-Caveat Lector- from: http://www.aci.net/kalliste/ <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- Asian Markets Are the Tigers Back? Or are they only kitties looking fierce? HONG KONG - Is the Asian financial crisis over? Analysts say not by a long shot, but stock market investors have voted with their wallets, and their verdict appears to be yes. Two years ago this week, Thailand gave up trying to support its currency, the baht, and the Asian financial crisis began. >From this one event, panic spread through the financial markets of Asia and beyond. Banks lurched into insolvency or just stopped lending, and the bewildered residents of the region were plunged almost overnight from an atmosphere of plenty into what amounted to an instant depression in Indonesia, Thailand, and South Korea. Now, almost as suddenly, investors have again piled back into the region. Markets, including Hong Kong, South Korea and Thailand, have regained or even exceeded the levels they were at when the crisis hit. For many analysts here, it is a case of too much, too soon. ''All the Asian stock markets are running ahead of fundamentals, including those with solid fundamentals,'' said Friedrich Wu, chief economist at the Development Bank of Singapore. If investors shed good companies as well as bad ones two years ago, that irrational reaction is back again, he said. Markets are pricing in a full recovery in Asia within about nine months, he said, even though Asia's required debt restructuring and economic reforms are proceeding ''painfully slowly.'' Take Hong Kong, where instead of letting stock and real estate prices find their market levels, the government has moved to support both, even though its fixed exchange-rate system dictates that asset prices are supposed to float freely. Hong Kong is still in a severe recession, whereas two years ago the economy was growing strongly. Still, the Hang Seng index closed Wednesday at 14,257.49 points, well above the 11,630 mark it was at before the crisis washed over the territory on Oct. 23, 1997. That day, the index plunged more than 10 percent. ''From a fair value perspective, the market is overbought,'' said Anil Daswani, head of Hong Kong research at investment bank Salomon Smith Barney. According to Salomon's calculations, the Hang Seng index is priced about 25 percent higher than where fundamentals say it should be, he said. Indeed, Hong Kong and several other markets in the region have edged down in the past few days as investors have sought to capture some of the gains in recent months. In South Korea, the Korea composite stock price index surged Wednesday to 1,005.98, its highest level since Oct. 18, 1995. When the Asian crisis struck in July 1997, the index stood at 800. The currency, the won, in dollar terms is 29 percent weaker, but also would have been somewhat stronger if not for official intervention. In the real South Korean economy, though, chaebol, or large conglomerates, remain heavily indebted, and are only very slowly shedding unproductive assets, if at all. Two high-profile sales of state-owned banks to foreign investors may fall through. In Thailand, the baht is almost half the value it was two years ago. The Stock Exchange of Thailand index of stocks closed at 516.11 on Wednesday, around the level it was at in August 1997 about a month after the financial crisis truly set in. A report by Moody's Investors Service last month that said the Thai banking sector remains in ''deep crisis, and all banks remain heavily insolvent in true economic terms.'' Yet not everyone sees the bounce in Asian stocks as overdone. ''The better companies are really driving these benchmark indexes higher,'' said Ray Jovanovich, a director at Indocam Hong Kong Ltd. and for many years the manager of the Siam fund of Thai stocks. As one example, he cited Advanced Info Service, Thailand's biggest mobile phone operator, which is up 221 percent, easily compensating foreign investors for the fall in the baht. But Robert Medd at Deutsche Securities puts Advanced Info into a group of companies with ''no shareholder value,'' because unless it restructures, it is not creating enough value to pay off its debt. It is that restructuring that investors who look at fundamentals are waiting for, but among the 50 most heavily traded public companies in Asia, Mr. Medd sees a continuation of the pre-crisis trend for most firms to consume more capital than they create. That happens because of poorly judged investments, too much debt, or inefficient management. International Herald Tribune, July 8, 1999 Singapore Markets Singapore Thinks to Sue Malaysia Lee Hsien Loong Opines Singapore is willing to take legal action against Malaysia to end an impasse over M$14.5bn (£2.4bn) in shares that Kuala Lumpur has, in effect, frozen for 10 months. "We cannot rule it out," said Lee Hsien Loong, Singapore's deputy prime minister. "We are taking legal advice." He also said introduction of the euro had cut into Singapore's foreign exchange market. Mr Lee, also chairman of the Monetary Authority of Singapore, the de facto central bank, was speaking in a wide-ranging interview about the island-state's efforts to be a leading financial centre. Singapore has lost about 15 per cent of foreign exchange trade volumes since the euro was introduced, Mr Lee said. "The euro, itself, has not been very actively traded," he explained. "I hope the volume will grow back in time." But, even without it, Singapore is still ranked fourth by volume of foreign exchange trade in the world. Mr Lee said Singapore's goal of developing a bond market could well be supported by Japan's attempts to expand its own. Japan hopes yen-denominated bonds will emerge from its reported commitment to ¥2,000bn (£10.5bn) in guarantees to