30 August 98 A GROUP of mutual fund and retirement fund investors advertise in the Economic Journal, calling for fund managers not to lend shares to international speculators. They say while they can accept losses incurred due to the economic cycles, prolonged speculation on the stock market has 'crushed their retirement dream'. (Economic Journal) HONG KONG Monetary Authority chief executive Joseph Yam Chi-kwong says the authority has no plan to replace the Hong Kong dollar with the US dollar as the currency in circulation. He adds the authority is studying ways to increase the balance of the banking system, so as to deter attacks on the peg. (Economic Journal) TAIWAN's authorities order a crackdown on what they say is illegal trading in the funds of United States financier George Soros. Securities investors and consultancies are warned not to sell funds managed by Mr Soros. (SCMP) 31 August 98 HKMA head Joseph Yam says certain individuals have accumulated and withheld funds amounting to $7 billion to $8 billion, instead of making it available to borrowers at the interbank lending market. He says such 'market-controlling' behaviour has caused a fund shortage and raised interbank interest rates. The authority is studying measures to reduce market-controlling activities, he adds. (Economic Journal) INTERNATIONAL credit rating organisation Standard & Poor's lowers Hong Kong's long-term credit rating from A+ to A, with a negative outlook, saying the Government's intervention in the stock market has weakened its financial strength. The Government rejects the downgrade, saying the agency fails to understand the rationale behind its intervention in the markets. (Economic Journal, SCMP) CHINA Telecom (Hong Kong) reports a net profit of 3.47 billion yuan (about HK$3.22 billion) for the six months to June 30, better than most analysts' forecasts. In addition to an interest income of 1.08 billion yuan, chief executive Shi Cui-ming attributes the 'good' performance to the big increase in cellular service subscribers. (SCMP) 1 September, 98 SOURCES close to the Government say a controversial proposal to set up a second stock market is to be discussed at today's stock exchange council meeting. If the proposal is realised, the Stock Exchange of Hong Kong will face competition and pressure to reduce dealing costs, as it will end the exchange's 12-year monopoly. (SCMP) HONG KONG Real Estate Developers Association executive chairman Law Ka-shui suggests that the Government revise its 85,000-unit flats construction annual target in its policy address next month, and to extend the freeze on land sale for two more years, until March, 2001. (Economic Journal) AMID jitters over recent corrections in global markets combined with fears the Special Administrative Region may be forced to follow Malaysia's lead and adopt capital controls, investment banks have substantially reduced their short positions in Hong Kong dollar forward contracts. Meanwhile, the HKMA denies any controls will be introduced. (SCMP) 2 September, 98 MALAYSIA's Central Bank pegs the local currency at 3.80 ringgits against the US dollar with immediate effect. The fixed exchange rate, together with currency controls announced by Prime Minister Mahathir Mohamad, almost grind the ringgit's trading to a halt, as the financial community is 'confused' by the new rules. (SCMP) TWO hundred and forty four, or nearly half of Hong Kong's brokerages, fail to meet Tuesday's settlement deadline for the short positions they took last Friday on the stock market. They risk being penalised for failing to deliver US$14.67 billion worth of shares, a figure higher than had been expected.(SCMP) THE Hong Kong Stock Exchange suspends short-selling shares of HSBC Holdings, China Telecom (HK) and Hongkong Telecom until further notice, effectively barring investors from short selling half the Hang Seng Index. The exchange says the action prevents aggravation of the shares settlement backlog. (SCMP) 3 September, 98 NOBEL Prize winner Milton Friedman calls the Government's intervention 'crazy', which disappoints people who believe in the dollar peg. He says if the currency board was allowed to operate on its own, automatic increases in interest rates would allow the dollar peg to weather 'all kinds' of speculative attacks. (Economic Journal) SENIOR sources reveal the Government is taking into consideration implementing controversial legal changes that would increase significantly its power over the stock and futures markets, allowing it to have greater flexibility to tackle speculators. The move, if realised, might spark criticism it is moving further away from the Government's stated policy of non-intervention. (SCMP) HONGKONG Clearing chairman John Chan Cho-chak hits back at criticism that Hongkong Clearing's not implementing strictly the T+2 settlement regulation, had undermined the Government's market intervention. He says the role of the clearing is to ensure smooth settlement of transactions, which has nothing to do with market regulation. (SCMP) 4 September, 98 THE stock exchange takes the first steps in what may become one of the largest investigations of the broking industry. It confirms five brokers who failed to settle transactions are being probed and a further 25 investigations are imminent. Penalties for breaching rules range from suspension of trading rights to revoking of membership. (SCMP) RATING agency Moody's Investors Service puts Hong Kong' A3 rating on review for a possible downgrade. (SCMP)
