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ISA (Santa Isabel): Chile's Santa Isabel operates supermarkets in Chile, Paraguay, Ecuador, and Peru.  ISA has fallen from 31 to 12 over the past year as rising store operating costs, and Asian related weakness in the Chilean market have taken a bite out of it. Management is taking steps to address the rising store operating costs as it continues to expand the chain throughout the region.  We expect profit margins to tick upwards in the coming quarter as falling inflation in Chile takes hold. We believe the Chilean market is deeply oversold. Falling inflation will lead to lower interests rates which should help negate some of the economic weakness caused by a slowdown in exports to Asia. We believe that exports will pick up later in the year and Chile will return to a strong GDP growth rate.  We expect the market to rebound in the second half of the year. ISA's stock has been unfairly lumped in with the rest of the resource-export driven Chilean market as investors indiscriminately dumped Chilean equities. We do not expect Asia to have an effect on this supermarket chain's earnings. This stock is extremely undervalued relative to its industry group. ISA is trading at 10 times next year's earnings with a PEG of 0.9, versus an industry wide PE ratio of 24.6. This stock will rebound as investor's extreme negative sentiment towards emerging markets eases. We look for the oversold ISA to gain 50-75% over the coming year. We're putting it in our shopping cart.  

Danka still needs to come to agreement with Kodak on long term supply relationships, and the company will need to continue to adjust its product mix in the coming quarters if it is to regain financial stability. We believe that the company has taken the necessary first steps on the road to a return to profits. We look for the shares to trade up to the $8-10 range on any positive developments. Our 12-18 month target for DANKY is $10-15 a share. (12/21/98)

MALAYSIA:  The selling of Asian equities has reached panic proportions.  The region now offers outstanding value. We believe that Asian economies will begin to recover later this year.  We expect Malaysia to rebound strongly. Malaysia's economy has held up better than most in the region as the government made the decision not to seek IMF assistance. We believe this was the right decision. IMF plans usually help foreign businessmen more than they help the citizens of the effected countries. By avoiding a steep IMF induced recession,  Malaysia is better poised than most of its neighbors to resume a growth path.  The latest round of selling establishes a bottom in investor sentiment. We expect the Malaysian market to rebound as sentiment returns to less panic induced levels. The best way to play this rebound is through the Malaysia WEBS, which mirror the Kuala Lumpur market index.  

EWM (Malaysia Webs Index Fund):  The recent levels of investor hysteria mark an important bottom from which we expect Malaysia to rebound. EWM, which has fallen from 14 last June, is looking strong technically.  During the recent decline there has been a strong positive divergence between OBV and price. OBV is now rising. The smart money has quietly been accumulating while panic selling reigns. MACD and %R are giving buy confirmations now.  A strong double bottom is in place in the Malaysian market. Now is the time to go long Malaysia. 

PHILIPPINES: The Philippine economy and currency have fared better than many of their regional rivals. The Philippine government has managed to avoid the total loss of confidence in the economy that has plagued many of its neighbors.  We expect flat GDP this year and a return to growth next year. The new Estrada administration has alleviated fears of an ineffective government by assembling a strong cabinet.   The recent plunge in Philippine markets was due to extremely bearish investor sentiment, rather than actual weakening economic fundamentals.  We expect the market to rebound strongly as Asian economies stabilize and the extreme pessimism exhibited by traders dissipates. We view Philippine Long Distance Telephone and First Philippine Fund as the two best ways to participate in a recovering Philippine market environment. 

FPF (First Philippine Fund):  Ignore the premium on this closed end fund.  The recovery potential is such that the premium you pay over net asset value on this one is immaterial.  FPF is down from 9 on April 1st, and down from 14 1/2 last June.  This fund has completed a double bottom, and %R has given a buy confirmation. We are purchasing now. 

PHI (Philippine Long Distance Telephone): PHI has held up better than other Asian stocks, registering a decline of 30% versus 70-80% for many of its regional rivals. The weaker Peso has benefited PHI which derives a large proportion of its business from Dollar denominated international calls. 60% of PHI's revenue comes from international long distance services.  We look for this international revenue to provide a cash safety cushion for PHI as it seeks to build up the under developed domestic infrastructure.   We look for increasing growth in the years ahead and view PHI  as extremely undervalued.  PHI is trading at just 11.3 times 1998 estimates and on a prospective 1999 PE of 10. PHI technically is poised for a breakout. The stock held above its January lows during the recent market rout.  It bounced off the 62% Fibonacci retracement level which we view as a bullish sign.  Accumulation has been taking place during the recent fall, and OBV is showing strong positive divergences. %R has given a buy confirmation.  We would be buyers of this undervalued equity which offers lower risk than many of its Asian rivals. 

