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FM HONG KONG
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TELNO 1671
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INFO IMMEDIATE WASHINGTON, PEKING, SEOUL
28
117417 MDHIAN 5956
TOP COPY Q DIST ?
HKC100/1
SEOUL FOR PS/LORD GLENARTHUR
STATE OF HONG KONG MARKET 23 MAY 1989
SUMMARY
POINTS ON HIGH TURNOVER.
HONG KONG DOLLAR
1. HANG SENG INDEX REBOUNDED TODAY BY 261
THE MONEY MARKET REMAINED STABLE WITH THE STRENGTHENING SLIGHTLY TO 7.774 TO THE US DOLLAR.
DETAILS
2. FOLLOWING THE 339 POINT FALL ON MONDAY, THE HANG SENG INDEX ROSE BY SOME 150 POINTS IN THE FIRST HALF HOUR OF TRADE AND SURGED TO 3030, A RISE OF 224 FROM THE PREVIOUS CLOSE, AT THE CLOSE OF MORNING TRADING. THE INDEX CONTINUED TO CLIMB IN THE AFTERNOON
SESSION AND CLOSED AT 3067, MAKING A TOTAL RECOVERY OF 261 POINTS. TURNOVER FOR THE DAY WAS A POST-CRASH HIGH OF HKD3.67 BILLION.
3. THE MARKET REACTED POSITIVELY TO NEWS REPORTS THAT THE ARMY UNITS
HAD WITHDRAWN FROM BEIJING AND THAT LI PENG WAS BEING PRESSURED
TO RESIGN. IT IS DIFFICULT TO TRACK THE NEAR TERM DIRECTION OF THE
MARKET BECAUSE IT DEPENDS LARGELY ON POLITICAL MOVEMENTS IN CHINA.
4. THE HANG SENG INDEX FUTURES TRADED AT A PREMIUM TO THE SPOT
MARKET WITH JUNE CONTRACTS AT 3110 AND AUGUST CONTRACTS AT 3150.
NO OCTOBER CONTRACT WAS TRADED TODAY. THE VOLUME OF BUSINESS
REACHED 3750 CONTRACTS.
5. THE FOREIGN EXCHANGE MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR FIRMING AGAINST THE US DOLLAR ON THE FAVOURABLE NEWS THAT THE TROOPS HAD WITHDRAWN. THE HONG KONG DOLLAR ROSE TO 7.774 TO THE US DOLLAR FROM 7.784 ON MONDAY. INTEREST RATES EASED SLIGHTLY. GENERAL CONFIDENCE WAS EXPRESSED BY THE MARKET IN THE STABILITY GENERATED BY THE LINK OF THE HONG KONG DOLLAR TO THE US DOLLAR.
WILSON
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