Report on yuan puts red chips in decline

PUBLISHED : Tuesday, 16 June, 1998, 12:00am
UPDATED : Tuesday, 16 June, 1998, 12:00am

Mainland-related stocks plunged yesterday, as an erroneous report circulated that Vice-Premier Li Lanqing had said the mainland might 'break its pledge not to devalue the yuan'.

The report, which was picked up by some financial news services, was first carried in the Hong Kong Standard.

It quoted a trader based in Shanghai, who referred to remarks he said he had heard Mr Li make on television about the 'difficulty' caused by the yen decline.

The People's Bank of China received numerous telephone calls over the report.

A central bank spokesman in Beijing said it was checking on the reports and pointed to related comments made last week by the central bank governor, suggesting a case of misidentification.

'Governor Dai Xianglong made it clear last week that the falling yen is having a very negative impact on the Chinese economy,' the spokesman said.

In making the comments, Mr Dai reiterated a pledge not to devalue the yuan.

The red-chip index yesterday plummeted 7.58 per cent, while the H-share index dived 3.89 per cent.