AJL (Amway Japan Ltd): Amway Japan is the distributor of Amway products in Japan. The company sells products in 4 categories: housewares, personal care, nutrition, and home products. The stock has been under heavy selling pressure, falling from 20 last June, as a slumping Japanese economy has taken its toll on profits. 1998's first half profits fell 27% as higher costs offset a 3.1% rise in sales. The higher costs were due to 3 factors. The Yen's fall caused margins to come under pressure since AJL purchases most of its products from Amway U.S.A. in dollars. AJL also incurred expenses from promoting itself at the Winter Olympics. Heavy expenses were incurred for a public relations campaign designed to combat negative publicity surrounding the company. We believe that management is taking the necessary steps to turn the company around. The Olympics exposure and corporate image campaign will lead to increased revenues in the second half of the fiscal year and to a more favorable public relations environment for the company. Operating expenses will be lower as the extraordinary advertising expenses of the first half abate.   The distributor force renewal rate increased by 4% in the first half. Housewares sales have surged 30% due to the introduction of well received new products. We expect a stabilization in the Japanese economy and Yen to further boost profits. High yielding AJL is a compelling turnaround in the making, trading at just 11.4 times fiscal 1999 earnings estimates and yielding 5.5%.  Money Flow has turned up as accumulation has begun to take place. %R, MACD, and stochastics have given buy confirmations. We expect the stock to double by this time next year. 

JCC (Jilin Chemical Industries): JCC is a $1 billion in revenue Chinese chemical company. Petroleum products constitute 40% of sales,petrochemical and organic chemicals 21%, dyestuff and dye intermediaries 11%, synthetic rubber 9%, chemical fertilizers 6%, and other chemicals 13%. The company which derives 96% of its revenues from China, has been largely insulated from the plunge in regional economies. Its share price however has plummeted from 19 1/2 last October as investors have indiscriminately sold off all Asian equities. We expect JCC's share price to recover strongly  as oversold conditions in Asia correct, and investor's sentiment towards emerging markets returns to more normal levels.  The decrease in crude oil prices will benefit JCC and boost profits. JCC is extremely undervalued, trading at 6 times earnings and yielding 3.7%. We expect these shares to trade at 15-20 within the next 18 months.  

CEA (China Eastern Airlines): CEA serves China's eastern gateway of Shanghai with 1100 flights a week from 44 cities in China and eastern and southeastern Asia.  39% of traffic revenues are from domestic flights. CEA's heavy exposure to southeastern Asia travel has led to a severe downturn in profits this year. The stock price has fallen in step with the profits, down from 39 7/8 last August. Profits will rebound strongly as Asian economies begin to recover later this year. We expect CEA to grow strongly over the coming years as air travel grows in China. CEA is now extremely oversold and undervalued. The shares trade at a 1998 PE of 6.7 and at 6.6 times next year's earnings. The PEG ratio is just 0.47.  Technically CEA is showing signs of moving to the upside. OBV has turned up sharply. MACD, CCI, and %R are giving buy confirmations. We look for CEA to trade at 15-20 in the next 12 months, and at 25-30 within the next 18-24 months. 

CHL (China Telecom (Hong Kong) Ltd.): CHL is the main provider of cellular services in the fast growing Chinese provinces of Guandong and Zheijiang. CHL is 78% owned by the P.R.C. Ministry of Posts and Telecommunications. CHL, with 3 million subscribers, has experienced rapid growth in new subscribers . We expect this growth to continue strongly over the next 5 years. CHL is the best way to play the explosive growth in Chinese telecommunications which will take place over the next decade. The company is solidly profitable and is one of the cheapest cellular plays around.  CHL is trading at just 16.2 times next year's earnings estimates, with a PEG ratio of 0.97. We look for the stock to shoot up when investors start returning to emerging markets later this year as the Asian recovery unfolds.  CHL has held up well during the recent market swoon, and is showing solid signs of a move to the upside.  Accumulation is taking place in the stock as money flow turns positive. We look for this stock to move up to the 40-45 range over the next six months. Our 1 year target is 50-55. Go long while it's still a bargain.

HONG KONG: We believe that a bottom is firmly in place in the Hong Kong market. The slowdown in Hong Kong's economy resulting from the Asian crisis has driven the market down more than 50% since last September. We believe that the market has discounted all the bad news far into the future. We expect property prices to fall only another 10-20% before stabilizing.  The Hong Kong economy will recover from a mild recession later this year after signs of a turnaround emerge in other Asian economies. Fears of a Hong Kong Dollar devaluation are unfounded. Beijing will not under any circumstances "lose face" by allowing a decoupling of the currency's link to the dollar. Negative sentiment has reached an extreme and now is the time to reenter the Hong Kong stock market. 

EWH: (Hong Kong Index WEBS)  The best route to participating in a recovery in Hong Kong is through EWH which mirrors the Hang Seng Index. EWH has fallen from 18 last August. OBV has started to turn up, a bullish sign. We would buy EWH at these levels. 

SINGAPORE: Singapore's economy has been hit hard by the troubles of its neighbors Malaysia and Indonesia. Traders have driven the Straits Times Index down more than fundamentals warrant. The Singapore economy will avoid the recession that its neighbors are facing.  We expect growth of 2.5% this year, rising to 6-7% next year. A partial recovery in Asian economies later this year will benefit the trade dependent economy. With sentiment at extreme levels of negativity, we would take this opportunity to enter the Singapore market.

EWS: (Singapore (Free) Webs Index) We are buying EWS which is a proxy for the Singapore market.  EWS has fallen  40% since March. It is down 66% since last July. We would take the opportunity that the negative psychology towards emerging markets presents and buy at this low point.