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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (1691)	5/25/1998 9:01:00 PM
From: Stitch	Read Replies (1) \| Respond to of 2951

MikeM, I can vouch for the penchant of the Chinese to save if my Chinese wife and Mother-In-Law are any evidence at all. And I can also vouch that the vast majority of Chinese business folks I know are very conservative business people. Evidence of this in Malaysia includes the recent relaxation of equity ownership rules in Malaysian companies allowing ethnic Chinese to own a larger share of the companies. I suspect this was to attract new capital into companies dying on the vine as liquidity drys up here. Insofar far as I know, it hasn't produced a well of new money. Best, Stitch

To: MikeM54321 who wrote (1691)	5/26/1998 10:47:00 PM
From: Ron Bower	Respond to of 2951

Mike, I wish I had posted it, but it wasn't relevant to the posts being made at the time. I recently read and article about bank policy changes by the PRC. They had imposed tight 'sink or swim' restrictions on bank lending policies, requiring them to foreclose on a high percentage of non-performing loans. The article states that the policy has now loosened and for banks to restructure loans if the companies could present a debt retirement plan that seemed feasible. The PRC will advance low interest loans to the banks to keep them solvent during a transition period. The company performance will be closely monitored and those not performing to the payment schedule may be forced to liquidate, merge, or otherwise restructure. I believe they realized how extensive the unemployment would be if the kept the original policies. A weak employer was preferable to a bankrupt former employer. They do have a problem that I haven't seen mentioned. China needs to lower loan rates to stimulate the economy. Interest rates for Rmb deposits are 5.25%. For $US, 5%. They cannot lower rates for depositors of yuan because of this. If they can't lower depositor rates, they can't lower loan rates. The alternative of yuan devaluation has been rejected as it would cause a withdrawal panic with depositors trying to convert yuan to $US or other currencies. The only solutions that seem feasible at this time is to expand the already liberal tax and other benefits for exporting companies. For what it's worth, Ron