EBOLA, the very latest in African killer diseases, made its mass-media debut this week. It turns some organs to liquid, causes the eyeballs to bleed and the name has already won itself a powerful resonance. There are plenty of equally powerful words of ju-ju in financial markets. There is derivatives. Derivatives use was the subject of a Hong Kong Monetary Authority review after banks failed to spot the totally obvious right answers in a short test. Typical example: Do you have written policies and procedures for risk management of derivatives? Before you answer, try to guess the Basle guideline. The authority is to seek government permission to tap the telephones of all bank workers, secretly video expatriate sales staff in their bedrooms, drug test treasurers and also get more detailed information from banks on positions held and internal controls. The authority's new tactical support unit will also have total carte blanche to use armed force to storm dealing rooms. Considering how long it took to get banks to agree to hand over details of possible money launderers, it is surprising that the local banking equivalent of the Michigan Militia is not picketing Citibank Tower and calling the authority 'jack-booted thugs'. The tightening of rules is another ripple from the collapse of Barings, which the authorities see as a direct result of allowing a perverted cult absolute freedom to keep the most powerful weapons. Before the Barings disaster, the cultists of the derivatives markets were worrying, yes. They were obsessed with the worship of their god Money which they were convinced would bring the eternal happiness. 'Buy, buy,' they were taught to chant into the mobile telephones which cult leaders made them to carry. No one realised the extent of the threat until after the disaster. Now, the crack-down has begun. Other ju-ju words are rally, bull and soar. When sentiment changes and the right magic words are used by enough people, up goes the market. Hong Kong had seemingly been ignoring Wall Street's rise this year. There were other local concerns - the collapse of profits at many China-oriented manufacturers and distributors has been a persistent threat since the middle of last year. China's raging economy and unstable political condition have also kept bulls subdued. But suddenly the tide seems to have turned. United States long bond yields have plummeted since the start of the month. In the past two days, the US dollar soared back up against the yen. The local stock market had five straight days of high turnover and rising prices. On Monday, the Hang Seng Index closed up 1.87 per cent at 8,488 points despite some US economic data which took its toll on Wall Street prices. Big brokerages were said to be the buyers. Tuesday saw the futures market play its part. Trading for arbitrage helped push the market a further 85 points putting the year's high of 8,827 on March 28 in sight. On Wednesday, things really started to break out and the index closed up 2.6 per cent at 8,796 points with turnover hitting $5.28 billion. The rally had taken the index up by 464 points in three days. The 9,000-point barrier was finally stormed on Thursday and turnover was $8.65 billion with hedge funds, institutions, retail investors, Japanese cults, extremist Libertarians and cadres, both honest and corrupt, all buying away like crazy. Stretch the facial skin back and shake gently as if thrusting through light-speed aboard the Starship Enterprise when looking at the stock-market screen. By the time the close came on Friday the index was 9,217, up 192 points on turnover of $9.62 billion. Money not in the market may have missed the best but it may not have missed the rest. Perhaps it was the market which distracted the bankers from the grim pincers of intrusive regulation. Perhaps it also distracted retail investors from responding to government mandatory pension proposals. The Government is going to make wage earners have company pensions. How many citizens believe it will guarantee any losses from fraud/mismanagement or investment in diabolical third-line stocks which will give the money away to obscure face-building joint ventures near ancestral villages in Guangdong? How did the Government come up with the proposals? It gave a small consultancy firm three weeks to come up with plans in conjunction with a US-based group of actuaries which does not keep permanent staff in the territory. 'They gave them three weeks to build a house and they got a three-week house,' said Danny Quant, a director of leading local actuary group Wyatt Co. The Government was forced to do this, primarily at the bidding of the General Chamber of Commerce and some businessmen who clearly are not going to be worrying about an old age of penury in a Mongkok cage any time soon. Hurling epithets like 'Company stooge' and 'Greed-head' at the people who did it will not help. So just whisper it when they go past. One more familiar word: Denway. Denway was the most over-subscribed float ever on the Hong Kong market. The flotation caused near paralysis of the banking system in Hong Kong, sucking in a large fraction of M3. Denway reported a loss of $156 million for last year selling only 5,726 cars from an assembly line capable of turning out 150,000 machines a year. Denway blamed the poor results on austerity measures. Hindsight is on record as advocating stern slapping to directors using this excuse. Denway saw its best customers, state enterprises, leave the market. State enterprises? Denway's only major customer was the Chinese Government in its various guises? That is strange because the prospectus said no single customer accounted for more than two per cent of sales. That must be the East-West miscommunication thing, then. Obviously, equity investors take risk. But of late the line between miscommunication and lying to shareholders about prospects and intentions has been getting blurred. Beware, because as one market observer put it: 'You get just one tank full of credibility in the stock market, once you've burned that, you don't get any more.' Put it another way, rights issues are going to be harder than flotations and the remaining H shares better think hard about the contents of their prospectuses.