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To: Enigma who wrote (21501)	10/13/1998 12:44:00 AM
From: Ahda	Read Replies (2) \| Respond to of 116764

Communism in bloom or avoid pending doom Monday October 12, 10:58 pm Eastern Time Many say HK intervention ends free market-Moody's HONG KONG, Oct 13 (Reuters) - Moody's Investors Service said on Tuesday many investors saw the Hong Kong government intervention in financial markets as a shift from its traditional free market approach and viewed local shares as risky. ''Despite everything that's said, it's viewed as a violation of free market principle. I think that's very clear,'' the credit rating agency's vice president and senior analyst, Steven Hess, told local radio. ''There is a significant camp in the investment community in the United States and elsewhere that does say that this is the end of the free market in Hong Kong, and that now the government owns a substantial portion of stocks that the stock market is a risky investment because you don't know what the government is going to do with its own stock position,'' he said. Hess did not spell out Moody's own position on the intervention, but said that was one of the factors considered during the agency's current review of a possible downgrade of Hong Kong's debt ratings. However, he said the intervention was not a major factor. ''I don't think that is a major factor in my review. It is quite something that we will consider particularly if (there is) a number of interventions over time that would cause international reserves to be affected,'' Hess said. ''This one seems to affect the international reserves by some perhaps a billion dollars. If that were to continue, of course, that would have to be factored in our review. But my own personal feeling is that that is not a major factor in the review.'' Hess said the intervention was ''an extraordinary measure in these really exceptional circumstances,'' and there were concerns the Hong Kong government might take such moves again. ''You could say there's potential risk emanating from China and elsewhere in the future which could cause extraordinary circumstances again. And one wonders whether such measures will be taken again in the future,'' he said. ''We are still not convinced that the Asian crisis is over and we still believe that there could be further problems developing in China in the future. and therefore this period of volatility is probably not over,'' he said. Last month, Moody's placed on review for possible downgrade Hong Kong's foreign currency ratings. In August, the Hong Kong government intervened heavily in the stock and futures markets, saying it aimed to foil speculative attacks on the local dollar. Officials have said the territory remains a free market.