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Technology Stocks : Deswell Industries (DSWL) -- Ignore unavailable to you. Want to Upgrade?

To: mod who wrote (871)	8/5/1998 3:00:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 1418

Dennis, I've been involved in lengthy discussion about potential yuan devaluation on the Asia Forum and Hong Kong threads. I don't believe it will be devalued. While I can present a lengthy argument involving many aspects of China's economics, the primary reasons are two fold: 1) Exports amount to 20% of China's GNP and a devaluation to boost exports would be at the expense of the other 80% and 2) any devaluation would not have any lasting effect as it would cause a run on the other currencies, likely putting Asia into complete bankruptcy. The yuan/yen relationship is now at the same proportion as it ws before China devalued. This still gives Chinese companies a slight advantage from taxes and other incentives. China is announcing new programs to aid distressed exporters and looking for methods other than devaluation. However, these advantages won't make a difference short term as customers are bargain shopping and the Japan, S Korean, and ASEAN companies are letting them drive the price down just to get the business. If one thinks longer term, Chinese companies will be much better off if the yuan is not devalued. I look for Deswell to make a similar announcement as to the difficulties due to devaluations, mainly for Kwanasia. As with Zindart, sales will weaken, but both will continue to profit. JMHO, Ron