During the current economic crisis, many foreign investors feel over-exposed in Asia. But with prices and price depreciation at the present levels, savvy investors can find bargains. The countries to watch are Thailand, Malaysia, and South Korea. For the most part, these countries are accepting and learning from the International Monetary Fund's reforms and are looking for foreign investors. One situation to look for is recently developed hotels with non-amortized debt where interest is due. Management is searching for capital infusions to keep new development afloat. First-class and luxury properties in the region offer the best short - term investment opportunities, as this segment is often the quickest to recover after an economic downturn. 

Investors will be wise not to back out of Japan, as conditions are likely to improve in the near future and Japan has been traditionally a tough market for hotel investors and operators to penetrate.  Presently, the economy is simply not weak enough to fully open its doors to foreign investors. As this year unfolds, Japan's general economy will continue to limp along. However, there will be some bright spots. In particular, we see the hotel industry strengthening, supported by international travel and trade in the area. 

Asia's last bulwark, China is priming its own pump. China's leaders are steadfast on reforming and managing its debt-laden state-owned enterprises and banks. Critical to its reforms is the maintenance of the bank's retail deposit base. Any whiff of currency devaluation could threaten the retail base. We see China continuing to stifle outside investment, a policy that has so far saved it from the Asian crisis. 

Meanwhile, the Hong Kong dollar is behaving as expected. The Asian crisis has forced Hong Kong to confront two major weaknesses in its economy. The first is that its wealth is rooted in real estate. The second is that Hong Kong pegs its currency to the U.S. dollar. At present, Hong Kong has no room to maneuver. The plunge in Asian currency has increased the cost of doing business in an already expensive market.  The fear is, if Hong Kong drops its peg in hopes of reducing artificially high costs, capital will flee. This would leave government no alternative but to raise interest rates. Higher internal costs of capital would cause property values to fall. Hence, the potential opportunity for foreign investors. 

The remainder of this year will bring continued economic struggle for Asian economies. Many of this year's economic chal-lenges will persist largely as a result of inter-dependence among Asian business commu-nities. However, as the debt crisis sustains its burden on cash-poor companies and govern-ments, traditional barriers to cross-border mergers and acquisitions will begin to fall. In ranking Asian investment opportunities, we put Thailand at the top of our list, followed by Malaysia, Korea, and the Philippines and Taiwan.  Long term, patient investors are likely to reap the rewards of their risks.