Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Zeev Hed who wrote (2332)	2/23/1998 10:16:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 9980

Zeev: I also heard Intel is thinking about upping their stake in Samsung's DRAM division to the tune of some $300 mil,I belive Intel already has 10% stake in this division. Smart move by Intel probably as this will allow them a steady supply of DRAMS in case of any periodic shortage.

To: Zeev Hed who wrote (2332)	2/23/1998 10:57:00 AM
From: Worswick	Read Replies (2) \| Respond to of 9980

Zeev lest I quote you old news...but here is where we are in my opinion. I agree that Korea can shuffle it's most lively corpses but when they get down to the bone....hey, there is nothing left to cut as you so rightly point out. Damn. Stitch and I are both glad you are back! So is Bernie and Jack and Mohan... and all the rest of us. Heartening messages from the Northeast on a snowy day. For Private Use Only c The Far Eastern Economic Review Korea "The IMF's $57 billion in emergency funds offer little direct benefit to South Korean companies. The central bank is guzzling up most of the money to shore up its foreign-currency reserves and support rickety financial institutions. Of the country's $153 billion in foreign debt, private companies owe $42 billion--some $25 billion of it due to mature in one year or less. And quite aside from these numbers, there's $23 billion borrowed by Korean multinationals' overseas subsidiaries. The picture is even grimmer on the domestic side. Won-denominated corporate debt exceeds $300 billion, according to Ssangyong Investment & Securities. Bankers have determined that there's little prospect of collecting on some 30 trillion won ($17.5 billion) in short-term loans coming due later this month and next. They have, therefore, extended the repayment deadline by two months. The consequence of all this is starkly clear: The chaebols must start making money fast--or die. "We haven't seen the peak of the bankruptcy cycle yet," says Namuh Rhee, Samsung Securities' research head. If he's right, another, more destructive shock is sure to hit the already overstretched financial system--requiring an even greater official response. With the domestic economy locked in a deep freeze, the only way out of the bind is to earn dollars abroad. Most South Koreans hope that the weaker won will fuel a surge in exports. Although the country registered a $3 billion current-account surplus in January, signs of an export-led recovery are so far elusive. Most of the gains were made on the import side: Compared with a year ago, incoming shipments plunged 40% while outbound shipments edged up just over 1%. Meanwhile, the nation's stockpile of raw materials needed to make goods for export is dwindling to perilously low levels because costs have soared in won terms--and banks are, not surprisingly, reluctant to provide trade finance. For South Korea, there's simply no quick fix. Korea Inc. is so rotten, analysts say, that its rejuvenation is bound to be an agonizingly protracted process. For the duration of this year and probably throughout 1999 then, GDP will contract, interest rates will remain punishingly high, the won will linger at present levels and South Korea's unemployment level will be higher than at any time since the Korean War. Then, on to Japan. The millions of people in Tokyo waiting for the Big Bang might be in for a real surprise: the Big Bang could turn out to be the collapse of the Japanese economy rather than a new age of competitive finance. Surely the greatest paradox today is that one of the richest countries in the world, Japan, is flirting with bankruptcy. Its banks are being downgraded by credit-rating agencies, its budget deficit has grown alarmingly large, and if unfunded pension liabilities are included, its debt is now equal to more than 200% of GDP. There must be no doubt that Japan is teetering on the verge of a 1930s-style collapse of financial institutions, confidence and economic activity. Taking measures to prevent this is "very difficult." The measures aren't really understood and they certainly are not believed. Having preached to the U.S. for more than a decade that deficits are bad, that Japan is right, and that free-market pursuit of prosperity is inferior to conformism and a managed economy means that the Japanese public and most surely its sclerotic policymaking process cannot just jump over their own shadows. Japan is trapped. Japan must immediately do a deep cleaning of its financial system. This is vastly different from tinkering with accounting rules or setting aside money to pay depositors of failed banks; it means taking out the bad loans and making banks liquid and eager lenders. Nonperforming loans are somewhere between 12% and 15% of GDP and presumably rising. Years of bad loans are coming to roost; no bad loan was ever refused." 12%-15% of GDP? Jesus H., this is the most respected journal of finance in the Far East saying this. These are hummongous, very large figures. This is the big kahunga!!