The wave is sweeping across Asia as I write this. The NASDAQ will most likely tank in the morning, but I believe more people will flee into large value stocks. The S&P might be saved. Lots of good shorts in the market tommorrow.
The signifigance of the Thailand SETI tanking is this. A few months ago after the coup many analysts were upgrading Thailand. Ultimately, there were probably some investors who flocked into the Thai exchange thinking it was now a great buy. There are also a multitude of retail investors in international etfs and mutual funds.
As I pointed out before, there is a lot of $$$ in margin. There will be many entities liquidating assets in the morning trying to cover the margin over the Thai exchange fiasco and limiting their exposure to Asia in general.
As well, there will be many retail investors redeeming their international based mutual funds and etfs. I certainly will be cashing out my Vanguard international funds first thing in the morning.
Im not going to go through this once again like in 1994.
****
U.S. Investors Burst Asian Stock Bubble
By Lawrence Malkin International Herald Tribune
Friday, January 14, 1994
American investors are pulling their money out of the overheated stock markets of Southeast Asia, helping burst the bubble that they themselves created in a headlong drive to diversify abroad.
.
As markets tumbled in Hong Kong, Malaysia, Thailand and Singapore on Thursday, investors, advisers, brokers, and analysts agreed that they had reached their highs for the time being and that Southeast Asia was being dealt out in this year's annual reshuffling of investment portfolios, no matter how optimistic may be the long-term outlook for the area.
.
The Asia/Pacific component of the International Herald Tribune World Stock Index tumbled 0.8 percent, to 116.47.
.
But specialists disagreed on where the money would move next - Japan, other emerging markets, Europe, or back to the United States. The most likely answer may be that Americans will continue to diversify their investments in all these places.
.
If there was any trigger to the flight aside from the obvious unsustainability of the Southeast Asian markets themselves, it was recommendations from major advisers. None counseled a wholesale repatriation to the United States.
.
Merrill Lynch's international strategist, Thomas R. Robinson, advised clients Wednesday to shift their emphasis to Latin America and Europe because of short-term volatility in Southeast Asia, and Asian fund managers to shift to Japan. This was short-term advice, Mr. Robinson said, because "we are long-term positive" in Southeast Asia.
.
Eric Kobren, who runs a newsletter tracking Fidelity Investments, the largest U.S. mutual fund house, advised readers to bail out of Southeast Asia about a month ago and either to come back home and bet on the domestic economy or to try profiting from declines in European interest rates by investing in bond or equity funds there.
.
Vivian Lewis, editor of Global Investing, an American newsletter devoted to foreign stocks, carries few Southeast Asia recommendations now, except to buy some selected issues on weakness. Bullish long-term, she nevertheless advises subscribers to take profits on some of her best picks, for example by selling half of Thailand's Shinawatra Computer, up a phenomenal 558 percent since she first recommended it at the end of 1991.
.
Small Asian markets - Biryini Associates calculates that volume in Hong Kong last year was only one-fourteenth of Wall Street's - thus are learning what it is like to sleep in the same bed as Wall Street's thundering herd. The problem for Wall Street is that no one knows precisely what will be the next trend.
.
"For the present, money is coming home, like all marginal money at the first whiff of trouble, and it has been marginal money that moved these small markets," said William McBride, who follows emerging markets for Lipper Analytical Services, which rates mutual funds. Since the start of the year, he reported, Asian closed- end funds are down 16 percent.
.
"Managers don't move their money from one country to another," he said. "Most funds will bring their money home, and then they will redeploy it as long as there isn't a sharp fall in the U.S."
.
But Robert Walberg, stock strategist for MMS International, said there was "still a flood of money going into emerging markets, but it is just going to different places." He predicts it will go to India, New Zealand and South Africa. The latter two are already up more than two-thirds in a year.
.
Michael Metz, investment strategist of Oppenheimer & Co., is one of the few who believes that much of the foreign money is coming home "because all those markets are overpriced and so is Wall Street, but it is the least overpriced."
