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

To: Ron Bower who wrote (2261)	9/1/1998 8:26:00 PM
From: Tom	Read Replies (1) \| Respond to of 2951

Excerpts from current FEER hardcopy edition...column by Kara Tan Bhala, senior portfolio mgr., ML Dragon and Emerging Tigers Funds. The scheme takes advantage of two factors: a poor investment sentiment in Asia and the vulnerability of Hong Kong's markets, a result of their small size and low liquidity. Speculators had brazenly boasted that Hong Kong was their "ATM" for withdrawing fast and easy money. (I really do hate those guys.) The HKMA's market actions also highlighted the hypocrisy rampant among speculators, who eagerly extol the virtues of capitalism as long as it profits them. But when an unanticipated development designed to protect market integrity occurs -- costing them money -- they claim that the market has been rigged. ...they ought to understand that market manipulation is likely to lead to a shutdown of their beloved ATM network. This is not to deny that there are some market imperfections in Hong Kong that need fixing, most notably the existence of the property cartel. The point is, however, that the HKMA should be congratulated for a job well done. ------------------- Ms. Tan Bhala doesn't break any new ground in her article, but she said the "Hedge funds' recent manipulation of the Hong Kong markets elicited the right response from the HKMA."

To: Ron Bower who wrote (2261)	9/1/1998 8:49:00 PM
From: Dayuhan	Read Replies (2) \| Respond to of 2951

<<Isn't it better for the governemnt to step in to protect the economy and prevent the insolvency of the banking system than to stay out of the system and have to deal with insolvent banks>> But if banks know that Government will bail them out if they get in trouble, what incentive do they have to keep their houses in order and limit their risks? If a company pours all its money into developing a product that doesn't sell, should government bail them out? What's the difference between that company and a bank that loans huge sums to excessively leveraged companies with little or no capacity to repay? There is a distinction that needs to be drawn. Banks that were caught up in circumstances beyond their control might arguably be entitled to a degree of relief. Banks that stuck their necks way out in search of an extra buck need to suffer the consequences. Exactly where the line lies is another question altogether, and not an easy one. Steve