An error in calculating the Morgan Stanley Capital International Hongkong Index (MSCI) of top Hongkong stocks may have caused some investors who trade in futures based on the index in Singapore to suffer losses yesterday, according to analysts and traders.
''There has been an extremely grave and horrifying mistake and I think there is going to be a big hoo-ha,'' said Mr John Wang, a Hongkong-based analyst for Barclays de Zoete Wedd (Asia).
A new Hongkong index futures contract based on the Morgan Stanley index was launched on Wednesday on the Singapore International Monetary Exchange (SIMEX) as a rival to the Hang Seng index futures traded in Hongkong.
Analysts say the error may have damaged, at least in the immediate term, the credibility of the new futures contract.
The first official acknowledgement of the mistake came from SIMEX around noon. In a statement to its members SIMEX said: ''Morgan Stanley has informed [us] that the MSCI Hongkong Index currently transmitted needs to be adjusted. It is taking the necessary action to correct the index as soon as possible.'' At 12:26 pm, almost 21/2 hours after trading in Hongkong stocks and the SIMEX contract had opened, the MSCI index was adjusted upwards by 128 points, from 4,347 to 4,475. The SIMEX June Hongkong index contract had reached 4,420 at 12:30 pm, against 4,338 only 21 minutes earlier.
Morgan Stanley officials in Tokyo said they could not comment on the incident.
However, there was speculation that the mistake could have been prompted by Hang Seng Bank going ex-dividend.
