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Strategies & Market Trends : HONG KONG
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To: Tom who wrote (2159)8/26/1998 7:55:00 AM
From: tom  Read Replies (2) of 2951
 
Hi Tom

It now seems as though the HKMA owns 1% of HSBC making it the fifth largest shareholder.

I've been thinking about why the HKMA intervened in the stock market as they must have known a) that it was a very, very silly idea and b) that the international markets would be appalled and that it would create more, rather than less, uncertainty in the HK$ peg.

There is a school of thinking that suggests that in fact it was the KS Li's (Cheung Kong) and the Kwok's (Sun Hung Kai) that were behind the intervention and that Tung supported them. This would also make sense as there was alot of insider buying in SHK just before the intervention. If this were true than it is even more negative for HK as it means that the HKMA probably have no endgame and also that the Joseph Yam is acting under the influence of the property developers. Whereas the HKMA knows that it makes sense to just let market forces push down prices whilst holding the peg firm, the developers are more desperate and are unwilling to lose half their wealth again.

You will notice today that when the HKMA stopped intervening in the afternoon, the market fell 2% in about 10-15 minutes. This has got to be one of the best shorting opportunities in the world ever hasn't it??? The premium of the August Futures to the September is enormous but people are still rolling over their shorts.

I get more bearish by the day....
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