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Tor Guri 145751 Q DIST? MDHIAN 7197
HKC100
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1791
OF 01095OZ JUNE 89
INFO IMMEDIATE WASHINGTON, PEKING
STATE OF HONG KONG MARKET : 1 JUNE 1989
SUMMARY
THE HANG SENG INDEX DROPPED 54 POINTS ON THIN TURNOVER. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR FIRMING SLIGHTLY TO 7.7738 TO THE US DOLLAR.
DETAILS
2.
FOLLOWING THE 62-POINT FALL ON WEDNESDAY, THE HANG SENG INDEX REBOUNDED BY 18 POINTS IN THE FIRST HALF HOUR OF TRADING TODAY. THE INDEX THEN FLUCTUATED WITHIN A NARROW RANGE OF 40 POINTS THROUGHOUT THE MORNING AND CLOSED AT 2731, WITH A LOSS OF 12 POINTS. IN THE AFTERNOON, THE INDEX CONTINUED TO SLIDE AND CLOSED AT 2689. THE TOTAL LOSS FOR THE DAY WAS 54 POINTS, WITH A TURNOVER OF HKDOLLARS 1.2 BILLION.
3.
CHINA'S POLITICAL TROUBLES ARE STILL INHIBITING ACTIVITIES IN THE MARKET. UNEASE OVER ECONOMIC IMPLICATIONS OF THE UNREST FOR FOREIGN INVESTMENTS IN CHINA IS DOMINATING MARKET SENTIMENTS AND DISCOURAGING INSTITUTIONAL PARTICIPATION. THIS HAS RESULTED IN THE
RELATIVELY THINNER TURNOVERS FOR THE PAST FEW DAYS.
4. TRADING IN THE HANG SENG INDEX FUTURES MARKET REMAINED LIGHT. A TOTAL OF 1370 CONTRACTS WERE TRADED. THE JUNE CONTRACT CLOSED AT 2680, A 9-POINT DISCOUNT TO THE SPOT MARKET. THE AUGUST CONTRACT CLOSED AT 2706, A 16-POINT PREMIUM TO THE SPOT MARKET. ONLY 63 CONTRACTS WERE TRADED FOR THIS MONTH. THERE WAS NO TRADING IN THE OCTOBER CONTRACT AND THE NEWLY INSTITUTED DECEMBER CONTRACT DUE TO LARGE VARIANCES OF 70 POINTS AND 150 POINTS RESPECTIVELY BETWEEN BID AND ASK PRICES.
5.
THE MONEY MARKET REMAINED STEADY TODAY. THE HONG KONG DOLLAR EXCHANGE RATE FIRMED SLIGHTLY TO 7.7738 TO THE US DOLLAR AND THE INTEREST RATES ALSO FIRMED FROM YESTERDAY'S CLOSE.
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