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To: yard_man who wrote (4610)	8/28/1998 9:49:00 AM
From: Joseph G.	Read Replies (1) \| Respond to of 86076

<<HONG KONG, Aug 28 (Reuters) - Hong Kong's Hang Seng Index closed sharply lower on Friday, despite a massive buying programme by the government that pushed turnover to record levels. The Hang Seng Index closed down 93.23 points, or 1.18 percent, at 7,829.74, having been held within a narrow trading range throughout the day. Turnover climbed to a new record of HK$79.0 billion, well above the previous high of HK$46.02 billion set on August 29, 1997. ''This is an ex-market force,'' Chris Robinson, regional technical analyst at HSBC Securities. Turnover prior to the start of government's intervention in the market on August 14 was relatively low, within a range of HK$4.5 billion to HK$5.5 billion a day. ''This was originally going to be a big day with the GDP announcement and the expiration of the August futures contract,'' Philip Chan, head of research at Shenyin Wanguo Securities in Hong Kong said. "Obviously, the government is involved but we do not know to what extent,'' Chan said. After the market closed, Financial Secretary Donald Tsang announced Hong Kong's gross domestic product contracted by around five percent (correct) in the second quarter of the year, a much faster rate than the 2.8 percent decline in the first quarter, putting Hong Kong officially in recession. The government said it forecast a 4.0 percent contraction in the economy for the full year, a forecast within the range of most expectations, brokers said. ''Asia is in a contraction, so to think that Hong Kong is coming out of this anytime soon is a bit wishful thinking,'' Bill Belchere at Merrill Lynch told Reuters Financial Television. Despite the government's intentions, short-term trading activity was still robust. With the expiration of the August Hang Seng Index futures contract on Friday, trade in the September contract picked up to a total of 33,968 contracts and open interest soared to 102,442 contracts. The September contract closed down 400 points at 7,210, more than a 600-point discount to the cash market. Buying interest in blue chips, to hold the index up, was overwhelming, brokers said. But China's H shares, red chips and small cap stocks, which were not the target of the government's buying programme showed double-digit declines. ''People are confused, but they see this as a phenomenally good opportunity to get out of the market,'' a broker with a U.S. house said. Others felt the government's big spending programme was misplaced. ''History shows us that normally markets do not respond well to intervention,'' HSBC's Roberts said. >>