.
The signifigance of the Thailand SETI tanking is this. A few months ago after the coup many analysts were upgrading Thailand. Ultimately, there were probably some investors who flocked into the Thai exchange thinking it was now a great buy. There are also a multitude of retail investors in international etfs and mutual funds.
As I pointed out before, there is a lot of $$$ in margin. There will be many entities liquidating assets in the morning trying to cover the margin over the Thai exchange fiasco and limiting their exposure to Asia in general.
As well, there will be many retail investors redeeming their international based mutual funds and etfs. I certainly will be cashing out my Vanguard international funds first thing in the morning.
Im not going to go through this once again like in 1994.
****
U.S. Investors Burst Asian Stock Bubble
By Lawrence Malkin International Herald Tribune
Friday, January 14, 1994
American investors are pulling their money out of the overheated stock markets of Southeast Asia, helping burst the bubble that they themselves created in a headlong drive to diversify abroad.
.
As markets tumbled in Hong Kong, Malaysia, Thailand and Singapore on Thursday, investors, advisers, brokers, and analysts agreed that they had reached their highs for the time being and that Southeast Asia was being dealt out in this year's annual reshuffling of investment portfolios, no matter how optimistic may be the long-term outlook for the area.
.
The Asia/Pacific component of the International Herald Tribune World Stock Index tumbled 0.8 percent, to 116.47.
.
But specialists disagreed on where the money would move next - Japan, other emerging markets, Europe, or back to the United States. The most likely answer may be that Americans will continue to diversify their investments in all these places.
.
If there was any trigger to the flight aside from the obvious unsustainability of the Southeast Asian markets themselves, it was recommendations from major advisers. None counseled a wholesale repatriation to the United States.
.
Merrill Lynch's international strategist, Thomas R. Robinson, advised clients Wednesday to shift their emphasis to Latin America and Europe because of short-term volatility in Southeast Asia, and Asian fund managers to shift to Japan. This was short-term advice, Mr. Robinson said, because "we are long-term positive" in Southeast Asia.
.
Eric Kobren, who runs a newsletter tracking Fidelity Investments, the largest U.S. mutual fund house, advised readers to bail out of Southeast Asia about a month ago and either to come back home and bet on the domestic economy or to try profiting from declines in European interest rates by investing in bond or equity funds there.
.
Vivian Lewis, editor of Global Investing, an American newsletter devoted to foreign stocks, carries few Southeast Asia recommendations now, except to buy some selected issues on weakness. Bullish long-term, she nevertheless advises subscribers to take profits on some of her best picks, for example by selling half of Thailand's Shinawatra Computer, up a phenomenal 558 percent since she first recommended it at the end of 1991.
.
Small Asian markets - Biryini Associates calculates that volume in Hong Kong last year was only one-fourteenth of Wall Street's - thus are learning what it is like to sleep in the same bed as Wall Street's thundering herd. The problem for Wall Street is that no one knows precisely what will be the next trend.
.
"For the present, money is coming home, like all marginal money at the first whiff of trouble, and it has been marginal money that moved these small markets," said William McBride, who follows emerging markets for Lipper Analytical Services, which rates mutual funds. Since the start of the year, he reported, Asian closed- end funds are down 16 percent.
.
"Managers don't move their money from one country to another," he said. "Most funds will bring their money home, and then they will redeploy it as long as there isn't a sharp fall in the U.S."
.
But Robert Walberg, stock strategist for MMS International, said there was "still a flood of money going into emerging markets, but it is just going to different places." He predicts it will go to India, New Zealand and South Africa. The latter two are already up more than two-thirds in a year.
.
Michael Metz, investment strategist of Oppenheimer & Co., is one of the few who believes that much of the foreign money is coming home "because all those markets are overpriced and so is Wall Street, but it is the least overpriced."
.
