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To: Henry Volquardsen who wrote (376)	7/30/1998 8:14:00 PM
From: X Y Zebra	Read Replies (1) \| Respond to of 3536

Once again you are correct. I get frustrated that these people are so short sighted that can not see the benefits of a more 'open' mind attitude and allowing to have free markets do their work, but as you say a respect for reasonable law and individual rights is a basic requirement for the free market system to work. I wonder what would happen if Russia or even Mexico were to totally collapse in their current systems... I guess Cuba would be an example of sorts. Except Mexico not being an island would have a greater impact through Latin America.... we shall see.

To: Henry Volquardsen who wrote (376)	7/30/1998 9:13:00 PM
From: Michael Friesen	Respond to of 3536

Henry, >>> without that co-factor free markets can be devestating to these countries. That co-factor is the rule of law and a respect for property rights. An excellent clarification. Hong Kong and China (I realize they are now the same country) are a good contrast. I would feel extremely comfortable doing business in HK, knowing that I had the "infrastructure" of the legal system to fall back on. China, however, is another story.

To: Henry Volquardsen who wrote (376)	7/31/1998 2:35:00 AM
From: Eashoa' M'sheekha	Respond to of 3536

A Little Reading For The Thread. (1) JAPANESE COULD SHIFT $1 TLN INTO FOREIGN SECURITIES FROM DEC By Phillip Day ÿÿÿÿÿHONG KONG (MktNews) - Japanese investors are likely to invest overseas a significant portion of their 1,200 trillion yen ($9 trillion) savings once restrictions are lifted in December, analysts say. ÿÿÿÿÿThat's likely to mean hundreds of billions, or even trillions, of dollars moving into foreign markets, particularly the U.S. Treasuries market. ÿÿÿÿÿConservative estimates see Japanese savers allocating 5-10% of their assets overseas. That would amount to flows worth $450 billion to $900 billion at today's exchange rates. The government itself estimates 3-4% of Japanese savings will be invested overseas after the reforms. ÿÿÿÿÿOther estimates go as high as 15% of Japanese savings, or $1.2 trillion, being invested in foreign assets after Phase II of the Japanese "Big Bang" reforms kick in come December. ÿÿÿÿÿThe effect on exchange rates and the U.S. Treasuries market will be enormous, according to some analysts. ÿÿÿÿÿ"From discussions with our institutional clients in Japan, our survey shows that we should expect approximately 15% of (savings) to be diversified out of yen primarily into U.S. government fixed income," Princeton Economics Institute economist Martin Armstrong says in a recent report. ÿÿÿÿÿHe estimates that $1 trillion of that could be invested in U.S. Treasuries, creating a "massive" effect on U.S. interest rates. ÿÿÿÿÿArmstrong says that would mean Japanese investors would hold a quarter of the U.S. domestic Treasuries market, since some $2 billion of the $6 billion in outstanding government debt is already held by non-U.S. investors. ÿÿÿÿÿThe effect of such huge flows out of Japan would also hit dollar-yen, with some seeing Y200-Y220 in reach by the end of next year. As those flows drive the yen down, foreign assets will become even more attractive to those holding such domestic instruments such as Japanese government bonds, which now return a yield of just over 1%. MORE 04:15 EDT 07/23

To: Henry Volquardsen who wrote (376)	8/2/1998 9:49:00 PM
From: Ramsey Su	Read Replies (1) \| Respond to of 3536

Henry, does the following imply someone is trying to attack the HK$? Ramsey Monday August 3 1998 Money market rates to rise in wake of $1b HKMA deal PETER CHAN Money market rates are expected to rise today after the Hong Kong Monetary Authority accepted local currency selling orders amounting to $1 billion in overseas trading on Friday. The authority's figures updated on Saturday showed it forecast the aggregate balance of the Liquidity Adjustment Facility (LAF) would be reduced by $1 billion to $1.33 billion tomorrow. The figures implied that the authority had bought $1 billion on Friday for US$130 million. The deal will be settled tomorrow, which is two trading days after the execution day - T+2 settlement. The market is understood to be concerned about the low balance level at the LAF, which is essentially a measure of the amount of short-term liquidity available in the system. Tomorrow's balance of $1.33 billion could be easily cut to zero by similar sale of Hong Kong dollars to the authority for only US$173 million, an amount not regarded as significant in the international foreign exchange trading arena. Normally Hong Kong dollar selling orders were absorbed by commercial buying interests in the market at levels below $7.75 per US dollar and these kind of selling cannot hit the LAF balance. Only when selling is at $7.75 or more per US dollar, will the buying party be the authority, which is believed to always place bids at this price to prevent the local currency from weakening to levels beyond. This type of "direct" dealing to the authority is more likely to succeed in overseas trading where volumes are generally very thin. Money market rates remained quite stable last week with one-month rate closing at 8.75 per cent and three-month at 9.125 per cent on Friday.