RESTRICTED
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1922
OF 1212OOZ JUNE 89
INFO IMMEDIATE WASHINGTON, PEKING
HKC 100
COPY ST ?
43
002126
MDHIAN 8803
STATE OF HONG KONG MARKET: 12 JUNE 1989
SUMMARY
THE HANG SENG INDEX CLOSED 172 POINTS UP ON INCREASED TURNOVER. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR FIRMING TO 7.787 TO THE US DOLLAR.
DETAILS
2. FOLLOWING THE 175 POINT RISE IN THE LAST THREE MARKET DAYS, THE HANG SENG INDEX ROSE 80 POINTS IN THE FIRST HALF HOUR OF TRADING TODAY. THE INDEX CONTINUED TO RISE THROUGHOUT THE MORNING AND CLOSED
AT 2386, WITH A NET INCREASE OF 118 POINTS FOR THE MORNING. IN THE AFTERNOON, THE INDEX ROSE FURTHER TO CLOSE AT 2440. THE TOTAL GAIN FOR THE DAY WAS 172 POINTS WITH A TURNOVER OF HKDOLLARS 2.24 BILLION.
3. PRICES OF BLUE CHIPS IN HONG KONG ROSE SHARPLY ON THE RE-EMERGENCE OF DENG XIAOPING. HIS APPEARANCE PUT TO REST, AT LEAST TEMPORARILY, SOME UNCERTAINTIES IN THE CHINESE POLITICAL SITUATION. BROKERS WERE RELIEVED TO SEE THAT FEARS OF A CIVIL WAR IN CHINA WERE REDUCED AND THAT THE PRESENT GOVERNMENT HAD REGAINED CONTROL. HOWEVER, SENTIMENTS REMAINED UNSTABLE FOR THE MEDIUM TO LONG TERM PROSPECT IN THE LOCAL MARKET. SINCE THE LAST NORMAL TRADING DAY ON 18 MAY, THE INDEX HAS FALLEN BY SOME 25.5 PERCENT. THIS REPRESENTS A SIGNIFICANT IMPROVEMENT OVER THE INDEX OF MONDAY, 5 JUNE, WHEN THE MARKET SHOWED A LOSS OF 36 PERCENT.
4. TRADING IN THE HANG SENG INDEX FUTURES MARKET REMAINED LIGHT. A
TOTAL OF 1401 CONTRACTS WERE TRADED TODAY. THE JUNE CONTRACT CLOSED AT 2370 WITH A 69-POINT DISCOUNT TO THE SPOT MARKET. THE AUGUST CONTRACT CLOSED AT 2390 WITH A 49 POINT DISCOUNT TO THE SPOT MARKET. ONE CONTRACT WAS TRADED FOR OCTOBER WHICH CLOSED AT 2370. THERE WAS NO TRADING IN THE DECEMBER CONTRACT.
5. THE MONEY MARKET REMAINED STEADY TODAY WITH THE HONG KONG DOLLAR
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