Financial Secretary Donald Tsang Yam-kuen yesterday offered a more detailed glimpse into why the Government decided to intervene in the stock and futures markets for the first time, saying failure to do would have spelt disaster for Hong Kong. Mr Tsang - addressing legislators at a key meeting of the Financial Affairs Panel - said the Government believed if it had not intervened, the stock market would have fallen between 2,000 and 3,000 points and interest rates would have risen to 50 per cent. He declined to rule out further intervention and added there was still speculative activity to be dealt with. Mr Tsang said the Government last entered the market on August 28 - the day it spent an estimated HK$70 billion supporting the Hang Seng Index. Mr Tsang said the attack by international speculators on the stock, futures and currency markets was an orchestrated attempt to profit by creating turmoil. 'The scale of the August attacks from the speculators was much larger than the former attacks,' he said. 'Speculative activities in August were planned and organised. The speculators prepared their action for a long time.' He said speculators sold short US$6.2 billion in Hong Kong dollars in the Hong Kong, New York, Sydney and London markets in the first two weeks of August. This compares with US$3 billion in October last year during earlier speculative attacks. Gross open positions on the futures market stood at more than 100,000 contracts, compared with 70,000 in October, he said. Average daily turnover fell from HK$30 billion in October to HK$3 billion in August, helping speculators to manipulate the market more easily, he said. Mr Tsang said that last month there were rumours the yuan might be devalued and the Hong Kong dollar peg might break, both of which conspired to undermine confidence in the SAR. He said poor economic figures announced last month - together with problems in Russian and Japanese markets - had put Hong Kong in its toughest position since the Hong Kong dollar was pegged to the US dollar 15 years ago. 'This is the worst time we have had since 1983,' Mr Tsang said. 'The intervention [was] also the most difficult decision I have had to make in my career.' He refused to disclose further details of the scale of the intervention, fearing it might assist speculators attack the currency. 'We are still in the middle of the battle. We cannot let others know how many aeroplanes we have or how many guns we have on hand,' he said. Market practitioners estimate the size of the intervention at HK$100 billion, representing nearly 15 per cent of domestic reserves. Mr Tsang also announced the Government would set up a company under the Exchange Fund to manage stocks bought by the fund as part of the intervention.