JWL0063
May 040/1
زواج
2.4.92
HONG KONG FINANCIAL MARKETS: MARCH 1992*
•
HK$ strenghtens to 7.74 per US$ - 0.8% away from the link, is it sustainable?
• HIBOR stays above slowly rising US$-LIBOR, mirrored by rise in EF Bill yields
• HangSeng index high but volatile - HSBC merger plans, surprisingly good company profits
Budget for 1992/93 (announced on 4 March) contained 1% rise in profit tax and extension of stamp duty to warrants, although this had little effect on the markets. Annexes included 1991 economic statistics (datasheet available on request).
Confidence improves: Morgan Stanley increased HK's weighting in its global portfolio from 1% to 6% in late February, greatly improving the confidence of other foreign investors. China's National People's Congress convened in late March, dominated by pro-reform speeches, adding further to confidence in HK.
Good Company Results: HSBC announced 82% growth in profits, a bid for Midland (without a rights issue) and gained dual primary listing in London. Standard Chartered announced 37% rise in profits, and most other companies (including Swire, Hopewell, Cheung Kong and HK Electric) ́ announced unexpectedly large profits.
Hang Seng Index rose to a peak of 5071 on 13 March, but fell back again to 4938 by the end of the Month. Volatile trading was dominated by large-scale foreign capital inflows and surprises (mostly pleasant) in company results.
*
HK$ strengthened from 7.76 per US$ at the beginning of March to 7.74 at end-March. This is the strongest rate since June last year, when interest rates were temporarily kept 2% higher than US rates, in an ill-fated attempt to reduce inflation
Interbank rates rose sharply in mid-March, widening the 3-month HIBOR-US$LIBOR differential from 20 bp on 9 March to 56 bp on 16 March, when the Exchange Fund decided to inject HKS100 mn of liquidity to ease the market.
Prime lending rate remained unchanged at 8.5% throughout March, despite continued pressure on the Hong Kong Association of Banks for a cut.
Exchange Fund Bill average yields: 364-day yields rose, to 4.92% on 24 March (up 13 bp from four weeks earlier), 182-day yields rose to 4.37% on 17 March (up 19 bp from two weeks earlier, and up 26 bp from four weeks earlier), 91-day yields rose to 4.11% on 24 March (up 18 bp from three weeks earlier).
Developing World Division HO-3 Far East 2 April 1992
J W Lund (4483)
Jakob Sund
* Copies to Mr Crockett, Mr T A Clark, Mr Latter, Mr Page, Mr Elston, Mr Smeeton,
Mr Sutherland, Mr D A Ware, Mr Miles, Mr Milne, Mr A Bulley,
ID Sections 6(FE) 9, BSD Group 18; Mr Ricketts (FCO), Mr Cox (FCO), Mr Lane (FCO), Mr MacIntyre (HMT).