Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education



Front Page

World

UK

UK Politics

Business

Sci/Tech

Health

Education

Sport

Entertainment

Talking Point
On Air
Feedback
Low Graphics
Help

Monday, October 26, 1998 Published at 16:11 GMT


Business: The Economy

A tonic for the Hang Seng

The Hong Kong stock market recovered after the $15bn support

Hong Kong's administration has admitted that it spent $15.2bn (£9bn) propping up the stock market in August.

The administration now owns shares in all 33 companies that make up the benchmark Hang Seng index.

It owns more than 10% of three companies - property developers Cheung Kong Holdings and New World Development, and Swire Pacific, owners of Cathy Pacific.

A special company has been set up to oversee its investments. The company has promised to disclose any change in shareholdings of more than 1%.

Yang Ti-Liang, chairman of the new company, Exchange Fund Investment Ltd, said that the administration was in no hurry to sell its investments.

Intervention 'necessary'

The move to boost Hong Kong's share market came in the last two weeks of August when it was feared that speculators were trying to force a devaluation of the Hong Kong dollar, which is pegged to the US dollar.

The adminstration believed that hedge funds were selling the Hong Kong dollar, forcing the government to raise interest rates to defend its value, and simultaneously selling shares short on the stock market.

High interest rates hit share prices and forced the Hang Seng index to a record low.

Since the intervention, the market has recovered substantially, but critics say the move damaged Hong Kong's credibility as a free market area within China.

The operation has been a financial success, however.

Shares in the two property companies which the government bought in August are now up 95% and 51% respectively.



Advanced options | Search tips




Back to top | BBC News Home | BBC Homepage | ©


The Economy Contents


Relevant Stories

29 Aug 98 | The Economy
Hong Kong defends intervention

28 Aug 98 | The Economy
Hong Kong battles recession and speculators

07 Aug 98 | The Economy
Hong Kong vows to defend currency





Internet Links


Hong Kong Stock Market

Hong Kong Monetary Authority


The BBC is not responsible for the content of external internet sites.




In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree