too much capacity but prices you know, Paul, have come down tremendously -- 80 percent in U.S. dollars from their peak in some cases. So we're beginning to buy selectively throughout Asia with the exception of Japan. KANGAS: Which Asian markets look the best? HOLOWESKO: Hong Kong is where we have our largest exposure. People are very fearful of the peg . We think the peg will hold because they want it to hold. They have over $91 billion in foreign exchange reserves to support it and so if you think the peg will hold, there are a lot of great ideas in Hong Kong... KANGAS: Give us a few. HOLOWESKO: Hong Kong Telecomm (NYSE:HKT) has about a 5.8 percent dividend yield. It's got over $1 billion in cash and actually benefits from higher rates. KANGAS: And it trades in ADRs on the New York exchanges, I understand. HOLOWESKO: That's correct. Also Chung Kong. If you strip out Chung Kong's holding in Hutchinson Wampoa, you're only paying 2 times earnings, the remaining business. That's very, very cheap. So those would be 2 ideas in the Hong Kong market that we're buying today. KANGAS: How about some closed end funds in the Pacific Rim markets? Anything there? HOLOWESKO: A lot of the closed end funds have come down tremendously and they sell at big discounts and I think it's worthwhile investors taking a look at those funds. KANGAS: Korea. HOLOWESKO: Korea has some very large discounts on the closed end funds. In our fund we don't buy other funds so we principally stick with common stocks. KANGAS: What about the impact of these markets on the United States, overstated or understated? HOLOWESKO: Understated I believe. It's a very small part of the world in some respects. You know, Korea's problem loans of about $40 billion are small relative to the size of the U.S. economy but I think that Asian now need to get foreign currency and the way they're going to get foreign currency is by exporting goods and so they're going to be exporting more goods to the U.S. and it's put pressure on pricing. So I think it's going to hurt prices in America and almost 60 percent of exports from some of the West Coast states go to Asia so it's going to impact some of the West Coast as well. KANGAS: So while it's good for inflation here at home, not good for corporate bottom lines. HOLOWESKO: I think profit expectations are very high in America and people have not yet begun to bring down their profit expectations because of Asia. KANGAS: You said you're not interested in Japan. Why? HOLOWESKO: The problems there, I don't think reflected in the prices. Japan still sells at a premium to America. With all the financial problems they have in Japan, why is the stock market there still selling higher in valuation terms than the U.S. So I think their problems are easily solvable. Financially they're incredibly strong. The Bank of Japan has almost the same amount of money as the Federal Reserve system, despite the fact the economy's only 1/2 the size. But I think prices still aren't cheap. I think they're going to solve their problems but you shouldn't pay 80 times earnings for stocks over there and you shouldn't pay 2 1/2 times book value if companies only return 3 percent on book. KANGAS: So the NIKKEI could go where, down as low as 12,000, 11,000. Anybody's guess I gather. HOLOWESKO: Anybody's guess but it certainly can go much lower. KANGAS: OK. The last time you were with us, it's too long ago but you've been traveling incessantly as we know but that was in April of '96 and you liked at that time, Texaco and Royal Dutch (NYSE:RD) and both stocks have done very well. Texaco (NYSE:TX) a 2 for 1 split. Royal Dutch 4 for 1. You liked Ford (NYSE:F), General Motors (NYSE:GM), Motorola (NYSE:MOT). They're all way up. Have you taken some money off the table in those stocks? HOLOWESKO: Yes. We continue to own some of them but we're not big buyers of any of those stocks today. KANGAS: Any American stocks you like at all? HOLOWESKO: We own companies like Adco, Agrium (NYSE:AGU), Tinmet, which is a titanium metal producer. Those are some of the stocks we're buying in the USA. KANGAS: How about Europe? HOLOWESKO: Philips (NYSE:PHG) in the Netherlands still to us seems very cheap. It has a lot of list of subsidiaries. They account for 60 percent of the price but only about... KANGAS: PHG on the big board? HOLOWESKO: That's correct, right. But if you strip out the listed holdings out of Phillip's price, you're only paying about 5 times earnings for the remaining business. That's still too cheap. KANGAS: How about in the 30 seconds we have left, Mark, Latin America. Anything likable there? HOLOWESKO: Yes. We have not been doing a lot of buying in Latin America up till the last few months and we're still buying companies like Telebras (NYSE:TBR) and YPF (NYSE:YPF). There's some good ideas in Latin America. KANGAS: We've seen Telebras very active almost every day on the active list of the big board. Not too much recently about YPF, but that's a Venezuelan. HOLOWESKO: That's correct. It's an oil company down in Argentina. KANGAS: OK. Argentina, pardon me. You're right on-who would know better. I'm afraid our time is up but Mark thanks very much for being with us and let's make it sooner the next time. HOLOWESKO: Thanks very much. KANGAS: My guest, Mark Holowesko, chief investment officer Templeton Worldwide. Nightly Business Report transcripts are available on-line post-broadcast. The program is transcribed by FDCH. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c)1997 Community Television Foundation of South Florida, Inc.