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

To: Worswick who wrote (1821)	2/1/1998 12:23:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 9980

Worswick: Here is a nice link I found,if you like Indian Music that is.They even have songs from the 50s. radioindia.com

To: Worswick who wrote (1821)	2/1/1998 3:46:00 PM
From: Rational	Read Replies (3) \| Respond to of 9980

Worswick: About inestments, I was intrigued by an MOF (Japan) official commenting that they were not interested in investing in Korea (although they wanted to help Korea) and that they were looking at Indonesia and India which have been listed in the top ten emerging markets. Indian political system is very stable, corporate laws are as sophisticated as in the developed world and the judiciary is truly independent. India's primary goal has been and will continue to be self-reliance and this has created many rules that impinge on efficiency and competition in the corporate sector. Two days ago I read an analysis in NYT praising India's gradual approach to liberalization. In fact, PV Narasimha Rao told in 1991-1992 that it would be a mistake to move too fast to liberalize. Indian bureaucracy consists of some of the best brains in the world and is highly competent to understand what is achievable and the sophistry of modern finance. True, many bureaucrats have also been corrupt; afterall the British started a corrupt bureaucracy to survive in India. However, high level corruption is crumbling because of the PIL (public interest litigation) that has invaded the power structure at all levels by young PIL litigants supported (rationally) by the Indian courts. Now, top bureaucrats and ministers dread the PILs; Chief Ministers are being sent to jails; a Prime Minister is being prosecuted. Thus, the Indian atmosphere is changing dramatically. Remember that India had been an ancient land in which the prominent ruler (Ram) did not tolerate even the appearance of impropriety. The BJP is poised to create such a land and I believe they will succeed. I have no political affiliation with any Indian party, but I believe it will be in their self-interest to run a corruption-free country which will then put pressure on the Congress party to rid itself of corruption. There are many smart and highly ethical bureaucrats who command more power than the ministers and, given the rampant rise in PILs, the others (prone to corruption) will be unlikely to collude with the ministers. But, a quick good return on investment in India is unlikely at this time, IMO. Indonesia has a very large consumer base. But, Indonesia does not have sophisticated corporate laws and a stable political system. Nevertheless, Indonesia can reform faster than many think. This is because Suharto has no option; he cannot afford to lose his legacy of making Indonesia prosperous. He is very popular among the minions. His opponents (mostly the rich ethnic Chinese) want to topple Suharto by squeezing the Rp after the window of opportunity opened to do so. Suharto lost faith with the IMF package after the panic and run on Rp choked the financial system in the wake a closure of 15 banks at the behest of the IMF. But, after receiving sufficient assurance from IMF, US and Japan for concrete help, he became ready to reform. I think he means to continue to reform as long as Rp value improves; US, IMF, Japan and Singapore know this and will prop up Rp in exchange for some political and mostly economic reforms. However, Suharto's opponents still do not want the markets to believe him. With the governments of Japan, Singapore and US actively supporting Indonesia and shaping the monetary and banking policy, however, these critics will vanish and the speculators will resort to a panic buying of Rp. These governments once did so soon after the IMF plan was unveiled in Jakarta; but a potential VP nomination of Habbie marred the efforts because these governments wanted to have an absolute guarantee from Suharto that even after his regime, Indonesia would continue reforms. I think Japan, Singapore and USA have received some subtle guarantee that Habbie would not be the VP; this is because Mr. Yen has talked recently about an exchange rate of 4000-5000 Rp/USD or better. I have heard comments from Singapore that confidence in Rp can be quickly restored if everybody believes that Suharto will not back out. I believe it is in the best interest of Suharto to not back out. The main fear of markets is that Indonesia may print a lot of money. But, if IMF policy is credibly followed (as signalled by the CB intervention from Japan, Singapore and US), the hedgers/speculators of Rp will resort to panic buying once again; this realization may have sparked the rally on Indonesian ADRs (TLK, IIT, GRL) on Friday. The talk of a pause on debt repayments should be good on both Rp and equity because it is only the debtholders who suffer. Korean successful debt renegotiation and Indonesian resolve to not guarantee corporate debt must have increased the pressure on debtors -- on Friday, the WS caved in even though the Asian markets soared completely in line with my ex ante belief. If the Japanese scandal does not mar the perception about Japanese economy, then Asia should outpeform US and Europe, IMO. Then, one can gain the most from an investment in Indonesia; although the risks are high. If the Rp rises to 5000 per USD, that will be a 100% return from the current level of 10000. I would be careful about buying Korean ADRs that are selling at ~100% premium on their won price in Korea. Korea will lift the restriction on foreign ownership of Korean stocks and these premia will vanish. Buying stocks locally may not be a bad idea, although most of the bluechips have advanced to their highest levels which means that buying the won is a better idea than buying Korean stocks. Currencies in Thailand, Phillipines and Malaysia have not depreciated as much as Rp. But, these ADRs are selling for a lot of premiums, although one can still make money. Buying good stocks in these countries locally (albeit inconvenient) is a good idea, IMO. Sankar