TNAG-1483-FCO40-2037-Economic-situation-in-Hong-Kong-1986 — Page 224

overseas.

However, sentiment

institutional

investors

value of the Hong Kong dollar, and the rallying securities markets in New York, Tokyo and London were believed to be the

ma in reasons for this decline as unloaded their Hong Kong stock holdings and diverted funds

in improved

April as the

overseas securities markets appeared to have peaked and Hong Kong stocks appeared undervalued. The overwhelming response to the Cathay Pacific issue also helped to promote buying interest. The Hang Seng Index rose to another high of 1 866 on 7 May. It subsequently fell gradually

institutional

as

investors reduced their stock holdings in the absence of fresh factors. The index finished the first half of the year at

1 739, 1% lower than at the end of 1985.

3.20

The total volume of funds raised through the stock market amounted to $6,129 million in the first half of 1986. A total of $1,770 million was raised by way of new issues of shares offered to the public by three companies. Another $2,316 million was issued by way of private placement. A further $2,044 million was raised by way of rights issues by five companies.

3.21

Falling interest rates in major industrial nations and the falling US dollar helped to push the price of gold to US$363.5 an ounce in mid-January. Falling world oil prices,

lower inflation

generated

expectations of

and

however, undermined the long-term strength of the metal. The price of gold fell subsequently but found support at the US$330 level. Thereafter, gold prices fluctuated between US$330 and US$360.

The range

of fluctuations narrowed in April and May, with prices moving mostly between

an US$345

Political unrest in South

in South Africa brought more fluctuations in prices in late June, but trading generally remained quiet.

the end

end of June, gold was quoted at US$346 an ounce, and HK$3,208 a tael on the local market.

US$340

and

ounce.

At

30