RESTRICTED
HKC100/1
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1900
OF 091005Z JUNE 89
INFO IMMEDIATE WASHINGTON, PEKING
44
175251 MDHIAN 8514
STATE OF HONG KONG MARKET : 9 JUNE 1989
SUMMARY
THE
THE HANG SENG INDEX CLOSED 44 POINTS UP ON MODERATE TURNOVER. MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR EXCHANGE RATE
LITTLE CHANGED.
DETAILS
2. FOLLOWING THE 75 POINT RISE ON WEDNESDAY (YESTERDAY WAS A MARKET HOLIDAY) THE HANG SENG INDEX ROSE 35 POINTS IN THE FIRST HALF HOUR OF TRADING TODAY. AFTER CLIMBING FURTHER TO A HIGH OF 2280, THE INDEX FELL TO CLOSE AT 2246, WITH A NET INCREASE OF 22 POINTS FOR THE MORNING. IN THE AFTERNOON, THE INDEX RECOVERED SOME LOST GROUND TO CLOSE AT 2268. THE TOTAL GAIN FOR THE DAY WAS 44 POINTS WITH A TURNOVER OF HKDOLLARS 1.8 BILLION.
3. BROKERS WERE SURPRISED BY THE INITIAL RISE IN THE INDEX AND THE STEADY AND FIRMER TONE OF THE MARKET. THEY ATTRIBUTED THE RISE TO LI PENG'S TV APPEARANCE THE NIGHT BEFORE. THIS PROVIDED ENOUGH
BULLISH NEWS FOR THE MARKET WHICH WAS HUNGRY FOR A SIGN OF LEADER- SHIP IN BEIJING. IN THE MEDIUM TERM, THE MARKET SHOULD REMAIN HIGHLY POLITICAL AND SENSITIVE TO DEVELOPMENTS IN THE CHINESE CAPITAL. SINCE THE LAST NORMAL TRADING DAY ON 18 MAY, THE INDEX HAS FALLEN BY SOME 30.8 PERCENT.
4. TRADING IN THE HANG SENG INDEX FUTURES MARKET DROPPED OFF TODAY. A TOTAL OF 1313 CONTRACTS WERE TRADED. THE JUNE CONTRACT CLOSED AT 2180 WITH A 88-POINT DISCOUNT TO THE SPOT MARKET. THE AUGUST CONTRACT CLOSED AT 2185 WITH A 83-POINT DISCOUNT TO THE SPOT MARKET. ONLY 241 CONTRACTS WERE TRADED FOR THIS MONTH. THERE WAS NO TRADING IN THE OCTOBER AND THE DECEMBER CONTRACTS.
5. THE MONEY MARKET REMAINED STEADY TODAY WITH THE HONG KONG DOLLAR LITTLE CHANGED AT 7.793 TO THE US DOLLAR. INTEREST RATES WERE STEADY.
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