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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (27974)	1/12/1998 7:34:00 AM
From: CPAMarty	Respond to of 50808

FOCUS-HK shares savaged;Tung vows dlr peg to stay January 12, 1998 6:11am Reuters zdii.com By Stephen Weeks HONG KONG, Jan 12 (Reuters) - Hong Kong shares reeled under across-the-board selling on Monday, mauled by high interest rates to protect the local dollar and an application to liquidate the once high-flying Peregrine investment group. The Hang Seng Index plunged 773.58 points, or 8.70 percent, to close at 8,121.06 after hitting 7,909.13, its lowest level since March 1995. That is the sixth largest point drop since 1970. The Hang Seng Index has lost more than half its value since it peaked at 16,820.31 points on August 7, 1997. Only nine issues advanced against 517 decliners. Turnover finished at HK$13.33 billion. Hong Kong leader Tung Chee-hwa, facing one of his toughest tests since Britain ceded this capitalist outpost to China last July, appealed for calm in Hong Kong financial markets and said the crisis facing Peregrine Investments Holdings Ltd would have little impact on banks. "With regard to the volatility of the stock market, I call on Hong Kong people to have cool heads in making any investment decisions," Tung said. Peregrine was felled by the turmoil cutting through Asian financial markets for the past six months and several bad deals, notably in Indonesia. "Peregrine is not a bank," Tung told reporters. "Its core business is securities and investment. It's impact on the Hong Kong banking system will be minimal." It was Tung's first personal appeal for calm since Peregrine announced last week that its deal for a US$200 million lifeline, arranged with a Swiss group, had fallen through. Brokers said the Peregrine collapse triggered deep seated concerns over higher interest rates, a downturn in the property market, tourism and retail sales, and persistent fears that Hong Kong would not be able to escape unscathed from Asian turmoil. China-related shares suffered heavy blows with the "red chip" China-Affiliated Corporation Index diving 21.92 percent to 964.50 and H-shares ending off 16.18 percent at 445.08 after hitting a record low of 431.98. "Peregrine has been seen as having close relations to some of the red chips and H-shares companies," said Frederick Tsang, head of research at PrimeEast Securities. "There are speculations that some of the clients might need to sell bounded positions," he added. The market rout prompted Huaneng Power International Inc to postpone its H-share listing. The company cited turbulent market conditions in Asia. Brokers said investors were wary about the ability of the Hong Kong dollar to resist a concerted speculative attack, and feared interest rates would have to stay high for a long period to protect the currency. Tung said the 15-year Hong Kong-U.S. dollar peg would stay and that breaking the link would cause chaos. Speculators have broken every other major U.S. dollar peg in Asia. "We are determined and have the ability to defend the dollar peg," Tung said. "Without the dollar peg, Hong Kong's financial and banking system will be in chaos. This will affect Hong Kong's economy." The Hong Kong dollar ended at HK$7.7430/50 on Monday, weaker than its opening price but barely changed from Friday's 7.7430 close. The local dollar opened at 7.7405/25 on Monday. Deposit rates with maturities ranging from one to six months closed unchanged from midday at 18-20 percent, compared with 15-20 percent at the open and 12-15 percent at Friday's close. Source: Reuters