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Re: MKT Asia Pacific



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I turned extremely bullish on Vanguard AP last September when it became
apparent that the downside thrust in both the weekly fund chart and the
Nikkei was reversing and we took large, long term positions to which we
added again at year-end. Basically, there were a number of considerations
working in favor of this position: washout of short-side technicals in both
the AP fund and the Nikkei, extreme bearish sentiment toward Asia,  an
indicated reversal in the Yen, and a steady stream of US corporate buying in
Asia.

One investing in non-US assets must always keep in mind that currency moves
can amplify or nullify a correct call on the direction of asset price moves.
A large portion of the large gain in AP fund has been due to favorable Yen
movement and very close attention must be paid to future Yen price action.
Even a cursory look at the monthly and weekly Yen futures charts indicates
that the Yen remains in a significant bear trend and is at a critical
juncture. I still like Asia because I believe that asset prices are much
better buys than US assets, that a basic restructuring is now underway, and
(local currency) lows may be in place.

That said, one must not forget that these are export economies and any
significant decline in US equity markets is likely to have a severe impact
in both the equity and currency markets. Also, one might want to look back
further than 1982 to the recovery from the US crash of 29 which took 13
years to complete a sound bottom in 42. While we may have seen the lows in
Asian equity markets, we may not have seen the lows in currencies. So I
would keep a watchful eye on both the Asian equity markets and on the Yen
and be ready to exit if things look nasty. The one thing to remember about
buying cheap assets is that they can always get cheaper, so the current
stampede into Asia assets, may in fact, provide an opportunity to take some
profits and repurchase the assets at lower levels. I believe we are entering
a period where we may see significant trend changes in US equities (down?),
bonds (up?), and currencies (?) so it is a good time to be careful.

Earl

-----Original Message-----
From: USAuslander <U.Stuart-Auslander@xxxxxxxxxxxxxxxx>
To: eadamy@xxxxxxxxxx <eadamy@xxxxxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, March 22, 1999 10:18 PM
Subject: Re: MKT Asia Pacific


>I am holding Bank Tokyo and Sony.  Very heavy volume has come
>in.  If I am positive on the longer trend but disturbed by the
>volume what advice do you have.  My time horizon on Japan could
>be quite long. My suspicion is that Tokyo will give us a rerun of
>1982 in the us market
>
>Stuart
>
>Earl Adamy wrote:
>>
>> Here's the vanguard asia pacific fund which has been handily out
performing
>> the s&p with considerably lower valuation risk near last fall's lows.
>>
>> Earl
>>
>>   -----------------------------------------------------------------
>>                   Name: ASIAPAC.gif
>>    ASIAPAC.gif    Type: GIF Image (image/gif)
>>               Encoding: base64

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