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

To: Sam who wrote (4150)	6/3/1998 1:18:00 PM
From: HB	Respond to of 9980

Sort of OT: Buried among other interesting information here is the fact that Copper was 42% of Chile's export earnings in the first 9 months of 1997. state.gov Just thought I'd quantify my statement that Chile is very sensitive to copper prices! As I read this, and the figures with growth rates 8%+, 7%+, 6%+ for '95, '96, '97, the thought did cross my mind that the "Chilean miracle" might be in trouble. But, I guess, and I am not very certain about this, that the Chilean miracle has occurred in a somewhat less cronyistic, more truly free-market, environment than much of the Asian miracle (which incidentally, should really be traced back to the 50's for some of the Asian nations (Korea, Taiwan, Singapore at least), and has led to gains which IMHO this crisis is far from erasing at least in K, T, S, probably others as well.). Certainly the stated ideology in Chile has been much more libertarian, though combined with pragmatic (and effective) modifications, like controls on capital flows which should also help stabilize Chile against an Asian-style meltdown. Read the exchange rate policy segment of the state dept. report I linked for further reassurance along this line, specifically the policy that the Chilean govt does not try to keep the longer term movements insulated from the market... although one would want to be sure this is so in real life rather than just on paper. You are quite right we should worry about copper prices and Chile though. The key is whether copper has dropped enough that it anticipates further contraction in Asia sufficiently, and will bottom here for awhile and rebound as the Asian picture gets less cloudy, or whether it has farther to go. I don't know enough to hazard a guess, though I'm leaning toward the latter (though I hold some Chile Fund, CH, a partial position leftover from successful trades last year (and held another trading position for a short while, and small loss, late last year)). If commodity prices slump further, coinciding with plunging output and stocks and maximal uncertainty in Asia, there might be a great buying opportunity in CH (and Asia too, for that matter) later this year. Howard