Share prices rose yesterday as the Government committed more funds to the market despite growing unease about the policy.
The gains came as Tung Chee-hwa confirmed Hong Kong had fallen into recession in the second quarter. The Chief Executive also defended the share trades, which the Government says are to ease pressure on the Hong Kong dollar.
The Hang Seng Index climbed 1.57 per cent to 7,742.53 points, up 16 per cent in four days. The Hong Kong dollar eased slightly to $7.748 to the US unit.
'As long as these [speculative] conditions exist we will [intervene] . . . we will do it at the right time when it is necessary to protect our currency and our stock markets,' Mr Tung said. 'The integrity of our market needs to be protected.' Many brokers said the policy was having the reverse effect, tarnishing a free-market reputation. 'We already had enough trouble calling this market and now we have the Government in there,' one analyst said. 'I have not seen anyone supporting it apart from politicians.' Mr Tung said economic growth in the April-June quarter was negative, but gave no figures. In the first quarter, the economy shrank 2.8 per cent. Two consecutive quarters of negative growth is commonly defined as recession.
