RESTRICTED
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1744
OF 30095OZ MAY 89
INFO IMMEDIATE WASHINGTON, PEKING
TOP COPY Q DIST ?
HKC 100/1
34
137140
MDHIAN 6862
STATE OF HONG KONG MARKET
30 MAY 1989
SUMMARY
1. PROFIT TAKING PUSHED THE HANG SENG INDEX 40 POINTS LOWER ON THIN TURNOVER. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR LITTLE CHANGED.
DETAILS
2. FOLLOWING THE 80 POINTS GAIN ON MONDAY, THE HANG SENG INDEX ROSE 11 POINTS IN THE FIRST HALF HOUR OF TRADING TODAY. THE INDEX THEN DROPPED STEADILY THROUGHOUT THE MORNING TO 2799 AT THE MORNING CLOSE. IN THE AFTERNOON, THE INDEX RECOUPED SOME 20 POINTS, AFTER AN INITIAL 15 POINT FALL IN THE FIRST HALF HOUR, TO CLOSE AT 2805. THE TOTAL LOSS FOR THE DAY WAS 40 POINTS WITH A TURNOVER OF HKD1.144 BILLION.
3. THE DECLINE TODAY STEMMED MAINLY FROM PROFIT TAKING RATHER THAN NERVOUSNESS ARISING FROM POLITICAL UNREST IN CHINA. SINCE TURNOVER WAS THIN, INVESTORS HAD BEEN ABLE TO PUSH PRICES WITH RELATIVE EASE. VOLATILITY IN THE MARKET IS LIKELY TO CONTINUE UNTIL AT LEAST 20 JUNE WHEN THE NATIONAL PEOPLE'S CONGRESS MEETS.
4. THE HANG SENG INDEX FUTURES MARKET WAS LESS ACTIVE TODAY, WITH A TOTAL OF 1482 CONTRACTS TRADED. THE JUNE CONTRACT, STILL TRADING AT A 43 POINT DISCOUNT TO THE SPOT MARKET, CLOSED AT 2762. THERE WERE ONLY 55 CONTRACTS TRADED FOR AUGUST WHICH CLOSED AT 2810. NO OCTOBER CONTRACT WAS TRADED SINCE THE BID-PRICE AND THE ASK-PRICE VARIED BY SOME 80 POINTS THROUGHOUT THE DAY.
5. THE MONEY MARKET REMAINED STEADY WITH THE HONG KONG DOLLAR EXCHANGE RATE AND INTEREST RATES CLOSING LITTLE CHANGED.
WILSON
YYYY
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