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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: LemurHouse who wrote (9449)	10/24/1997 1:36:00 PM
From: John E. Rylander	Respond to of 70976

Andrew, I agree with what you're saying, though whether or not it was overdone on the upside depends on how long-term one was thinking. (The more long-term, the less overdone the upside.) --John

To: LemurHouse who wrote (9449)	10/24/1997 1:37:00 PM
From: Larry Meneely	Read Replies (1) \| Respond to of 70976

To All: Why global markets dropped Eric Quinones The Ottawa Citizen NEW YORK -- Hong Kong's decision about whether to let its currency trade freely in financial markets or stand firm in supporting its value is behind yesterday's global stock market unrest. Some questions and answers about what happened: Q: What does a country's currency policy have to do with the stock market? A: The value of a currency determines how much its citizens can afford to buy from world markets and how hard it is to sell a country's products abroad. A higher currency makes its goods more expensive abroad, making it harder to compete. It also makes imports less expensive to buy, hurting a country's own manufacturers but holding down inflation. So the strength of a currency can determine whether investors have confidence enough to invest in a country's businesses. Q: What is happening with Hong Kong's currency? A: Hong Kong's dollar is the only Asian currency still linked to the value of the U.S. dollar, while other regional currencies have been battered after being released to trade freely on foreign-exchange markets. Hong Kong views the peg to the U.S. dollar as vital to maintaining international confidence, now that China has taken over from Britain. As its neighbours' currencies dropped, some speculators were betting that Hong Kong would bow to competitive pressure and devalue its dollar. But monetary authorities dipped into Hong Kong's foreign-exchange coffers to sell U.S. dollars and support the currency. Q: How did the currency defence affect Hong Kong's stock market? A: In addition to buying Hong Kong dollars, monetary authorities in Hong Kong cut off a cheap source of credit to banks, triggering a stunning rise in interest rates that sent shudders through Hong Kong's stock market. Hong Kong stocks recorded their most severe selloff in a decade as traders feared that the region's recent financial market crisis -- spurred in part by rising interest rates meant to boost sagging currencies -- was finally spreading to East Asia's strongest economy. Q: Why did Hong Kong's market affect others worldwide? A: The stock selloff, which grew as North Americans slept, quickly spread through Asia and then rumbled into Europe as traders lost confidence that Hong Kong would be immune to the troubles engulfing its Asian neighbors. When U.S. and Canadian markets opened, traders sold off shares of technology companies, airlines and other businesses that depend on Asia for a significant portion of their profits.