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

To: Tony van Werkhooven who wrote (7779)	1/4/1999 4:03:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 9980

Tony, I have not read Stratfor's Report, but I agree with them that the malaise will ease first for Korea and Singapore (I think that Korea will actually register Growth in the last two quarter of this year, if not earlier, their exports are exploding and their coffers of foreign currencies are being replenished.) Japan is another case, what I said is that by the middle of the year visibility of the turn around in Japan will start ands appear. Since equity markets have a way of discounting future actualities, I expect that after another major shake out (which we might be in the midst of), the Japanese market will stabilize. My reasoning follow these lines. Japan has put in place (finally and reluctantly) a real major stimulus package in place (including consumption enhancement "coupons"). The evens that are actually going to turn the tide is a shift in consumer confidence, which is still low. I believe that we will reach a nadir in this indicator coincidentally with a peak in unemployment, which I expect sometime by mid year. Once confidence starts to turn around, the market is going to look at trillions of yen locked in the Postal system ( a big chunk due to come out in 2000 and 2001) as fuel to both equities and the economy. The key, however, is a turn around in confidence. Puting few billions into "patriotizing" the domestic media could do wonder to shaping the population confidence, and have a bigger impact than direct government stimulus in my opinion. But, those guys only read part of our posts on this thread. The next danger flag for Japan is the way they will deal with the big budget deficits created by the stimulus package and the current deflation (less taxes). If they panic and try to close the budget gap created too fast, they will fall on their face, and be faced with a public now believing in the "You fool me once...you fool me twice etc," and a major blow to confidence. It is, IMHO, imperative that they not increase taxes to close the budget gap, but find a gradual way (through mostly increase in economic activity and gradual removal of the stimulus as the economy revives, the key word is gradual. As a matter of fact, as the economy revives, they should lower taxes, once again gradually. Zeev