Optimism in Hong Kong Stock Market

19 March 2008

A rise in the Hang Seng Index yesterday has caused speculation concerning the return of confidence in the global economy.

The changes within the Hong Kong stock market were up 2.7 per cent more than the previous day. Turn over peaked at 55.48 billion Hong Kong dollars.

This is accompanied by a statement from the Bank of East Asia which announces that the lending rate will decrease to 5.5 on Thursday. This is a decrease of 50 basis points.

Reduction in basis rates are often tied to the cuts in the interest rates by the US Federal Reserve which, in turn, influence the Hong Kong Monetary Authority (HKMA).

Peter Lai, director at DBS Vickers, said: "Earlier this week there was panic selling in Hong Kong with some funds dumping shares. This sent the market to its bottom.

"In the short term, both the US market and Hong Kong will bounce back unless there is some unexpected bad news."

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