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27
114003 MDHIAN 5734
RESTRICTED
FM HONG KONG
TO IMMEDIATE FCO
TELNO 1656
OF 22110OZ MAY 89
AND TO IMMEDIATE WASHINGTON INFO IMMEDIATE PEKING, SEOUL
TOP COPY Q DIST ?
HKC100/1
SEOUL FOR PS/LORD GLENARTHUR
STATE OF HONG KONG MARKET : 22 MAY 1989
SUMMARY
^
HANG SENG INDEX FELL TODAY BY SOME 340 POINTS ON HIGH TURNOVER BUT COPED WELL AND LOCAL INVESTORS REMAINED CALM. TWO MARGIN CALLS WERE PAID UP SATISFACTORILY IN THE FUTURES MARKET. THE FOREIGN CURRENCY MARKET REMAINED STABLE WITH THE HONG KONG DOLLAR STRENGTHENING SLIGHTLY TO 7.78.
DETAILS
2.
THE HANG SENG INDEX FELL TO 2794 IN THE FIRST 20 MINUTES AND
RECOVERED TO 2887 AT MID-DAY. PRICES MOVED DOWN DURING THE AFTERNOON SESSION, SEEMINGLY ON OVERSEAS SELLING, BUT CLOSED ABOVE THE LOW POINT OF THE DAY AT 2806. TURNOVER OF THE DAY WAS HKDOLLARS
2.998 BILLION.
3.
OVERALL THE MARKET WAS SEEN TO HAVE PERFORMED WELL WITH THE
SMALL INVESTORS STAYING ON THE SIDELINES. NO SETTLEMENT PROBLEMS
ARE ENVISAGED. IT SEEMS UNLIKELY THAT THERE WILL BE INCREASES IN
PRICES WHILST THE PRESENT UNCERTAINTIES IN CHINA CONTINUE BUT SO
FAR THE BEHAVIOUR OF THE MARKET IS SEEN TO BE MUCH BETTER THAN IN OCTBER 1987.
4.
THE INDEX FUTURES MARKET PERFORMED WELL SO FAR WITH JUNE CONTRACTS AT 2815, JULY AT 2860 AND AUGUST AT 2915. SOME 3300 CONTRACTS WERE TRADED. TWO MARGIN CALLS WERE MADE TODAY AND BOTH
WERE PAID UP IN FULL. MARGIN REQUIREMENTS HAVE ALSO BEEN INCREASED.
THE FOREIGN EXCHANGE MARKET HAS BEEN QUIET WITH THE HONG KONG
DOLLAR TENDING TO APPRECIATE IN TERMS OF THE US DOLLAR. THE HONG
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