The Hong Kong stock exchange had as you know, risen sharply in the last two to three months and was due for correction. The fall in share prices when it came was not too surprising for not only did it reflect this correction but it also reflected the market perception of Hong Kong being particularly vulnerable to global recession caused by higher oil prices.
Indeed the Hong Kong Stock Exchange might have fared worse! However, the drop in share prices in Hong Kong on 6 August amounted to 7.4% which was not all that out of
line with several other centres eg Zurich 7.3%, Singapore
6.35% and Frankfurt 5.4%.
The one-day settlement system in Hong Kong, compared to longer periods in other centres could also have added to the drop in prices as investors sought to improve their liquidity. However, it has now been established that turnover on 6 August was not exceptional and was in fact lower than on 7 and 8 August by which time the
freeze had taken place.
I believe you have also raised the question of
extraterritoriality in relation to restrictions placed on the activities of overseas registered companies via the
stock exchange listing rules which prevent the buying back by a company of its own shares. The Hong Kong Government's view is that what is important is where the
company has its listing not where it is registered. All companies listed in Hong Kong have to abide by the listing rules there. I see nothing discriminatory or inappropriate in that. As you know locally registered
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