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Strategies & Market Trends : HONG KONG

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To: Joseph G. who wrote (2218)	8/30/1998 7:44:00 PM
From: Ron Bower	Read Replies (1) of 2951

Joseph, "...(iv) change of rules and some over similar actions amount to an outright confiscation of foreign capital; countries that do these kind of things can't expect foreign investorconfidence in years to come. (v) since HKMA has no control over global economic situation, they are to a large extent gambling with the resources that were entrusted to them - not a wise behavior expected of an administration." The HKMA is charged with maintaining the currency peg to the $US with the purpose of a stable economy. If the speculators disrupt the economy by using the mandates on the HKMA against the market, then it is necessary for the HKMA to take some form of action. IMO this would improve foreign investor confidence rather than diminish. The HKMA has no desire to control global economies, but does desire that the global economic situation have as little impact on the Hong Kong economy as possible. If the Asian and Russian situation puts the US into a recession, would you expect the government to do nothing? The HKMA is stepping into the market for the same reasons the US bailed out the S&Ls, guaranteed loans to Chrysler, and numerous other private industry programs through the years. JMHO Ron

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