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

To: Geoff Nunn who wrote (772)	1/13/1998 6:41:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9980

Geoff, <<Therefore, why do you suppose the Japanese are opposed to a weaker yen? Do you agree with me that Japan is against a weaker yen?>> Yes, from what I gather from the news I think Japan is against a much weaker yen. I think this question is better fielded by Sankar but I will venture some ideas. Japan's crisis is one of confidence more so than any other factor. Consumer and Capital spending have declined significantly. Confidence has been severely shaken by the apparent (to some) debunking of former "sacred cows" such as lifetime employment, appreciating real estate values, and solid financial organizations. Try to imagine the sacrifice a Japanese worker had to make to buy a small home or apartment 10 years ago and the per centage of his income he must allocate to pay his mortgage, just to watch the value of his property dimish today. Also keep in mind that Japan has no social security system and few, if any, pension systems. Savings for retirement must come on top of the burden of that mortgage. In addition I believe Japan officials are very sensitive about the trade surplus in that they do not want to see it rise to a level that creates additional strain in an already strained relationship with the U.S. I believe Japan's officials understand the critical and strategic nature of their trading and political partnership with the U.S. Just now figures are being released that show that Japan's current account surplus is up 76% from last year to about 1.33 trillion yen. This reflects not only a growing trade surplus but also reflects the substantial reduction in consumer and capital spending. I think the capital spending issue is another problem. As technology moves forward Japan must be in a position to rise to the challenge of the migration to the 8 inch and ultimatle 12 inch semiconductor wafer for example. Or in disk drives, the GMR head processes. These migrations create staggering capex requirements. Japan can little afford to see their spending power erode at a time when so much is going on in the technology sector. All else being considered Japan makers are still very much dependent on U.S. born technology and equipment to keep their technology sectors healthy and up to date. These comments are just my opinion and, as i said before, I am little qualified to field a question like this. Bottom line IMHO is that Japan has been wrestling with a prolonged stalled out economy whereby any reduction in spending power does them little good. Best. Stitch