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Strategies & Market Trends : HONG KONG
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To: Defrocked who wrote (2107)8/14/1998 10:59:00 AM
From: tom  Read Replies (1) of 2951
 
I agree. Intervention in the stock market has never worked in the past and it won't work now. All it does is delay the inevitable.

I think the HK government have been very, very silly. By intervening in the markets they have pushed down the forward interest rates and made it even cheaper for the hedge funds to short the currency. If the market falls on Tuesday (or the Yen goes to 150) then the hedge funds will smell blood as they know the the HKMA have played their last card (intervention) - and lost. This reversal of the HKMA's non-interventionist policy is extremely bad news for the equity risk premium of the stock market and I would expect the market to go lower.

Hedge funds have NOT liquidated their short positions and so this could provide support on Tuesday. We shall see.....
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