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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (2256)	9/1/1998 5:05:00 PM
From: Tom	Read Replies (2) \| Respond to of 2951

What have we here? \| S&P up 4% \| Mexico down 5% \| And not so much as a word about it on the wires during business hours. Appears the funds are bailing on Mexico. I see where they wheeled-out the Cohen woman again. Merrill Lynch opposed what she advised, opting instead for the truth. Refreshing I thought. But they were the only one. The U.S. Federal Reserve is stuffing the global void created by declining commodities revenues w/ U.S. dollars. Money for nothing. Too many analysts are using the wrong indicators. Why is everyone so worried about a Russian economy that's not much larger than that of Switzerland?

To: Ron Bower who wrote (2256)	9/2/1998 3:52:00 AM
From: tom	Read Replies (2) \| Respond to of 2951

The point I am trying to make is that it IS very bad in Hong Kong. Almost any economic indicator you can think of is at its lowest level since records began (except unemployment). RPI is not negative enough (I think its about flat to -1%) to make a 16% fall in retail sales meaningless. Service Export price inflation is now negative for the first time ever, real interest rates are now 10% as compared to negative for the last few years, Housing/Rents as a % of GDP are at record levels. M1 is contracting at an alarming rate. I believe that HK needs flexibility. There are several ways in which HK can react to the changing environment. 1. Cut Costs. Housing costs must come down but the HK government is trying to stop this. Wages are coming down in the private sector 2. Fire staff. Again this is happening in the private sector 3. Raise productivity. Your guess is as good as mine but it is an interesting question if the 30% hike in air cargo rates at CLK is worth the money in terms of extra productivity PS. Again I say that I believe too that property prices coming down does not mean the end of the peg. On the contrary, they must come down in order to preserve the peg! As the stock market is driven by property prices it also will fall ergo my sell recommendation. Interesting idea by Henderson Land. If buyers pay 10% more than the list price of HK$3170 for Metro City II and if the valuation on Sep 30 2000 is less than the purchase price then the company will compensate up to the amount of its top up mortgage which is 20% of the purchase price. The top-up mortgage is interest free for the first 2 years. ie buyers who think prices will fall 10% or less in the next 2 years are likely to buy. I guess we'll see what people think of property prices.