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

To: smolejv@gmx.net who wrote (3542)	5/13/1998 3:33:00 PM
From: DMaA	Read Replies (1) \| Respond to of 9980

Here comes some more: 05/13 14:43 Capital said flying out after India nuclear blasts By Elif Kaban GENEVA (Reuters) - Foreign capital is flying out of India following its latest nuclear blasts and Pakistan is likely to take a hit as well amid fears of a regional arms race, money managers at a Geneva conference said Wednesday. Reports of two more Indian underground nuclear tests just two days after it stunned the world with its first blasts in 24 years, shocked fund managers at the Geneva conference, sending many to a nearby computer screen for news. ''Foreign portfolio managers are taking their money out of India right now as we speak,'' said Jim Ayer, general partner and portfolio manager at U.S. Tiedemann-Ayer Asian Growth Fund. ''Get out!'' was the advice to investors from Jim Mellon, founding partner of fund manager Regent Pacific just before the United States announced economic sanctions against India for breaking its self-imposed moratorium on tests. ''This is a very big negative. The United States will impose sanctions, and other countries will follow. It is a big step back for India,'' Mellon said in an interview. News of the new nuclear tests sent Indian stocks tumbling more than 4 percent on the Bombay stock exchange and helped weaken the Indian rupee against the forward dollar on hectic corporate demand for the U.S. currency sparked by sanction fears. In New York, Indian mutual funds dropped. In London, Indian global depositary receipts tumbled more than 6 percent. President Clinton Wednesday signed sanctions against India, but France and Russia said they were against any such action. Washington's sanctions are expected to cut off all U.S. aid to India, bar American banks from making loans to its government and restrict the export of computers and other equipment for military uses. Japan, India's largest donor, has said it is considering freezing all loans. It has already announced a suspension of grant aid. Rating agency Moody's Investors Service Inc. said it felt India could not have chosen a worse time to flex its muscles. ''It is certainly not positive from the standpoint of the macroeconomic environment,'' a senior Moody's official said Tuesday. Moody's is expected to complete a review of its ratings on India by June or July, he said. Standard & Poor's Corp. reaffirmed India's debt rating at BB+ Tuesday, but warned it could review the rating if sanctions are imposed. If India were subjected to widespread trade sanctions, it could seriously hurt economic growth expectations that have supported Indian stock prices. This fear is unsettling fund managers. Mellon predicted the Indian stock market ''will probably go down another 10 percent.'' He said Pakistan may follow suit. Pakistan's Foreign Minister Hohar Ayub Khan has reiterated his country's own nuclear capability after the Indian blasts and has accused New Delhi government of going berserk. ''The situation will escalate with Pakistan developing its own nuclear capability,'' Mellon said. Terence Mahony, managing director of TCW Emerging Markets Equities, agreed: ''Investors are not going to touch Pakistan.'' Mahoney said the prospect of Western sanctions against India was likely to prompt fund managers to reduce exposure to the Indian stock market. But he said he had not acted yet on his exposure to the Indian equity market, which he put at about $50 million. Fund managers at the Geneva conference estimated foreign institutional investor exposure to India at around $9 billion in current equity market portfolios. That is not too high compared with India's stock market capitalization of more than $150 billion, they said. ^REUTERS@ Reut14:43 05-13-98

To: smolejv@gmx.net who wrote (3542)	5/13/1998 10:01:00 PM
From: Stitch	Read Replies (2) \| Respond to of 9980

DJ, <<I dont think that Japan woke up April 1st and said "Damn, the Tankan really sucks" and decided to shift gears. It's a process that has been going on for some time too. The savings set free lately... peanuts.>> I tend to agree that there hasn't really been an awakening to the possibilities on the part of the Japanese saver. But the amount of savings released is significant and not "oeanuts". In other words there really is a pile of money sitting there for potential redeployment. No wonder we are wading in the slaver of so many western money managers. But curiously, when I was in Japan in April, there was noted lethargy on the part of the individual saver. At the business level there was much animated talk re: policy. My view is that the Japanese businessman AND the individual (note:these are one in the same often) has been so long led that new found freedom finds him standing and blinking in the bright lights of newly found self determination. This shouldn't surprise us. In fact, it is a movement that will carry into everyday decisions, both business and personal, and marks a significant paradigm shift for the Japanese citizen. We can and should expect some faltering. Best, Stitch