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

To: Mohan Marette who wrote (1729)	1/29/1998 1:16:00 PM
From: Worswick	Read Replies (3) \| Respond to of 9980

I will address this latest Jess Beltz post to you since you are the last to post here. It is a shame Jess just can't post himself on this site: he is so very good and trenchant. He seems stuck in semi-land. That is somewhere between the outskirts of Austin and KL. My personal prediction: we are near the end of the beginning of THE CRISIS: Buy when there is Blood in the Streets Thread To: +Robert Grutza (4615 ) From: +Jess Beltz Thursday, Jan 29 1998 6:16AM EST Reply # of 4627 Bob, alright, I'll give you some bearish sentiment. Let me preface these remarks by saying that I think there are good times ahead in semi-land, but not yet. Asian markets are up on temporary weakness in the dollar driven by the mess in Washington. The Asian crisis is far from over. Korea looks like its on the road up finally, but there are still the following three issues: (1) First and foremost, Japan. I don't care what stimulus package they put up, nothing is going to change the disaster there until he Japanese clean up the festering mess in their banking sector by (a) writing off the masses of bad loans that already are on the books, (b) making provisions for the new bad loans that are coming (virtually every loan from Indonesia will pass into the nonperforming category within the next 2-4 weeks, and (c) implementing the necessary transpanancy reforms to prevent this disaster from happening again. Furthermore, I see no way of reversing the declining GDP problem which is largely driven by Japanese demographics (the aging population.) I will bet right now that by June 1, the Nikkei will be below 12,000 and the yen at or around 140-150 if they don't make these changes. (2) Indonesia is on the fast track to economic destruction. I listened to an analyst who lives there say to hell with the forecast of 20% inflation for the next year, inflation of 20% is there right now, and the real question is, can they stop the onset of hyperinflation with its ruinous consequences. Virtually every single loan made to ANY major Indonesian company where the source of the loan was foreign capital is now in default due to the continuing destruction of the value of the Rupiah. All of the loans will have to be restructured. A huge question right now is how many of them belong to Japanese banks. And, Suarto, who is as corrupt as they come, is going to run for re-election, and is very likely to win. In the words of an Indonesian analyst, "he knows all the right things to say to the IMF.", The problem is that he doesn't really plan to implement any of the changes. (3) How long can the Chinese continue before they have to devalue the Yuan? They've said they won't, but I bet they'll have no choice in the end, to avoid largescale riots due to massive unemployment. The economic outlook here in Hong Kong is grim and getting grimmer. I think the markets here are rebounding on the hope that the mess is over and because they've been spiralling downward for so long. There's also some new year's positive outlook sentiment (it's the big holiday of the year here, the Lunar new year, year of the tiger and all of that.) My feeling right now is that there's at least one more downward leg to go as Indonesia disintigrates, and the real bottom will be reached when the Japanese direct full-scale reforms towards the banking sector, hopefully around the middle-end of April. If and when that happens, it will be time to take out the second mortgage and jump with both feet into the best semi-equipment stocks. By the way, Carl J. at Infra. says that there's some more serious bad news for the front-end sector of semi-equipment stocks due soon, which I think is probably Asia related. There. Is that bearish enough for you? (C)jess beltz