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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: DRRISK who wrote (8)	12/21/1997 6:55:00 PM
From: current trend	Read Replies (4) \| Respond to of 9980

IMF Warns Asian Crisis Could Deepen By Adam Entous WASHINGTON (Reuters) - The financial crisis in Asia could deepen and spread in the months ahead, the International Monetary Fund (IMF) warned on Saturday in a report urging developing countries to brace against the economic fallout. In its interim World Economic Outlook, the IMF slashed its combined growth forecasts for Thailand, Indonesia, Malaysia and the Philippines by a whopping 3.7 percentage points to 1.7 percent for 1998, and said turmoil in Asia would dampen global growth. It predicted growth in Japan of only 1.1 percent in 1998, and said growth in South Korea was expected to fall to 2.5 percent next year from 6.0 percent this year. "Undoubtedly, people are going to feel the pain of this adjustment," IMF chief economist Michael Mussa said at a news conference to present the report. In recent months, the IMF has had to put together multibillion loans to rescue South Korea, Thailand and Indonesia after the July 2 crash of the Thai baht currency sent economic shock-waves across Southeast Asia. The extent of the financial shock to hit Asia took the international lending agency by surprise, the IMF said. Neither economic forecasts nor asset prices in the financial markets foretold the "depth and breadth" of the crisis to come, it said. While acknowledging that some of its previous forecasts for the region were "too optimistic", the fund said it repeatedly warned authorities in Asia about the risks. But to no avail. "When economic conditions remain generally good and when private foreign capital is flowing at a record pace and on very attractive terms, it is easy to believe that the good times will continue," the report said. Although uncertain of how long the crisis will last, the IMF said the economic pain was far from over, and warned that market turmoil could spread. For those countries already affected, the IMF said economic reforms must not be put off. Hesitation can only worsen the crisis, cause markets to drop further, and exacerbate contagion to other emerging markets and to more developed countries, it said. The crisis has already led to a dramatic slowdown in private capital flows to emerging economies in all regions, with the sharpest drop in Asia, the IMF said. These flows to developing and newly industrialized economies will drop by $80 billion in 1997 alone, the fund estimated. Painful adjustments will need to be made in emerging markets around the world, the fund said, as fiscal policies are tightened, domestic investment and consumption are compressed, imports decline, and economic growth slows or, in some cases, turns negative. The IMF said capital flows to developing countries would remain low in the months ahead as investors become more cautious and as borrowers postpone new issues because of the high cost of accessing the international capital markets. As the crisis drags on, the IMF said other developing countries are more likely to be drawn in. "Many countries are vulnerable to reversals of market sentiment," the IMF said. "It is therefore critical that countries take the necessary steps to reduce their vulnerability." To protect their economies, the fund said developing countries should contain their external deficits and strengthen their banking systems. In some cases, exchange rate policies may need to be changed. Though bleak in the near-term, the IMF said investor sentiment toward emerging markets would begin to turn around in the course of 1998, and that countries hard hit by the Asian crisis, after a significant slowdown in growth next year, will see a pickup in 1999. The crisis may even pass along a few benefits to the former "Asian tigers". It may help the region put a lid on large current account deficits as private capital moves elsewhere, the IMF said. "These economies have the potential to regain the confidence of investors at home and abroad," the IMF said. "As confidence returns, growth can also be expected to recover."

To: DRRISK who wrote (8)	12/21/1997 7:13:00 PM
From: Kurthend	Respond to of 9980

Interesting article. Thanks. The following site has up-to-date inforamtion on the stock markets around the world. As of a few minutes ago Japan is down. The site is: quote.yahoo.com

To: DRRISK who wrote (8)	12/21/1997 10:08:00 PM
From: Pete Young	Read Replies (1) \| Respond to of 9980

I have a similar story of underwhelming demand in Korea. I was talking to a friend today who flys for Delta, and has for many years. She was remarking that normally when she goes Christmas shopping in Seoul she and a friend have to physically hang on to each other's clothes in order not to get separated (I guess that the "mosh pit" form of shopping is an Asian custom). However, this time, empty. She said that she had never seen anything like it since first flying to Seoul 15 years ago. She also said that in general, she was disapointed over the declining quality of goods available in Korea over the last couple of years. (Cause and effect?)

To: DRRISK who wrote (8)	12/22/1997 9:05:00 AM
From: Richard Tsang	Read Replies (2) \| Respond to of 9980

DrRisk, This is very interesting to read in deed. As a native of Hong Kong, I know exactly the several floors at Windsor that was mentioned in the article. However, I have never seen the kind of boom time and chaotic shopping as described. This location, to me, is more of a "show window" for a lot of the brands and the location is for more up-scale shopping and for the not-so-smart tourists. Most local people would not shop there. There are other computer shopping centers that would appeal to the general public. I was there last week to get a feel of the quietness and I can testify that there are more empty shop spaces for let than any other time I visited this place. The rental is just too high for the shops to survive. The up-market department store Lane Crawford was also closed and instead a Japanese store is there taking up the ground floor - Seibu. I also visited two other centers. To my surprise I could not tell much difference here - heavy traffic and lots of business. I went to pick up a new gadget - the DVD machine (by Pioneer) that is backward compatible for VCD/VCD 2.0/CD and more importantly, the LD, all in one, direct from Japan, but re-programmed locally for the DVD to "all region" compatible including the US, Japan and other Asia (maily on PAL system). This retailer het me jump the allocation line as I had to leave town in a couple of days. It is a great machine as it has the feature of playing with angles (only available on software made from Japan for now). The "angle play" is to provide mutiple choices on the angle you want to see the scene which was shot with several cameras from different angles at the same time. I am relocating to the US (in the mid-west) this coming spring but on my pre-move trip there, I could not find multi-system stuff that I am so used to in around Asia. I have lived in Hong Kong, Singapore and currently residing in Shanghai. I got the impression that the US still thinks the world lives on one single system (the NTSC) and one voltage (110V) as most electrical shops I went to did not know what I was talking about when I tried to describe how a Multi-system TV set can automatically adjust to any of the 21 systems worldwide and the voltage input of between 100V and 240V without making any manual adjustments. I also visited Tokyo the week before last and my friends and colleagues there seem to be worried about the current situation and spending has subsided a lot. I am not surprised. Most Asians are fond of saving up, especially when situation is not clear. This is particularly true in countries and regions that have little or no social security programs - that is, when there is trouble, you are on your own. "Save up for the rainy days" is still very much considered a prudent and correct behaviour, as taught by generations. While I very much appreciate the creation of this thread I don't know how I can contribute to it. However, I would like to point out that to think that Asia is one problem and the problem is similar all over Asia is a very wrong assumption. The culture is very different, even as you travel from south China to the north, let alone the whole continent, and the different fiscal systems in effect in these countries. Best of luck to all investors in the world having interest in Asia. RT