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

To: MikeM54321 who wrote (5342)	8/1/1998 8:01:00 AM
From: MikeM54321	Respond to of 9980

Thread, Good article on Japan's motivation to invest in foreign equities and bonds. It's from a link Ramsey posted. I rearranged sentences to make it easier to read. MikeM (From Florida) _____________________________________________ Japan investors opt to cut stocks, increase bonds By Yoko Matsudaira TOKYO, July 31 (Reuters) - Japanese institutional investors recommend reducing exposure to equities in August for the third consecutive month, while increasing investment in bonds for the second month in a row, according to a Reuters survey. The monthly survey polled 13 Japan-based financial institutions in late July about their investment strategies for August. The figures represent the firms' recommendations rather than actual investment plans. ''The (Japanese) stock market would favour drastic write-offs in bad loans and structural reforms, but we plan to park money in U.S. and European markets, as we can't hope for a drastic change in Japan in August,'' said a fund manager at Okasan Economic Research. Respondents showed a cautious stance towards British equities, with the weighting declining by 8.85 percent, falling for the second consecutive month. They said the buoyant British economy was likely to soon see a correction. ''The dollar's firm trend against the yen will keep us wary of investing in yen assets,'' said a fund manager at Kokusai Investment Management. Japanese institutional investors say a lack of strength in Japan's economic fundamentals and expectations that interest rates will remain low were behind the decline in the weighting of Japanese bonds. ''Japan's real economy is not going to recover easily, and the trend of extremely low interest rates will not change for now,'' the fund manager at Okasan Economic Research said. Equities The average overall weighting of Japanese equities declined to hit a new low of 15.12 percent, amid uncertainty over the Japanese government's ability to solve the country's financial and economic problems. On the other hand, the weighting of U.S. and Canadian equities rose slightly to 44.65 percent. Many investors say strength in the U.S. economy will prevent Wall Street stocks from falling sharply, although concern over growth in Asian economies and U.S. corporate earnings will cap the upside of the market. Bonds The average overall weighting of bonds was up 42.10 percent, marking a rise for the second consecutive month, the survey showed. Respondents proposed reducing investments in Japanese bonds, while increasing the weighting of U.S. bonds, and those of some European and Asian countries. Respondents said U.S. bonds would gain popularity as the strong trend in the dollar makes investment in dollar-denominated products attractive. ''Moreover, there is concern over a supply glut in Japanese government bonds. We can't hope for a rally in bond prices,'' he said. A portfolio manager at SG Yamaichi Asset Management Co Ltd said: ''Japanese bonds will remain unattractive for the time being.''

To: MikeM54321 who wrote (5342)	8/1/1998 8:09:00 AM
From: MikeM54321	Read Replies (2) \| Respond to of 9980

Thread, A couple of interesting excerpts containing some facts/comments about the Asian crisis from the bear, Bill Fleckenstein. One compares our banking crisis to Japan's banking crisis AND the other about the level where the devaluation of the yuan (Chinese$) started the entire nightmare rolling. Economist believe the fuse was lit when China first devalued (suddenly made all of Japan's overseas investments struggle to compete), and the dynamite exploded when the Thai baht fell. Neither excerpt below is truly comparing apples to apples, but thought the numbers were of interest. First, when the US had a banking crisis, rates were much higher than they are currently in Japan. Bad debt is easier to finance, when Japan's rates are so incredibly low. Something others have often stated on this thread. Secondly, the Tigers were still strong (financed by Japan) back in 1993. It made more sense for China to devalue back then. Today a devaluation just furthers the massacre of the Tigers. Which won't help China a whole lot. Like beating a dead horse and shooting themselves in the foot. Devaluation can't do much more damage to the Tigers and further weakens Japan (China's biggest market). Of course, all IMHO. MikeM(From Florida) _____________________________________________ July 30th Market Rap: "Stories are surfacing that Japan's bad debt is closer to $1 trillion than the $500 billion they had previously admitted to. Let's put this in perspective: That is close to 30 percent of GDP. When we had our S&L fiasco in the early 1990s, we created the Resolution Trust Corp. (RTC). We had an approximately $300 billion problem, or 6 percent of GDP. Their (Japan's) problem is five times the size of the one we had. Their whole region is in trouble, and now they have politicians in charge of the economy who have proven to be particular skilled at doing nothing. Things are going to get worse in Japan before they get better. But this could be good in the long run, because if their economy really hits the skids, Japan will be forced to face facts. They can then begin to extricate themselves from the sinkhole they have created. American investors don't pay much attention to world events these days, but they should take note of the seriousness of the problems in Japan." July 31st Market Rap: "Another development is that the Chinese Yuan, compared with the yen, is now priced almost where it was back in 1993 when they devalued their currency. There is now gargantuan pressure on China to devalue, which will be very important because Japan continues to be a basket case. Expect this to have a major impact on Asia, and consequently our markets as well."