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: B Tate who wrote (4229)	6/6/1998 7:29:00 AM
From: Michael Sphar	Read Replies (1) \| Respond to of 9980

Foundries, Motorola catch a dose of the Asian flu << "What started as an Asian problem has become a global problem," said FitzGerald of Merrill Lynch. >> << Despite two slow quarters for semiconductors, many companies are hoping for a rebound later this year. But Angel, recently returned from a trip to Taiwan, thinks that's a remote possibility. >> eet.com

To: B Tate who wrote (4229)	6/7/1998 8:24:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9980

Bernie, I have long been a firm believer in the axiom that "What goes around comes around". I do not always get pleasure from this observation because often, there are innocent casualties in the process. To wit: Article 11 of 200 News; International News The Good Doctor Is No Antidote For Malaysia's Malaise Peter Hartcher 06/06/98 Australian Financial Review Page 9 Copyright of John Fairfax Group Pty Ltd From the rantings of its Prime Minister, you could be forgiven for thinking that foreign investors had been persecuting Malaysia. After four blissful months of relative quiet, the volcanic Dr Mahathir has erupted again. He accuses the West of the deliberate impoverishment of Malaysia through the withdrawal of capital. Indeed, by supporting the publication of a foaming-mouthed new book called Hidden Agenda, he has escalated his campaign. During his quiet interlude, he explained that he had fallen silent out of fear - fear of the financial markets. So is he no longer afraid? Is Malaysia past the worst? What is going on? First, a little secret. It is a little-known fact that the man who is screaming loudest about losing foreigners' money is the leader of the country which for a decade was the biggest winner. And it was the biggest by far. In proportion to the size of its economy , Malaysia grabbed almost twice as much foreign money as any of the others. In the decade to the end of 1996, private foreign investors pumped a total of $US68 billion into Malaysia, according to the Asian Development Bank (ADB). This is less than the $US80 billion that foreigners put into South Korea or the $US75 billion that went to Thailand. But it was the equivalent of an annual inflow of a vast 12 per cent of the country's total economy , as measured by GDP. By comparison, the closest thing to this performance was Thailand's annual inflow of private capital equal to 7.4 per cent of its economy . The torrent of foreign money helped drive Malaysia's development. In the same decade, income per head grew impressively: from $US1,800 to $US4,400. The Prime Minister was looking forward to a proud celebration of Malaysia's 40 years of independence in August last year. Instead, crisis struck. When it first hit neighbouring Thailand, Malaysia's authorities believed that they would be little affected. This, of course, was wrong. But if Malaysia had reacted cannily, it could have minimised the damage. It had to take a hit, but it could have escaped with a relatively light one. It might have hoped to retain its status as a relatively well-favoured destination for foreign investors. Instead, Dr Mahathir got carried away. It was last September, just weeks after independence day, that Dr Mahathir began his most explosive attacks on the West's alleged economic warfare against the East. He called for a ban on currency speculation. He equated US speculator George Soros with drug traffickers. He hinted darkly at a Jewish conspiracy. His anger was entirely human. But he should have confined it to his private office. His outbursts only persuaded investors that he was irrational. The risks of investing in Malaysia seemed to be rising with the Prime Minister's temper. Money fled Malaysia and its currency fell yet further. By the end of 1997, he seemed to have learned his lesson. "It's been said I've now toned down my criticisms," he was quoted as telling The Australian in January this year. "That is basically out of fear. It is no longer safe to speak out and give your views. "If you say the wrong thing, you will be brutally punished by having our currency devalued." He wisely handed carriage of economic policy to his smoother and more market-savvy deputy, the Finance Minister, Dr Anwar Ibrahim. Anwar reassured investors. He brought forth a policy of fiscal austerity. And he seemed to favour the breakup of "crony capitalism" through the natural attrition of economic downturn. The Malaysian ringitt soon recovered somewhat and seemed to stabilise. It was enough to keep Malaysia out of the hands of the International Monetary Fund - and for a while it seemed that Malaysia would suffer a slowdown but nothing worse. But it has become increasingly obvious that Malaysia is headed for a brutal recession. By March, statistics showed that sales of manufactures were collapsing, with car sales down more than 60 per cent, and revised official forecasts showed domestic demand shrinking 5 per cent this year. And guess what? Mahathir is facing an election next year. In April, he seems to have decided that he was running out of time and despaired of a market-friendly solution. Mahathir decided to go for broke. He started to publicly meddle in economic policy once more; he returned to his attacks on the markets and the West generally; and he seems to be embarking on a full-scale bail-out of Malaysia's crony capitalists. In sum, he is discarding sound economics in favour of good politics. By protecting his mates, he evidently hopes to shore up the support of the business elite. And by blaming a Western conspiracy, he is preparing a political alibi for the coming economic collapse. "Why are we bearish on Malaysia bouncing back?" asks the big investment bank SBC Warburg Dillon Read. "Because it has not hit the ground yet and the authorities are still in denial . . ." The Singapore -based broker Credit Lyonnais Securities (Asia) comments: "All in all, it's a sad state of affairs . . . nor do we think Malaysian leaders are any different from the many governments around the world that have tried and failed in the past to buck the downturn of the business cycle . . . "The policy action being followed now will increase inflation, reduce export competitiveness, and produce a deeper and longer recession than Malaysia deserved." The IMF observed in April that in the history of financial crises around the world this century, "turnarounds did not occur until decisive actions were taken to deal with the bad loans of the banking system and wind up insolvent institutions". So what is Malaysia doing about this? Bank of America says that it is signally failing to take decisive action and "it risks postponing cleaning up bank balance sheets". The big Hong Kong investment bank Jardine Fleming says the health of the banking system will determine whether the IMF needs to provide more than consultancy services to Malaysia. Mahathir seems to have chosen deliberately to pursue short-term political gain over longer-run economic health. It would be a tragedy for Malaysia if, a year after its 40th anniversary of independence, it should have to surrender its economic sovereignty to the IMF.

To: B Tate who wrote (4229)	6/8/1998 10:55:00 AM
From: Worswick	Read Replies (1) \| Respond to of 9980

Bernie...hello to you today. Which are your picks of the survivors? Thanks for your input. See my post today on Korea. This is really positive...Kim coming to the US. Look for very good things to happen this week and lots of back room deals to be struck. Aany scent of these things thread post them. I am off-net in the Arizona Califronia desert for a week. This is the pivotal meeting. The ex-Ambassador I spoke about has heavyweight agency connections and will be in the thick of it. My best,