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To: Janice Shell who wrote (2147)	12/15/1997 12:22:00 PM
From: Joseph G.	Read Replies (2) \| Respond to of 2563

J, Shell we use him as a contrary indicator? <<I just think the emerging Asian markets--and I can rattle them off for you: Taiwan, Korea, Hong Kong, Malaysia, Thailand, Singapore, Indonesia, and China and India too--are the world's high-quality growth stories. And since they've been declining since the end of 1993, when the emerging-markets bubble was at a peak, you can buy into them now at ridiculously cheap prices, anywhere from ten times 1996 earnings for Hong Kong to 16 times for Thailand by our reckoning. Conventional wisdom says the Asian economies are overheating and that inflation is picking up. That's one reason the markets aren't doing much now, except for Hong Kong, which has been a decent performer over the past six months or so. But geez, inflation in these countries is going from maybe 4% to 5%, and yet people are wringing their hands when you have real growth of 8% to 9%. It's crazy. The Thais, for instance, are doing a remarkable job of sustaining GDP growth of 8% a year with relatively low inflation. They are getting a little bit of an inflationary pick-up here, and the trade account deficit [the broadest measure of a nation's trade balance] has increased slightly. But running a trade-account deficit isn't bad for developing countries, as long as it's financed by foreign direct investment. The Japanese are building plants in Thailand, for instance. Mexico ran into its problems because its deficits were being financed by stock market flows. The direct investment in Thailand and the other emerging Asian economies is by its nature long lasting and makes for a much more stable situation. And at just 16.2 times 1996 earnings, I think the market is a steal. >> J+