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Strategies & Market Trends : Thai Funds -- Ignore unavailable to you. Want to Upgrade?

To: Polartee who wrote (45)	1/8/1998 10:24:00 AM
From: Roland Kahn	Read Replies (1) \| Respond to of 107

I keep thinking maybe I'm missing something with regard to the premium on these closed end funds. I guess the holders are just refusing to sell. But who is buying at these prices?

To: Polartee who wrote (45)	1/10/1998 10:48:00 PM
From: Polartee	Read Replies (1) \| Respond to of 107

The strategy worked well in the first week as Korea Fund fell to 6 1/8 from 7 1/16 and fell to a 30.6% premium to NAV from 57%. The NAV actually went up 6.1% on this fund from Jan.2 to Jan. 9 but the price fell. At the same time, the AIM Korea fund that I used as a long hedge went from US$2.12 on Monday to end the week at 2.14. Now, if only the strategy would start to work with my short Malaysia Fund - long Malaysia WEBS position! Is it time to call the Guiness people for an entry into the records book? The Thai fund (TTF) ended the week at a 112.9% premium to NAV. It's the highest premium I've ever seen. The NAV fell 22% on the week but the price didn't budge. Potential buyers would be well advised to purchase instead one of the Asian regional funds that are trading at a discount to NAV such as the Asia Tigers Fund or Templeton Dragon. I'd try to short more of this fund if I were able to hedge easily but these markets are so volatile it would be dangerous without the hedge. How bad will the Thai economy get? How low can it go? Morgan Stanley thinks they'll use inflation to help de-leverage their economy (20-30% inflation rates). Although its not usually good for equities, in this case I think inflation could help. Elsewhere, I read that vehicle sales in November (or was it October?) declined by 73% compared to the previous year. That's a depression-like drop. The Morgan Stanley daily comments are good - Tim Condon on Southeast Asia and Stephen Roach on global. I agree with Roach that fears of global contagion are not fundamentally justified but when panic starts, no one knows how far it can lead. See the website: ms.com