Forum Archive Index - May 2000

[Richard Scott <richard@tkf.att.ne.jp>]

RIL

I personally think McEwen is wide of the mark with his comments about
Japan. He doesn't know enough about what else is going on over here. He's
no fund manager with a team of soldiers who go out and interview CEOs and
CFOs about what their comapnies are up to. The market is similar to the US
in that it's rather split. There is the old guard slowing dying an
ignominious death, while the more agile and responsive companies are
finding much investor support, both from within Japan and from overseas
investors.  The amount of maturing funds in post office savings accounts
into a zero interest rate environment will be quite extraordinary in the
next three years (100 trillion yen). Not all to be sure, but certainly some
of this money will find it's way into mutual funds or direct stock
investments, the prior of which are starting to find a lot of support
amongst ordinary Japanese households. Nomura, Daiwa and others marketing
these investment products fairly successfully now.

David McEwen has focused on the enormous debt that the Japanese Government
has run up in an attempt to stimulate the economy. This strategy has had
some success, but the country is a dozing giant at the moment. The
constraints on it's ability to grow into the future have, however, been
somewhat overstated I feel, and that once capital and productive asset
investment starts to pick up more there will some very large "winners" in
the new economy that has been emerging over the last 3 or 4 years.

Unlike a rather insignificant New Zealand, the local market is huge, and
while domestic demand is very weak, it's potential to increase due to very
high savings rates is extraordinary. It makes high value products that the
world consumes and continues to spend respectable amounts on R&D compared
to the US, Britain, France and Germany.

I really feel that without fear of contradiction from you at any rate, that
his comments of "Invest in Japan at your peril." would be more aptly
applied to New Zealand.

Richard
Tokyo Japan.

PS: I think you'll find "ruble" is spelt "rouble".  Never mind, it'll
become so worthless that no-one will care how it's spelt. Ask the Russians.





>After reading today's Herald site.
>
>There was a time very recently when a trade deficit (visibles) had never
>occurred. Now it is running at $3.5 bn for the Feb year. This is an
>extraordinary figure. March is the time for export resurgance and this
>was also blown away by a bigger increase in imports.
>
>These are significant figures. Comrade Brash will raise interest rates
>even higher this month to try and hold up the Kiwi ruble and stop the
>importing of inflation.
>
>Most economists were predicting recently that the Kiwi would reach 53 -
>55 cents this year. No way.
>
>Brash will keep hiking rates and mortgages will hit 10% late this year
>is my guess.
>
>However, the writing is on the wall for the Kiwi and the interest rate
>rises will choke off equities some more. His theory is also that demand
>for imports will fall if interest rates rise but this has not been the
>case so far. In my opinion this will only happen when the dollar falls.
>
>At some point Brash is going to have to stop raising or lower rates and
>the Kiwi ruble will take a pounding. Offshore fund managers should be
>coming to the same conclusion about now. They will be thinking, hey if
>the ruble drops 10% I have to make 20% back on the NZ equities to get a
>decent return to my investors. Knowing that the chances of making such a
>return in NZ equities or bonds is about the same as a decent ski season
>on Ruapehu, they will yank their dough out.
>
>This will depress the local sharemarket even further IMHO.
>
>It is looking really bad for the balance of payments/ current account.
>It's going to be a shocker this year. Mexico style.
>
>What should an intelligent investor do? Aussie or American government
>bonds. Why? Protection for currency risk and corporate bonds are going
>to get hit in the stockmarket crash.
>
>Also, with all these big companies doing a runner to Sydney there will
>be more shareholders there in time and a higher dividend stream heading
>over the Tas (or remaining over the Tas).
>
>Like to offer some good news but can't except every time the ruble falls
>I get a payrise.
>
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