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HKCIO
cloo/i
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FM HONG KONG
TO IMMEDIATE FCO
TELNO 1691
OF 2410OOZ MAY 89
INFO IMMEDIATE WASHINGTON, PEKING, SEOUL
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29
123215
MDHIAN 6168
COPY ST?
SEOUL PLEASE PASS TO PS/LORD GLENARTHUR
STATE OF HONG KONG MARKET 24 MAY 1989
SUMMARY
1. HANG SENG INDEX ENDED A VOLATILE DAY WITH A DROP OF 59 POINTS ON HIGH TURNOVER. THE MONEY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR FIRMING SLIGHTLY TO 7.7735 TO THE US DOLLAR.
DETAILS
2. FOLLOWING THE 261 POINT REBOUND ON TUESDAY, THE HANG SENG INDEX ROSE BY 17 POINTS IN THE FIRST HALF HOUR OF TRADE AND FLUCTUATED WITHIN A RANGE OF 1000 POINTS FOR THE REST OF THE DAY. AT THE CLOSE OF THE MORNING SESSION, THE INDEX WAS 3022, A DROP OF 45 POINTS. IN THE AFTERNOON, THE INDEX FELL FURTHER AND CLOSED AT 3008 WITH A TOTAL FALL OF 59 POINTS. TURNOVER FOR THE DAY WAS HKD 3.03 BILLION.
3. THE FLUCTUATIONS IN THE MARKET COINCIDED WITH THE RUMOURS ON THE OUTCOME OF THE LEADERSHIP STRUGGLE IN BEIJING. IT SEEMS UNLIKELY THAT THE MARKET WILL BE ABLE TO STAGE A SUSTAINED RECOVERY WITHOUT FIRM POSITIVE NEWS FROM THE CHINESE CAPITAL. THE HONG
KONG MARKET REMAINS A POLITICAL MARKET AT THIS TIME.
4. THE HANG SENG INDEX FUTURE STILL TRADED AT A SUBSTANTIAL PREMIUM TO THE SPOT MARKET. A TOTAL OF 3345 CONTRACTS WERE TRADED, WITH THE JUNE CONTRACTS CLOSING AT 3050 AND THE AUGUST CONTRACTS AT 3070. NO OCTOBER CONTRACTS WAS TRADED TODAY.
5. THE FOREIGN EXCHANGE MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR FIRMING SLIGHTLY AGAINST A STRONG US DOLLAR. THE HONG KONG DOLLAR FIRMED TO 7.7735 FROM 7.7740 ON TUESDAY. INTEREST RATES ALSO FIRMED SLIGHTLY.
WILSON
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