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

To: Paul Berliner who wrote (6291)	9/9/1998 12:17:00 PM
From: Worswick	Respond to of 9980

...and..from Yahoo today..guess what? When trading began Wednesday, Japan's 225-issue Nikkei Stock Average moved higher bit closed off 157.95 points, or 1.07 percent, at 14,755.54, because of new concerns about a major part of Asia's economic crisis -- the weakness of Japanese banks ridden with bad loans. As Japan's political parties continue to wrangle over a proposed bailout for the banks, rumors surfaced on the market that Fuji Bank Ltd. was facing huge derivatives losses overseas. That triggered selling in the banking sector, traders said, even though the bank later called the rumors "totally groundless." What today does "totally groundless" mean? I had heard in London, as I posted in August, that the Japanese pension funds...$9 trillion in holdings were "underwater" as it was put to me. My best,

To: Paul Berliner who wrote (6291)	9/17/1998 3:13:00 PM
From: Robert Douglas	Read Replies (3) \| Respond to of 9980

OT But possibly very important. Paul brought up the topic of pension obligations in Japan and how they are a huge unmet financial obligation. Since pension costs are one of the larger costs of doing business anywhere, I think we need to discover what effect they are having on U.S. companies' earnings. Today I ran across this in an Aerospace Industry report from Bear Stearns: The roaring bull market of the past few years (which has boosted the value of pension fund assets) and, in some cases, the adoption of more liberal actuarial assumptions have led to a steep decline in pension expense, generating a noncash source of income. We estimate that this trend alone accounted for 25% of industry-wide earnings growth in 1997 and could contribute a similar percentage in 1998. What this means of course is that when the stock market quits rising faster than the required rate of return of the pension plan (heaven forbid an actual decline), the pension expense must rise. Voila lower earnings. Is the aerospace industry an isolated case or is it representative of U.S. companies as a whole and how they are dealing with pension costs? I don't know the answer to that question. If anyone has seen something more on this please post it. Maybe there is some hungry grad student out there that could take this on as a research project and impress their professors. -Robert