Bangkok Post Nikhil B. Srinivasan

Regular readers of this column will note that I have not written about the markets for a few weeks. It should not be too surprising. What's the point? The war _ fed to us non-stop by ``embedded'' journalists _ dominates all trading activity.

It makes predicting expectations and price movements based on anything else virtually impossible. Macro fund managers (the only people making money in markets in the past few months) I know in London and the US all had very light portfolios going into the conflict. And for good reason.

Before the war began, you may recall that everyone had a view. Analysts and fund managers, in Thailand and elsewhere, all had their sound bites to provide. It will be short war'', markets will rally when it starts''.

It was not worth jumping on the bandwagon for a simple reason _ I did not know. I did not feel I possessed any particular edge or knowledge about a situation that was difficult to understand and make a call on. Even US Defence Secretary Donald Rumsfeld _ who knows more than any of us _ has perhaps been wrong-footed.

And as for market rallies, as noted before in this column, when everyone feels the same way about something, it is probably not a bad idea to go the other way. Despite all the talk about war and the market rallying, the SET has not risen since the war began. As I write, it is at 361 _ where it was the day hostilities started.

The war and now the Sars outbreak do help to put things in perspective. First, we live in uncertain political times. The war in Iraq will likely be won soon and with that, oil will drift lower and people may perhaps feel relieved. But there is an equally likely chance the tensions in the Middle East will continue to simmer remaining a distraction for the world. As for the price of oil, whatever happens in the Middle East, problems in Nigeria and Venezuela will mean prices are not going to simply collapse to levels of a year ago.

As for Sars and its impact, it is hard to underestimate the sort of visceral panic that the outbreak is creating. There is no doubt that this is a serious situation compounded by the fact that reaction and preventive measures were slow in coming. Tourism is suffering.

The impact on the markets borders on the irrational, as some would say. Or is it perhaps the most rational behaviour to expect from markets digesting so much simultaneously.

I can tell you this: when it comes to investing in stocks, fundamentals become even more meaningless in such times. I have been harping on this for a while (the fact that uncertain economic situations mean typical methods of stock analysis are not very useful) _ the war and Sars just amplify that point.

It's no use saying a stock is cheap and worth buying _ it just gets cheaper the next day on no particular news. Moreover, earnings numbers for companies become harder to estimate as there are changes in the macro-economic situation _ and if one cannot quickly react to macro changes, the micro picture is not worth looking at. To illustrate: you cannot properly value a stock on an earnings basis if the company itself cannot give you any visibility on its earnings beyond the next, say, six months.

In Thailand, we had good economic data in what was a decent first quarter. The economy can continue to grow at the pace of last year. But for the markets to move out of their current trading range to the upside, two things are required: 1) a return to a more reasonable global environment; 2) some policy move directly affecting the market (e.g. a major privatisation) or a new, large and successful private-sector IPO.

• The author can be reached at nibsri@hotmail.com

<a href=www.upi.com>By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 4/2/2003 5:47 PM View printer-friendly version

LOS ANGELES, April 2 (UPI) -- The final push by coalition troops into Baghdad got under way in Iraq Wednesday although oil traders appeared to be more focused with the latest weekly supply reports showing an equally dramatic jump in U.S. oil inventories.

May crude prices fell more than $1 per barrel on the New York Mercantile Exchange for the second consecutive day following the release of the U.S. Energy Information Administration's inventory report that this week included a major increase in the amounts of crude imported into the country and run through the refinery stream.

"With the high level of imports, U.S. commercial crude oil inventories ... increased by 6.8 million barrels," the EIA reported. "Over the last two weeks, crude oil inventories have increased by 10.5 million barrels."

The growing inventories coupled with continued coalition successes on the battlefield sent crude down by $1.22 to $28.56 per barrel. May Brent crude on the International Petroleum Exchange in London was down $1.15 at $25.21 per barrel.

May NYMEX gasoline lost a hefty 5 cents and dipped to 86.39 cents per gallon while heating oil, which reflects diesel prices, fell 2.23 cents to 71.86 cents a gallon.

The other closely watched weekly inventory report, which is issued by the American Petroleum Institute, pegged the build in crude stocks at more than 9 million barrels.

Saudi Arabia and Venezuela were the primary sources of the higher import flow. Ethnic turmoil in Nigeria's oil-rich Niger Delta appeared to be relatively quiet this week, although some 800,000 barrels per day of production remained shut down with no indications the major oil companies planned to restart their operations in the region any time soon.

The supply growth comes at an important time of the year for U.S. refiners who try to build up their supplies of gasoline in the spring in anticipation of higher summer demand. In addition, urban areas where cleaner-burning reformulated gasoline, or RFG, is sold are in the process of their annual switch from winter-formulated RFG to the summer formula.

Refined fuel supplies remained a concern, the EIA reported, as production of gasoline and jet fuel remained flat and diesel fuel production declined by around 100,000 barrels per day.

"Motor gasoline inventories rose by 1.7 million barrels last week but remain below the low end of the normal range," the agency reported.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, April 02, 2003 By: Patrick J. O'Donoghue

The Caracas (Simon Bolivar) international airport at Maiquetia authority (Iaaim) has laid off 90 workers as a reaction to tax and other income losses incurred during the December-January national stoppage. 

Iaaim director Captain (ret.) Jose Vielma Mora says the company lost more than 14 billion bolivares in Q1 and argues that there is no other solution but to dismiss workers. 

• The 90 workers are not on the permanent payroll and their contract has already expired . 

Over the last two years, 426  persons were given contract jobs at the airport in operations, public relations, protocol, security, maintenance and marketing.  The first 30 layoffs took place last week and included 14 security agents. 

Vielma Mora says he knows the dismissals will hit an already suffering Vargas State but adds that he hopes to recover taxes and normal income by the end of April.

Daily Press Wednesday, April 2, 2003 By JAMES RAMAGE/Staff Writer

Though gasoline prices stabilizing statewide, local companies have had to make difficult decisions

VICTORVILLE — These days, Orlando Mellan's livelihood comes down to pizza and gasoline. For the cook and co-owner of Carpino's, a pizzeria on Bear Valley Road in Hesperia, the price of gas determines how late he stays open and how much he charges for remote deliveries. He's not alone. Local businesses across the High Desert have been dealing with escalating fuel costs by considering or taking painful measures to maximize, or simply earn, profits. For many, the end of high prices cannot come soon enough. "The gas is so expensive here," Mellan said, "The drivers don't want to work." Because his drivers must pay for their own gas, as well as try to make their money through small commissions and tips, their returns are smaller than ever, Mellan said. "Now I must schedule my hours when my drivers will work," he said. Also, Mellan has started charging customers for deliveries outside of Victorville and Hesperia. For instance, deliveries beyond the Mall of Victor Valley or Ranchero Road will cost an additional $2 or $3. There are positive signs though. According to the state Energy Commission, the average price of gasoline in California fell on Monday by 1.3 cents from the previous week. At Hesperia Chevron Gas, owner Sager Fakhoury said the price of gas one year ago was $1.39 a gallon for regular unleaded. Today the price is $2.19. Fakhoury acknowledged that he's marked down the price 10 cents a gallon to get more business, even though it has eaten into profits. If customers pay with ATM cards, where each payment costs his business 45 cents to process, his profits all but disappear. According to Rob Schlichting, spokesman for the state Energy Commission, shipping costs and federal environmental regulations for California — which require gasoline blends that reduce air pollution — account for the nation's cleanest, yet priciest, gasolines. A harsh winter across the country and uncertainty about events in oil-producing countries Iraq and Venezuela have only compounded the problem. Some businesses take comfort knowing that price hikes have affected everyone. "We're paying $2.25 a gallon today, which seems like twice what we were paying several months ago," said Lorraine Chilelli, manager of Victor Valley Florist in Victorville, of her delivery truck fuel costs on Monday. Chilelli's company has had to raise delivery costs in the Victor Valley by $1 a customer. "At least we know that all the other florists have raised their prices, too," she said. James Ramage can be reached at james_ramage@link.freedom.com or 951-6242.

Miami Today News By Paola Iuspa

   While some financial institutions have stopped financing Argentine-bound exports, others are being creative to provide financing for Venezuelan-bound products.    Making loans to US exporters doing business with Argentina and Venezuela is being considered too risky because of those countries' continued economic and political turmoil during the past two years.    Argentina fell out of grace more than a year ago when it defaulted its foreign debt amidst a fiscal crisis that sent more than half of its population to below-poverty levels and government instability. Governed by a populist president, Venezuela's economy has been a victim of a series of national strikes, government opposition and new currency regulations limiting the access of US dollars to the country.    Carlos Milian, president and CEO of ImportCard Financial, a subsidiary of Hemisphere National Bank in Miami, said his firm three months ago stopped export-loan programs for Venezuelan customers.    "We were lucky," he said. "All of our Venezuelan customers paid us. We did not incur any loss."    His company was not so lucky in Argentina, he said, where at least three clients defaulted on loans.    "The climate there became worse," said Mr. Milian. "We had to pull out in 2001."    With about 95 exporters as customers, ImportCard provides 60-day credit lines to assist small- and mid-size companies.    Mr. Milian said the Export-Import Bank of the United States, or Ex-Im Bank, guarantees many of the loan programs available for other Latin American countries. But the Ex-Im bank is no longer operating in Argentina and Venezuela, reeling from double-digit negative growth, according to the bank.    "We are monitoring the situation in Argentina and Venezuela," said Jeffrey Miller, senior vice president for Ex-Im Bank's Export Finance division. "As soon as we see some changes, we will restart our programs."    While the Ex-Im Bank is closed for routine trade finance transactions, it will consider structured finance arrangements such as Ex-Im Bank's project finance program, asset-based aircraft leases and other financing that offers a reasonable assurance of repayment, including reliable access to adequate foreign exchange, Mr. Miller told a group of Miami entrepreneurs this year.    Ex-Im Bank's job is to finance exports, even in difficult times and difficult markets, to enable creditworthy national governments, municipalities and private-sector borrowers in emerging markets to buy goods and services from US exporters, according to the bank. Ex-Im Bank last year authorized more than $3 billion in financing for Latin America and the Caribbean last year.    Mr. Miller said last year Mexico was his bank's No. 1 market in the world, with $1.6 billion in authorizations. The federal agency guaranties private banks' export loans reducing the risk factor for the lending institutions.    Despite Ex-Im Bank's ceasing commercial-export loans to two South American nations, some banks are still providing financing for export transactions to Venezuela, but only when the loans are backed with private insurance. Those banks are lending money without government guarantees.    Alberto Valdes, heading The International Bank of Miami, said his firm still does business with Venezuela but analyzes each export transaction carefully before approving any export loans. He said customers with a long-standing relationship with his bank and able to provide private guarantees often get credits.    On the other hand, his bank has temporarily discontinued lending programs to Argentina-bound exports, said Mr. Valdes, also president of the Florida International Bankers Association, an industry advocate.    "Many banks are facing the same challenge," he said.    David Konfino, president of Union Planters Bank International, said his bank has open lines of credit for Argentina-bound exports, but only when exporters provide cash collateral or private insurance.    "In countries like Argentina and Venezuela we need to be more creative," he said. "We work with structured transactions. We look at each transaction and find a financing solution unique to each situation."    Mr. Miller said the outlook for the rest of Latin America is brighter.    Despite last year's depreciation of Brazil's currency, the economy grew by about 1% in 2002, a sharp contrast to the 13% and 10% declines for Argentina and Venezuela.    And in Central America, economists expect Mexico's gross domestic product to grow about 3.5%.    The Dominican Republic's economic growth is also expected to pick up after last year's global slowdown. Ex-Im Bank has supported efforts by the Mejia government to improve infrastructure, including housing, according to the federal bank.    "I hear many financial institutions are moving away from the international trade finance world," said John Zdanowicz, a professor of finance at Florida International University's College of Business Administration. "Some banks are refocusing away from Latin American trade financing. But it won't be like this forever."