Euro and Asian currency plays

Euro has been dropping quickly as the debt crisis sweeps. At the same time, the US dollar and Japan Yen rose quickly. Common understanding is that the Chinese Yuan, even though it was widely considered to be rising a couple weeks ago before the Euro zone problem spread out, would not rise soon. So the dynamics is mainly on the US dollar and Yen. Also because the $1T bill passed in Europe, the Euro will still face pressure in long run. That would affect investing decisions.

Although after years of development, many multinational companies have been well diversified, in a sense that currency fluctuation won't affect their revenue dramatically through manufacturing site arrangement and currency hedge, there are still a lot that rely heavily on the European and Asian markets on their revenue. These pure product "seller" companies will have hard time in the rest of the year.

Frugal spenders in Europe have to tight up their purse while Asian countries, mainly China, enjoyed over 10% growth in the past year, have to slow down because of inflation. Looking up company's revenue analysis and locking down those with more that 60% revenue from overseas, these company will have higher risk on their impact. It is not difficult at all to find out there are not a few, but many of them to be due for correction in the coming months. This provides wonderful opportunity especially after a strong rebound in 2009.

Following the same logic, European companies, strong and weak, are not good buy yet. For the strong ones, the timing may come when the Euro is stable.