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

To: Rmn who wrote (145)	12/26/1997 11:22:00 AM
From: RealMuLan	Respond to of 9980

Ramsey: the last few para. in this article is related to your question. [The Wall Street Journal Interactive Edition][Personal Journal News] Dow Jones Newswires -- December 8, 1997 HK's Hang Seng To Reach 18,800 Pts By End-1998 - Worldsec AP-Dow Jones News Service HONG KONG -- Hong Kong's blue-chip Hang Seng Index will shrug off the disruption caused by Asia's currency turmoil to reach 18,800 points by the end of 1998, and 20,000 points the following year, said Bethany Chan, director of research for Hong Kong brokerage Worldsec International Ltd. Monday. Chan told a gathering of investors, 'We believe that the difficulties that now beset us will be history in a year's time, and the excitement we saw in the first half of 1997 about Hong Kong and China will come back.' She added, 'Perhaps, by then, 15 times prospective earnings will again look reasonable, allowing the Hang Seng Index to reach 18,800 by end-1998 and 20,000 to be reached in 1999.' Chan told investors that the sudden switch in market sentiment caused by the currency crisis had surprised everyone. 'Basically, we're being derailed, put off track,' said Chan. But she said Hong Kong remained competitive thanks to China, adding that Hong Kong's currency peg to the U.S. dollar can survive further speculative attacks. 'We believe that the Hong Kong dollar peg will stay (intact), and that the Hong Kong-dollar interest rates will come back down with the prime rate falling back to 8.75% by around mid-1998 after speculation has subsided,' Chan said in a report presented at the briefing. Yen borrowing costs now are about 2% against 10% for the Hong Kong dollar, she said, and Worldsec is recommending investors short the yen and go long on the Hong Kong dollar. Worldsec is 25% owned by Bank of Tokyo/Mitsubishi and listed in London. n/djn Worldsec also predicted that Hong Kong's battered residential property sector will only fall another 20% to bring prices back to 1996 levels. This is well down on the 50% fall forecast by some of the more bearish commentators, Chan said. 'There is enormous pent-up demand increasing at the rate of 85,000 homes per annum in the future, compared with the 70,000 actually built in the past,' Chan said. She said Worldsec is confident people will return to the market once prices reach affordable levels. Property-related earnings form a less significant part of the Hang Seng Index than previously -- rentals now account for 8% of the total, down from 13% two years ago. Worldsec also expects China's yuan to stand firm amid the currency turmoil. 'The renminbi (yuan) effectively depreciated in January 1994 by 33% with the merge of the official rate with the swap rate, and the recent (Asian) depreciations can be thought of as catch-up by the other countries,' Worldsec said in its report. China is in a position to reflate its economy, the report said. Mainland inflation is low, so the government can further cut interest rates. by Sean Kennedy; (852) 2802 7002; skennedy@ap.org

To: Rmn who wrote (145)	12/26/1997 11:31:00 AM
From: RealMuLan	Read Replies (1) \| Respond to of 9980

<< I wonder if you could comment on China and the possibility of a yuan devaluation? Wednesday December 24, 1:29 am Eastern Time China's Zhu says no yuan devaluation -- paper TOKYO, Dec 24 (Reuters) - China's Vice-Premier Zhu Rongji told Japanese business leaders that there will be no devaluation of the yuan while he is in office and that the country will try to increase foreign investment by taking steps such as restoring tariff exemptions on January 1, Japanese business daily Nihon Keizai Shimbun said on Wednesday. He made the remarks in Beijing on Tuesday at a meeting with Jiro Nemoto, chairman of the Japan Federation of Employers' Associations (Nikkeiren), and other Japanese businessmen who were visiting China, the paper said. Regarding financial turmoil in Asia, the paper quoted Zhu as saying: ''Until I retire, China will definitely not devaluate the yuan.'' Zhu also said that China would abolish or cut tariffs and value-added taxes imposed on investment from abroad in order to boost foreign investment, the paper said.

To: Rmn who wrote (145)	12/26/1997 4:26:00 PM
From: Rational	Read Replies (1) \| Respond to of 9980

Hi Ramsey: Thanks for your appreciation. I have also been looking at Asian countries' equity, especially, the Asian ADRs. There are two risks in the ADRs. One is obvious: the exchange rate risk. The other one is not so obvious: the premium (like options) built into some of these ADR prices. For example, Korean ADRs (KEP, PKX, SKM) have ~100% premium built into their US$ prices. That is, at the current exchange rate (US$/won), one can buy twice the number of shares in Korea Stcok Exchange as the ADRs here for the same amount of US$. This means, one is unlikely to get the same appreciation in the value of these ADRs as the stocks in Korea would in the long run as the won becomes more stable. In the short-run, however, there may be euphoria/panic and so it is hard to predict how the ADR price will move vis-a-vis the underlying Korean stock. I would like to have your as well as others opinions on these ADRs. Indonesian ADRs (TLK, IIT) have no premium. But, this could be because of more political risk in Indonesia, making the perceived risk in the rupiah higher than that of the won. But, the Indonesian ADR prices move almost in sync with the rupiah/US$ exchange rate and the local rupiah price of the underlying stock. I have not looked at Malaysia and Thailand. I would like to have your opinion. Sankar