Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Frodo Baxter who wrote (2196)	8/28/1998 12:33:00 PM
From: RealMuLan	Read Replies (1) \| Respond to of 2951

I think you forget to mention the possibility of Chinese Gov. to step in to help Hong Kong. The total foreign reserve combined can buy 100% of HK stock market if your figure is correct. And then call all the shares back. I think that is what those hedge funds blood suckers deserve.

To: Frodo Baxter who wrote (2196)	8/28/1998 9:59:00 PM
From: Brad Bolen	Read Replies (1) \| Respond to of 2951

R: What if the HKMA asks for delivery of their shares, forcing a buy-in? That's right, every short's nightmare. SHORT SQUEEZE. Wow! But that sounds too easy. If that is the case, why is everyone so worried? Under this scenario couldn't we all go long HK, help the gov kill the speculators, and make a tidy profit ourselves? B.

To: Frodo Baxter who wrote (2196)	9/1/1998 3:32:00 AM
From: tom	Read Replies (2) \| Respond to of 2951

The point I am making is that the credit rating of HK has deteriorated over the last year as property prices have collapsed. As HK is, for investment purposes, one big property company this fall in collateral has weakened the balance sheet of the economy and thus the banking sector. If a company is more likely to go bankrupt wouldn't you demand a higher risk premium for lending to them? The HK peg is under attack because the HK govt (read property developers) don't want to bear the adjustment of prices needed to restore HK's competitiveness. Property prices need to fall another 50% and they can't bear to see this happen. Normally the currency would take the strain of the adjustment but in HK's case it can't. (It's strange that no one in HK minded the negative real interest rates that were present during the last ten years which caused a huge increase in property prices. Now they are finding out why it seemed so easy) The HKMA are desperate and the hedge funds know it. It is my view that it is the property tycoons that are behind this hair-brained scheme as I believe that the HKMA would have realised how stupid it was to intervene in the markets (ie they have no end game). They have lost all credibility and doomed the peg. You think they would have learned when they shut the stock exchange down after the 87 crash. All it did was postpone the inevitable. Well, I guess they'll find out the hard way...Even if they win this battle no serious investor will touch HK for some time to come. I think that it's unlikely that the HK will spend all its reserves (and then convince China to spend all its reserves) 'privatising' HK. What do you think it would do for the RMB when it was discovered that half their reserves were in HK stocks? Doesn't HK need some of those reserves to back the HK$ in circulation? Would the HK families sell to the HK government and would the Chinese government be a good entity to have managing the HK private sector economy? As I write I note that S&P have downgraded HK's credit rating (LT from A+ to A) citing the HKMA's in the equity markets as one of the main reasons for the downgrade. Sell!!!!