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

To: Thomas Haegin who wrote (4289)	6/9/1998 9:14:00 PM
From: Step1	Respond to of 9980

>>Stephan, thanks for your insights on Yen weakness perception in Japan. I want to encourage you to stay around, as you are a valuable addition to our net of correspondents in the region,<< Compensation in USD only please, abstain from Asian currencies...<g> >the first one from Japan, if I remember correctly.< World Outlook thread has Don who seems to know a lot about Japan, I don't know if he lives here or has in the past though. >>> How long have you been there already? Are you living there permanently or are you "on assignment"? Just being curious, Greetings, Thomas << See below, I just reposted my previous message from the Japan Nikkei thread. To answer your question, let me give you some background info : 1. I have been living in Japan for 6 years 2. I have no background in finance or business 3. I am a retail investor 4. I think Japan will eventually come back 5. Their economy could be in shambles for years to come yet some of their companies will survive and even thrive 6. I think now is the time to start looking for potential buys although it is too soon to act 7. Japan is being hit left , right and center by a combination of interdependent yet sometimes uncontrollable factors; For example, they certainly saw the aging of their population coming in their statistics although they weren't able to see the implications (at least not clearly) that it would have on the economy, one of which is that people in their 60s spend a lot less at the local shopping center among other things, hence stocks like Daiei are in deep trouble. The Asian meltdown, nobody saw or perhaps felt to uneasy talking about . They have no direct lever they can pull to correct that. 8. The Economist has published some very well balanced and very well researched articles on Japan in the last few issues (Japan on the Brink) Living here I can certainly relate it to what I see and hear around me. Recommended reading. 9. This message will probably confuse you more than anything else, since the problems afflicting the J economy are themselves so complexed and nobody at this point can claim to have the right answer. There are a number of possible scenarios that may happen and each one of them depends to a certain degree on other events taking place elsewhere (US economic slowdown or market correction, the Euro, very much talked about here, Asia and probably most important the J government and the actions it will take or avoid taking) That said, let me start by telling you a couple of anecdotes; 2 years ago when the yen was still around 110 (i get paid in yen, so those were the good days) and the Nikkei around 16000 I think, I went to the local Nomura office and opened an account there. Being in a small town , the front counter staff felt uncomfortable dealing with a foreigner and they asked the branch manager to come down and talk to me. The guy spoke English (although I speak fluent Japanese, it always helps) and had been in Canada (i am canadian) so we talked for quite a while. Anyway long story short, I told him I wanted to invest in Japanese blue chips to hedge my bets and thought the big J cos had some pretty good mileage left in them. Now this coming from a broker is pretty amazing. He just said to me: "Dont bother with them, you won't make money. If I were you I would sent it home and buy some Cisco system instead" Cisco was at around 53.00 usd then. He felt the J economy was not worth the risk and was pushing the "Fundo" at the time, basically a basket of money market foreign currency funds. I went to a couple of his seminars and the only times he mentioned J cos were for Honda and another called Secom (Security and Communications). I lost interest, did not trade in the account and now see the yen at 136.7 to the usd. So in yen terms I would have had to make more than 30 % on the stocks, just to be even in dollar terms... Good advice indeed. Unfortunately I didn't buy Cisco... As for the other things affecting the economy, I think you also have to look at societal causes. Nobody disputes the fact that the education system has to be overhauled as well. There are a number of other government sectors like that, health care being one that needs screaming attention, especially for the elderly. The other challenges I am sure you can read about in the financial press, business week and the Economist as I said earlier have some pretty good pieces in almost every issue. I hope I wasn't too broad in this first overview. What I would really like to do here is start compiling a list of companies (blue chips) that people feel will stand a good chance to fight it out once the dark clouds have started to thin. Preferably turn around story, remember IBM? The more battered the better, if they make it that is where the profits will be. As for my own self I have a pretty difficult dilemna. I get paid in yen like I mentioned at the beginning of the message. So far, changing my income into dollars every month has been the only way for me to protect against the yen 's devaluation. At some point in time I figure that it will not be worth it anymore as the US currency becomes more and more expensive to buy. I have very few options and one is to keep it in yen only and wait for a turn around . The Economist asserts that the yen if it was fairly valued would really be worth 109 yen, based on their Big Mac Index. I could also bet on some companies and invest in Japan, hoping that if the economy improves, the yen should appreciate also, therefore gaining on both fronts , potentially that is. I am sorry for this long winding message. I hope that I can be of some help to the posters here. Opinions welcome. sg