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

To: Tommaso who wrote (3451)	5/10/1998 11:19:00 AM
From: Zeev Hed	Respond to of 9980

Tommaso, the Japanese lenders to Indonesia are refusing to take on the exchange risks (the old deal was pegged at 5000 Rupiah to the dollar and it is closer to 10,000 now). If a deal is not struck, the Rupiah could go into another tailspin, then even if the Indonesian stock market does not go down, the value in terms of Dollars would be declining. I think that until the currencies there stabilize, investments there would be at best, risky. I must say, however, that some people think that the Rupiah is undervalued, I for one do not see the basis for such an assumption. Zeev

To: Tommaso who wrote (3451)	5/10/1998 3:53:00 PM
From: John B. Smyth	Respond to of 9980

"It sounds as if so far the actual disruption there is only about as severe as in the U.S. during the Vietman War." From what I saw, (or didn't see) during my recent trip there, I think that is a good parallel. JBS

To: Tommaso who wrote (3451)	5/11/1998 8:42:00 AM
From: tom	Read Replies (3) \| Respond to of 9980

The era of Suharto is coming to an end as more and more people are realising. He is indeed a master tactician but I think even he will not be able to control the situation now. I wonder if it will happen when he is away in Egypt? Leaders have a habit of having their governments sacked whilst out of the country (Gorbachev and Mobuto spring to mind as recent examples). I accept that there are no obvious replacements for Suharto (save, God forbid, one of his cronies) but neither were there in 1965. My guess is that Suharto's replacement will be a second line general who no one has heard of. At the moment the stock market is pricing in a poor year or two for corporate profitability but not a full scale meltdown. In this sort of situation I think that its better to wait until share prices get down to 2-3x normalized earnings and/or 80% discounts to net asset values. We are not near either of those targets yet. With interest rates at 60%, time is not on the equity investors' side.