The Hong Kong share market fell 1.36 per cent on profit-taking yesterday as investors discounted a widely expected cut in United States interest rates.
The Hang Seng Index lost 108.43 points to 7,837.61 after a sharp rise on Monday.
The US Federal Reserve was due to meet yesterday to decide whether to cut a key interest rate that could lead to an easing of lending rates in Hong Kong.
'The possibility of a rate cut . . . has already been discounted in share prices,' Dharmala Securities head of research Ben Kwong Man-bun said. 'With the long holiday approaching, investors prefer to take profit.' Turnover was a quiet $4.42 billion even as index futures and options contracts expired for September.
That compares with a record $79 billion in turnover as the Government faced off against speculators when August futures expired on August 28. Officials said they had not been in the market since then.
Some brokers agreed. 'I don't think they're in October futures at all,' a trader said.
Another trader said he suspected the Government might have small positions to hedge against its massive holdings in blue chips, but that both the Government and big hedge funds were out of the futures market.