TNAG-1764-FCO40-2518-Hong-Kong-stock-market-and-exchange-rate-1988 — Page 108

Stock Market Crash

Press Reaction

SILILL

Developments in Hong Kong's financial markets during the worldwide slump in share prices were extensively covered by the national print media and to a lesser extent by the electronic media.

Just prior to the announcement of the market's four-day closure in Hong Kong and when newspapers here were beginning to describe the downward spiral in major markets as a "Worldwide bloodbath", both the Times and the Financial Times reported the Financial Secretary's statement that the local stock market was sound given the overall strength of the economy. The Times, however, felt the statement was rushed out in a vain attempt to stop the collapse in prices.

Reports on the suspension of trading in Hong Kong were factual, with some commentators suggesting that the government may encourage the stock exchange committee to reopen the

It was also felt that the move market earlier than planned.

pre-empted what many stock brokers felt would have been a bankrupting blitz of selling orders.

Early signs of criticism of the market's closure appeared in the media on 21/ trust company with a very large portfolio in Hong Kong said he opposed the closure because he thought investors should always have the facility to deal whatever the state of the market. Reports also began appearing around this time of investors getting around the market's closure by using unofficial "grey" prices to continue dealing.

when the chairman of an investment

The first signs that the territory's futures exchange was experiencing problems saw bold headlines announce "Futures market hits troubled Hong Kong", HK's 2bn crisis"; "Fallout fears in HK" and "Default problems in store for Hong Kong". Reports also announced the government's appointment of Hambros to advise it on the futures market in the wake of fears of a

The tone and flavour of many huge default from investors.

of these reports were emotive and to some extent alarmist, with stories of government officials meeting in secret to devise a rescue package to save members of the futures exchange from financial ruin.

/Reports