re: The Chinese government, with no reputation and experience in financial markets, always attacked by the gamblers, has constantly done good jobs ( such as controlling currency and intervene the market) in controlling their own fate.
Excuse me, Lin, but this statement is so wrong headed it's laughable. If anyone is gambling, it is the Chinese gov't. The gov't is trying to maintain a currency peg that is almost certainly overvalued, and has become increasingly costly to maintain. If the peg collapses, the effect of having intervened will be to reward currency speculators with even more profits. The losers of course will be the general public, whose US dollar reserves will have been squandered on a bad exchange-rate bet.
Similarly, the gov't bought stocks last week that are estimated to have cost US$15 bil. Judging from the 7.1% fall in the market on Monday, and the additional 2.8% decline last night, it seems fair to say the prices of most of these stocks are now lower. If you lived in HK, would you approve of public investments in which the gov't buys high and holds low?
The gov't is taking one heck of a gamble also with regard to HK's free market reputation. This reputation has been badly damaged, and according to Business Week will take years to repair. Meanwhile, HK will find it more difficult than previously to attract outside capital for new investment.
The gov't has taken 3 big gambles, and my scorecard shows a record of 0-3.
Geoff |
