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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Chung Lee who wrote (2111)	8/15/1998 10:23:00 PM
From: WhySoSoon	Respond to of 2951

You are right. Time will tell and especially in the coming weeks. If the yen drops to 150 yens to one US$ level, it will impose enormous pressure on HK. The intervention of HK gov't into the equity and futures market is unprecedented and also set a very bad precedence. The free market image with gov't intervention is totally broken. I can say that there is not much fresh money into HK stock market. It even makes the potential investor double think about the HK policy. For the HK gov't uses foreign reserve to play poker game with the hedge funds and speculator is risky and it may be too risky. Once you start to play this poker game, you may not be able to get out it. I also think Donald Tsang is putting his job on the line. Good luck to him.

To: Chung Lee who wrote (2111)	8/16/1998 12:57:00 AM
From: Ron Bower	Read Replies (2) \| Respond to of 2951

Chung Lee, Seems we have divided camps on the intervention. You seem to approve of Sir Donald's action as I do. The subject was also brought up on the Asia Forum. After doing some more reading I find that the hedge funds are pretty well admitting that they are trying to break the peg. My post on the AF says the hedge funds involved should be prosecuted for market manipulation. This is just the beginning. The HKMA's action was joined by the various companies buying back their own stock. This pushed up the market and gave the funds a new opportunity to short. With the turmoil, other buyers are staying away but the HKMA has likely stopped panic selling. It now comes down to a war between the hedge funds against the companies and the HKMA. The HKMA will have to buy enough that that the funds are unable to cover shorts. If the HKMA can hold off the funds until the end of the month, I believe the funds will be forced to cave. Only by causing them losses can HK stop the attacks. I believe it critical for HK to win on this. If they lose the peg, they lose control of their own economy, their own destiny. HK is different in this could cause HK to lose it's 'one country, two economies' status. If the funds are successful, look for China to let the $HK be traded equally for the yuan and the HKMA foreign reserves transferred to the mainland. Then we'll see if the funds can figure out how to make China let the Rmb be trade on the currency markets. JMHO, Ron