help regional economies issue debt in global capital markets. "One motivation, which they have said openly, is to promote the bond market in Japan, but they also want to trade the bonds in the other markets in the region, such as Hong Kong, Singapore and Sydney," Mr Lee said. "So, if it does come to pass, it will be a plus for us." Meanwhile, Singapore's stock market is gaining from the conflict with Malaysia. There have been record volumes and highs in recent weeks as Singaporeans who used to commit large sums to the Kuala Lumpur market invest at home instead. The shift began in September, when Malaysia imposed capital controls and withdrew its currency from international circulation, making it impracticable for Singaporeans to continue eight years of trading Malaysian companies over-the-counter in Singapore. Singapore returned the shares to Malaysia and asked it to keep to an agreement to transfer them into individual accounts in Kuala Lumpur to be traded on its stock exchange. "We had a legally binding agreement with them to migrate the shares," Mr Lee said. "We have done our part, but they have not done theirs." Malaysia does not feel compelled to do so and has kept the shares frozen, fearing widespread selling would undermine its economic recovery. Three private sector proposals have been made to resolve the impasse. But they have included offers to buy the shares at discounts of up to 70 per cent or with so many restrictions that shareholders have spurned them. The Financial Times, July 8, 1999 Middle East Syria Says It Will Match Israel Step for Step on Peace Deal How long till Barak's coalition falls apart? EHUD BARAK, the Israeli Prime Minister, received a boost for his plans for swift progress on Middle East peace yesterday when Syria announced that it was ready to match him "step for step". A Foreign Ministry spokesman in Damascus said that Syria "shares the same wish to put an end to wars and establish a comprehensive peace in the region". More than seven weeks after he was elected, Mr Barak moved into the prime minister's office yesterday, after a brief hand-over ceremony with Benjamin Netanyahu, his predecessor. Mr Netanyahu said he had left the country in "a good condition", contrasting the relative peace of recent months with the wave of suicide bombings which marked the end of the last Labour government in 1996. He said: "There is calm in the country and a sense of personal security." Mr Barak set a hectic pace for advancing the peace process. His spokesman said he would travel to Egypt tomorrow to meet President Hosni Mubarak, would see the Palestinian leader, Yasser Arafat, on Sunday and would hold talks with King Abdullah of Jordan before going to Washington at the end of next week. The Egyptian ambassador to Israel, Mohammed Bassiouny, said: "The momentum is building up. I do believe that President Assad of Syria is really serious about achieving a just and lasting peace with Israel." In the Arab world, commentators welcomed Mr Barak's call at his swearing-in on Tuesday for a "peace of the brave", but many wanted to see action, not words. In Gaza, a senior Palestinian official said: "We are looking for a business meeting not a photo opportunity." The Jordanian newspaper Al-Dustour said Mr Barak must prove his good faith following his fine words. There should be a "clear and immediate halt to expansionist settlement policies". Sheikh Ahmed Yassin, spiritual leader of the Palestinian extremist group, Hamas, whose suicide bombers have killed dozens of Israelis, said it was useless to expect anything good from Mr Barak, a former army commander, and promised to continue "resistance" to Israeli occupation. The Jordan Times wondered if Mr Barak's broad coalition - stretching from the far Left to the religious Right - was capable of supporting his peacemaking agenda. It said: "This motley crew of his may bind him hand and foot." The coalition suffered its first defections yesterday. Two members of the Russian immigrants' party, Yisrael ba-Aliya, quit in protest at the failure of their leader, Natan Sharansky, to secure freedom to vote on religious matters. Mr Barak still has 73 members of the 120-seat parliament behind him, a relatively secure margin by Israeli standards. But there were plenty of predictions that his presidential style of government would further whittle down his coalition. Tommy Lapid, head of the secular Shinui party, said: "It has taken only 24 hours to start falling apart. I always predicted it would collapse and this is the start." While the omens may be good for a Syrian peace treaty, there are problems looming with the Palestinians. Mr Arafat is concerned that the government will focus on Damascus, leaving the increasingly restive Palestinians until later. He has reminded the government: "The Palestinian track is the central issue of the entire Arab nation". A hint of difficulties came when Haim Ramon, minister in the prime minister's office, said Mr Barak wanted to back off from full implementation of the Wye River accord, which calls for Israel to withdraw from 13 per cent of the West Bank. Mr Ramon said the government wanted to make some changes by negotiation, but hoped it could implement most of the agreement, which was suspended by the outgoing government. Its full implementation is seen by Palestinians as a test of Mr Barak's ability to hold his coalition together when it comes to handing land over to the Arabs. The London Telegraph, July 8, 1999 ----- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, Omnia Bona Bonis, All My Relations. Adieu, Adios, Aloha. Amen. Roads End Kris DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credeence to Holocaust denial and nazi's need not apply. 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