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

To: MikeM54321 who wrote (4260)	6/8/1998 12:14:00 PM
From: Worswick	Read Replies (1) \| Respond to of 9980

Actually, we will get so pissed off at a trade balance up 2,000 % that we will take the yen back down to 80 per dollar. IMHO. Between times the deflationary spiral I have been predicting for the last several months on this forum is developing some real pearly white teeth...to it. C.V. Meyers where are you now that we need you. Does anyone here remember Meyers? For private use only (C) Asian Export Boom a Bust PAULINE JELINEK Associated Press Writer SEOUL, South Korea (AP) - It was supposed to be the silver lining in Asia's financial crash. Currencies weakened by the meltdown would make Asian goods cheaper in the United States and elsewhere. Exports would surge, and that would give a lift to the battered economies of Thailand, South Korea and others. But that hasn't exactly happened, despite the predictions voiced widely in the United States and Asia. Instead, the overseas sales of some Asian nations are falling, and in others aren't rising enough to make a difference. So what happened to the hoped for export boom? ''It was unrealistic in the first place,'' said Dan Harwood, head of research at ABN Amro Asia Ltd. in Seoul. In the past, Asian tigers like Thailand, Indonesia and South Korea may have exported their way to rapid growth. But that was when investment was plentiful, credit was cheap and customers were abundant. Now, foreign investors have fled. Some of the nations' banking systems are failing and their interest rates are high. Many exporters are unable to get the credit they need to keep operating at a profit, to buy materials for manufacturing. And that's even when banks have the money to spare. A $575 million Bank of Thailand fund for exporters went undistributed by commercial banks last year. With their bad loans already estimated at 30 percent, Thai financial institutions were unwilling to risk making any more questionable loans. In Indonesia and elsewhere, if banks are willing to lend at all, it's at crushing interest rates, ratcheted up as part of conditions attached to International Monetary Fund bailouts last year. Then there's the problem of lower demand. Asian nations have traditionally been each other's trading partners - and many of those partners are drastically cutting imports. ''Trade between Asian countries was good, but general (world) demand is slowing and suddenly you've got a lot of Asian countries that are competing with themselves,'' said Harwood. ''They have no domestic markets and suddenly they're competing for a finite part of (the market in) Europe, the United States, Africa.'' Profitability of exports also has been hit by falling prices. South Korea is thinking about cutting production of computer chips because a glut in the market has so weakened prices. Malaysia, with half of its market in the European Union and troubled Asia, was further hit by declining prices for key exports such as petroleum, palm oil and rubber. ''The economy is at risk of going nowhere,'' said Joanne Song, economist with PhileoAllied Securities in the capital, Kuala Lumpur. Indeed, prospects for the rest of the year don't look good. For as poor as Asian export performances have been, the picture for imports has been worse. Lackluster exports and severely reduced imports may have led to trade surpluses in South Korea and elsewhere. But import cutbacks have come from not only slumping consumer demand but also lowered demand for raw materials and capital goods such as machinery. And, again, that's because Asian businesses can't get the credit to buy those goods. ''Fewer imports of raw materials now means fewer exports in the future,'' said Lee Pil-sang, economics professor at Korea University. Further weighing on the future is the question of Japan. Some economists had hoped Japan would take a stronger role in spurring the region's economies by boosting domestic consumption and opening up its markets to more Asian goods. Instead, Japan bought 15 percent less from Asian exporters in April compared with a year ago - and its weakening yen is making for even stiffer competition among Asian exporters of cars, steel, electronics and other goods. ''They're all in a difficult position

To: MikeM54321 who wrote (4260)	6/9/1998 1:04:00 AM
From: Step1	Read Replies (2) \| Respond to of 9980

MikeM54321, here is a short answer, more when I have some time off... >>Basically, the consensus between the five of them, was, "Let the yen weaken. It's good for us." As you can imagine, I was very surprised to read this.<< Mitsubishi Motors had a spokesperson on National TV last night (the Yen/Dollar rate was the top news, graphs, experts and all the works...) saying that they do not think a weak yen is good for them. He said that after the bubble and with the strengthening of the yen J companies took steps to off set the stronger currency . These measures take a long time to be implemented and now that they are, the yen is going south again... not good. >> My question is, since you are over there, I imagine you speak the language. << Yes I do although I can't read it much... >> Do you get the feeling that most Japanese business leaders, confidentially, want the yen to weaken further?<< I don't have the kind of high level connections that would allow me to get that information, frankly. All I can say is that the Japanese media for one is warning of dire consequences about the yen 's weakness and that over the last few years Japanese people have come to think of a strong currency as something good for Japan. You have to understand that this is a trend that took more than a decade to develop, going from 360 to the high of 79.something three years ago. When it went over the 100 mark, everybody started to get worried they would get priced out, it returned to 110 and they thought it was ok. So you see that it is a phenomenon that sways public opinion all the time, except that over the years, they are now in favor of a strong yen. I personally think that the 80 level was artificial, partly overconfidence that their economy was not in such a bad shape afterall and also because of enormous political pressure from the USA (via the Big Three) to open up their markets to foreign car parts and foreign vehicles among others, which translated in Central Bank pressure on rates. So in short, the public statements made by company officials all point out to serious concerns over the yen weakness. In private I have no clue what they may be thinking. Ordinary Japanese though, don't see it as a good thing at all. People will curtail their trips abroad, cut back on more expensive imports and generally see it as a set back. 110 to 120 seems to be the comfort level. My feeling, after discussing it with the people around me, is that the Japanese still can't understand why this is happening to them. An important businessman friend of mine was telling me how he couldn't understand why Japan with such a good habit of saving religiously, good work ethics and such a formidable trade surplus could be in such a dire situation while the biggest nation of borrowers on earth was doing so good. Other people just can't understand at all. As far as I am conceerned, even with garage sales prices on assets here, I don t see it as a buying opportunity yet. There has been no change of any importance and I am sure it will take some events of catastrophic proportions to force people to move. Otherwise, everybody is just looking out for their own self, politicians especially are watching their little behinds 'cause they all "inhaled", and until I see some major bankrupcies and layoffs I won't believe that anything has really changed. sg