Pessimism over the Government's ability to maintain the dollar peg had reached fever pitch just days before the Hong Kong Monetary Authority unveiled its seven-point plan to boost the peg and reduce interest-rate volatility, a survey revealed.
The monthly Merrill Lynch-Gallup survey of global fund managers found that as of Wednesday, half of the Asian-based managers polled believed the Government's intervention to prop up the market had made them more worried about the future of the Hong Kong dollar.
'Half now say a float would be better for Hong Kong than keeping the peg,' Merrill Lynch said, noting that this was double the percentage of respondents from the previous poll.
In last month's survey, not a single Asian fund manager believed the peg would float this year, but in last week's survey, about 11 per cent of respondents believed it would float this year, and 47 per cent said it would float next year.
As a consequence, about 19 per cent of fund managers also said the yuan would depreciate sharply this year.
'Last month no one said this,' Merrill added. 'The authorities may be buyers of the market, but local fund managers are sellers.' Sellers of equities outnumbered buyers by 43 per cent, up from 28 per cent last month, and mainland equities had also turned out of favour, with sellers outnumbering buyers by 19 per cent.