* -
RESTRICTED
HKC 100/1
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1862
OF 06103OZ JUNE 89
INFO IMMEDIATE WASHINGTON, PEKING
STATE OF HONG KONG MARKET 6 JUNE 1989
SUMMARY
Ј
41
161710
MDHIAN 7836
TOP COPY Q DIST ?
1. THE HANG SENG INDEX CLOSED 56 POINTS UP ON MODERATE TRADING. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR EXCHANGE RATE LITTLE CHANGED.
DETAILS
2. FOLLOWING THE MASSIVE 582 POINT PLUNGE YESTERDAY, THE HANG SENG INDEX DROPPED ANOTHER 56 POINTS IN THE FIRST TEN MINUTES OF TRADING. AFTER REACHING A LOW OF 2022, THE INDEX RECOVERED GRADUALLY AND REACHED A HIGH OF 2153 BEFORE CLOSING AT 2115 FOR THE MORNING. IN THE AFTERNOON, THE INDEX CONTINUED TO RISE BEFORE CLOSING AT 2149. THE TOTAL GAIN FOR THE DAY WAS 56 POINTS WITH A TURNOVER OF HK DOLLARS 2 BILLION.
3. THE UPWARD MOVEMENT OF THE HANG SENG INDEX IS ATTRIBUTABLE PRIMARILY TO BARGAIN HUNTING. POLITICAL UNCERTAINTIES IN CHINA HAVE KEPT MANY INVESTORS AWAY. IT IS EXPECTED THAT THE MARKET WILL GET WORSE BEFORE IT GETS BETTER.
4. TRADING IN THE HANG SENG INDEX FUTURES MARKET SLOWED DOWN SIGNIFICANTLY TODAY. A TOTAL OF 1729 CONTRACTS WERE TRADED. THE JUNE CONTRACT CLOSED AT 2085 WITH A 61-POINT DISCOUNT TO THE SPOT MARKET. THE AUGUST CONTRACT CLOSED AT 2100 WITH A 46-POINT DISCOUNT TO THE SPOT MARKET. ONLY 157 CONTRACTS WERE TRADED FOR THIS MONTH. THE LOW VOLUME CAN BE ATTRIBUTED TO THE UNCERTAINTIES AS WELL AS THE HIGH MARGIN REQUIREMENTS WHICH WERE INCREASED TO HK DOLLARS 30,000 PER CONTRACT YESTERDAY. THERE WAS NO TRADING IN THE OCTOBER AND THE DECEMBER CONTRACTS.
5. CONDITIONS IN THE MONEY MARKET REMAINED TIGHT. THE EXCHANGE RATE WAS STABLE AND LITTLE CHANGED FROM YESTERDAY'S CLOSING OF 7,785. OVERNIGHT INTER-BANK INTEREST RATE REMAINED FIRM AT OVER 12 PERCENT. THE RUSH OF RESIDENTS WITHDRAWING MONEY FROM BRANCHES OF THE BANK OF CHINA GROUP HAS SUBSIDED. THERE HAD NOT BEEN ANY
1
PAGE RESTRICTED