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

To: Worswick who wrote (5978)	8/28/1998 10:39:00 AM
From: Paul Berliner	Read Replies (2) \| Respond to of 9980

I can't see it happening here because the accounting practices are too strict in the U.S. The BOJ has not released data on off-balance sheet losses for Japanese banks, the percentages of non-performing loans, and other important data that is found in every U.S. banks SEC filings. Worst of all, lax accounting practices in Japan have resulted in major banks' unrealized losses not being marked to market. When that happens, dive into a bunker because the bombs will be a' fallin.

To: Worswick who wrote (5978)	8/28/1998 7:59:00 PM
From: Stitch	Read Replies (3) \| Respond to of 9980

Folks, Here is a bit of upbeat news. The Economist Better news in East Asia AS CURRENCY speculation destabilises one emerging economy after another, doom-mongers are having a field day. Pointing to positive news amid talk of global economic meltdown might seem unsporting. Yet it is worth noting that even as Russia quakes and Latin America trembles, there are more hopeful signs in some parts of East Asia. Trade figures tell the tale. Although in dollar terms Asian exports have stagnated or even fallen over the past year, in volume terms the performance is far stronger. In South Korea, Thailand and even Indonesia, all of which suffered big currency devaluations, the volume of exports has risen by 20-30% over the past year (see chart). This suggests that those much-criticised devaluations are doing just what they were meant to. Indeed, the increase in export volume is roughly the same as Mexico's in the year following its devaluation at the end of 1994-and the world economy was then much stronger. The surge in export volumes has been more than offset by a sharp drop in dollar prices and by falling prices in world markets for many of the Asian countries' exports. It will thus bring little relief to firms with dollar-denominated debts. At a macroeconomic level, however, rising export volumes will help to prop up output and jobs. J.P. Morgan, an American bank, reckons that this could lay a foundation for recovery next year; it forecasts modest growth of around 21/2% in both Thailand and South Korea in 1999, after a fall in output of around 6% this year. Already the export recovery, combined with a sharp cut in imports as domestic demand has slumped, has brought a huge improvement in some economies' current-account balances. South Korea ran a current-account surplus of $22 billion in the first half of this year (equivalent to almost 16% of GDP), compared with a deficit of $10 billion in the same period of 1997. Thailand ran a surplus of about $6 billion (12% of GDP) in the first five months of this year, against a deficit of more than $4 billion in the comparable months of last year. The dramatic turnaround in trade balances, combined with loans from the International Monetary Fund and a cautious resumption of private capital inflows, has allowed some governments to start rebuilding foreign reserves. South Korea's, for example, have risen from a low of $5 billion in mid-December to a record high of $41 billion in June. In Malaysia, however, which has seen an improvement in its current account but has not sought IMF loans, reserves have fallen slightly this year, suggesting that private capital has continued to flee. Thanks to all these factors, some currencies now appear to be stabilising. The South Korean won and the Thai baht have both recovered by more than 30% against the dollar from their January lows. This, in turn, has allowed their central banks to cut interest rates. South Korea's three-month rates have dropped from 25% in December to 11% today, Thailand's from 26% to 14%. Lower interest rates and stronger exports suggest that the worst pain may be over, at least in South Korea and Thailand-although probably not in Malaysia, whose currency has continued to slide. But there are still big obstacles to a near-term economic rebound. Debt burdens remain huge, and fragile banking sectors are making it hard for businesses to get credit. Political instability could yet upset things. And the outlook in East Asia's two biggest economies, China and Japan, remains murky. Yet elsewhere in the region, although recovery may come slowly, it is, after an excruciatingly painful year, at least visible in the distance.