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

To: Paul Berliner who wrote (7368)	11/2/1998 2:42:00 PM
From: Bosco	Respond to of 9980

<somewhat o.t.> Dear Paul - several years ago, PBS [Frontline?] chronicled a day of life of the money traders from 3 countries. If memory serves, they were a Chinese from HK, a Brit from UK and a guy [Swiss or American] in Switzerland. They were trading against one another. At the close, one won, one broke even and one limited his loss. I found the show most fascinating. So I certainly enjoy the high drama and intrigues <g>. With due respect, I disagree. While there are no lack of ego in the world of arbitrage and hedging, people like Soros don't get to where they are for being vindictive. Yes, even though I don't agree with them, I respect them. They play their game. They win some [Soros against the BoE] and they lose some [Eurobonds.] Speaking of Mr Soros, he has pioneered the break-the-rule game by betting against a Central Bank of a developed country, so I am not sure there is any rule agreeable by all participants. According to Barbara Tuchman in the "Gun of August," the allied forces have failed in the beginning b/c they followed their rules. To be careful, I am not here to argue for the sake of anarchy <VBG>. Indeed, we, as a society of human beings, or even of beings, some sort of protocol is a critical framework; however, in this case, I don't know if one can argue against the action of HKMA without implicitly acknowledging toppling regional economies [deservedly or not] is quite unprecedented. I could be wrong, as I am not at all well versed in history of finance, but I do not think the downfall of the Great Depression was brought about by shorties and hedgers! On second thought, while I respect seasoned hedgers like Quantum and Tiger, I don't agree your argument that "they have to show the world..." either. No, I do not think they are such noble creatures. Face it, would you invest in a hedge fund b/c the prospectus said it is going to teach the world a lesson? best, Bosco

To: Paul Berliner who wrote (7368)	11/2/1998 8:27:00 PM
From: Dayuhan	Read Replies (1) \| Respond to of 9980

Paul, I'm sure they are conjuring up some crafty plan to soundly defeat and break, once and for all, the HKMA and the $HK because the opposition did not 'play by the rules' (they cheated). They have to show the governments of the world that those who don't play fair will pay. I hope the hedge funds remember that they also broke the rules, by publicly stating their intention to break the peg. This gave the HKMA a political platform to stand on while using the lever of their reserve strength. If the funds had been a little more subtle about their moves, they might have gotten away with it. It will be interesting to see what they come up with next. I would guess (likely wrong) that their capacity for leverage, and thus their options, would be somewhat reduced these days. It would take a brave banker to underwrite a major bet on emerging currencies in today's environment. Hedge funds might also do well to recall that Governments have the power to make the rules, within their own territories at least. Obviously, nobody has to worry about the Philippines mounting the kind of defense that HK did. They simply haven't got the reserves. I do expect the funds to tread fairly lightly in the vicinity, though. The market here is small enough that significant fund plays would be difficult to conceal. With a growing consensus emerging in favor of regulation of their activities, the last thing the funds need is to be seen ganging up on a small and inoffensive country that has been doing its best to follow the rules. It would not be a smart move, if they're following political indicators as well as economic ones. I wonder if they are... Steve