HONGKONG STOCK MARKET, June 14-17, 1988
THIS TIME,
A LOWER U.S. TRADE DEFICIT
IS GOOD NEWS
Tuesday
The Hang Seng Index pushed on upwards against all odds, despite an increase in the prime rate and the pending release of the US trade figures.
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In the few months before, the Hongkong Market had tended to show some caution some had said excessive
caution prior to the monthly announcement of the US trade figures, and trading had generally subsided as a re- sult.
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But it seemed that the majority of investors were in- tent on riding high on the wave of positive sentiment whilst keeping their fingers crossed for favourable US trade figures.
Many analysts expected the US trade deficit for the month of April to be similar to that of March, around the $US12-billion level, and the local Market was said to be prepared for such a deficit.
At the same time, some investors were not prepared to commit themselves too heavily until the trade figures were announced) after the Market had closed).
The half-a-percentage-point rise in the Prime Rate ap- peared not to have had much of an effect on punters, and
brokers said that the Market had taken into account the
possibility of a Prime Rate increase.
The confidence that was being displayed in not only the Hongkong Market but also in overseas markets kept the bullish ball rolling, and positive sentiment was ex- pected to remain in the air of Exchange Square.
The long, slow summer that had been anticipated by many observers seemed to have been forgotten for the time being and the Market was proving very attractive to
local players.
And it was the support of the local institutions and in- vestors that kept the Market buoyant, largely, although there was a certain amount of interest from overseas in- vestors during the day.
The Hang Seng Index came to rest at 2,672.70, up 25.28 points despite some profit taking in the afternoon which trimmed earlier gains.
The Hongkong Index was up 21.57 points at one stage before lunch, but at the close, it had gained 15.85 points to
1,770.32.
Turnover was down $HK235 million from Friday's tally, but remained strong at $HK1.59 billion.
When the US trade figures did come out after the Market had closed, they revealed that the US trade deficit had fallen to $US9.89 billion, the lowest in the past 3
years.
As a result, stock prices in New York and London showed immediate gains with no indications of inflation/
interest rate fears.
The month before, when the March US trade deficit had been reported at $US9.75 billion, investors around the world got the shivers because, it was thought, the US economy was expanding too quickly. (Later, the March figure was revised upwards $US2 billion)
It was expected that the Hongkong Market would react just as favourably as other world markets and it was
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