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

To: R.Lui who wrote (24)	12/22/1997 2:31:00 AM
From: Stitch	Read Replies (1) \| Respond to of 9980

Anyone who has bought the story that Soros is the big bad guy that started all this can be sold to at will, all day and all night. I recommend a reduction in your fiber intake. Stitch

To: R.Lui who wrote (24)	12/22/1997 5:31:00 PM
From: Rational	Read Replies (5) \| Respond to of 9980

R.Lui: If you may like to hear my understanding of the Asian problem, you may read the following! Asian countries leveraged too much. A typical company in SE Asia has a leverage of 4:1 (debt:equity) as compared to a typical American company's leverage of 1:1. The companies (especially Japanese, Korean and Taiwanese) wanted to get market share at any cost, i.e., without looking at profitability or how to pay back the debt. Banks borrowed heavily and lent to these companies, who ultimately could not pay back the loans as promised. Banks, who had borrowed overseas and lent to these companies, lost their capital while protecting their domestic customeres under the governmental influence. As soon as this was recognized, SE Asian banks sold as much of their local currencies for US$ as possible to not default overseas. This resulted in a fall in the value of local currencies. In other words, there was a panic and run on local currencies, precipitating a slump in their values. The SE Asian Central Banks are hardly independent of their governments and have no rational policy in place to circumvent such runs or to control banks' borrowing for excessively leveraged companies. The cheap foreign capital made everything look easy and no one had an inkling that such a run could take place. Quite frankly, what is missing in the SE Asian countries is: competent professional financial managers manning independently operating banks, supervised by a thoroughly independent and competent Central Bank. Sankar

To: R.Lui who wrote (24)	12/24/1997 1:43:00 PM
From: Zeev Hed	Respond to of 9980

R. Lui, the reasons for the current malaise in Southeast Asia, is not Mr. Soros or any other speculator. The reason is the irrational and unrestrained expansion, backed by the governments of those countries. This has created a bulge in productive capacity with borrowed money. Now that the markets cannot absorb all these new products, inventories have built up and prices declined putting those companies in financial straights. Thus, those that were not sufficiently liquid and had no access to funds had to go under. Soros and the other speculators just made the problem more visible and of course profited by being the first to recognize the problem. So will you if you can recognize when assets in assia are going to go begging for $.40 on the dollar and you will fight your fear that they will go to $.10 to the dollar and jump in and buy at at the bargain prices. Zeev Note added later: R. Liu: I should have read the thread completely before responding to your querry, since I see that abler commentators such as Sankar and Tomasso have already answered. Sorry for the duplication.