Hong Kong Financial News

While doing more research on the HK dollar peg, I discovered that the range between 7.75 and 7.85 wasn’t established until May 2005 and that there isn’t much correlation between the stock market and the HKD exchange rate. Even if there was correlation, it might not be too reliable given the short history of the dollar peg range.

The peg to the US dollar was started in 1983. This was the time when the UK started the handover discussion of Hong Kong back to China and people started to worry about the future of  Hong Kong. Also it is interesting to note is that the HKD has been steadily depreciating from USD 1 to HKD 5 in the 1970s to USD 1 to HKD 9.6 in 1983.  After October 1983, the peg was set at HKD 7.8 to USD 1. This peg lasted for 15 years and then in 1998, the peg was moved to USD 1 to HKD 7.75 and in May 2005, the peg was changed to a range between HKD 7.75 to HKD 7.85.

If you look at the graphs below, after 2005 when the range pegging was introduced, there was only two instances where the exchange rate was hovering around the edge of HKD 7.75 (Late 05-Early 06, and Oct 07). The first time happened during boom time and the second time happened at the start of the stock market correction. So it’s hard to say that there is any correlation between the HKD exchange range and the Hang Seng index.

November 22nd, 2008 | Tags: hang seng index, Hong Kong Dollar Peg | Category: General Trends | Leave a comment

The Hang Seng Index has got back above 14000, closing at 14330 today. Will this last? Frankly I believe that this is up too fast. It’s up more than 3000 points in just 3 days. The sentiment in Asia Pacific today certainly helps with the rise with US lowering 0.5% of interest rate. But I believe it is also due to the settlement of October futures today. I believe there is a lot of short covering which forces shares to go up these days.

This V-shape bounce doesn’t really signal the end of the bear cycle. I would think that the end of bear cycle would be when there are no more big actions in the market, when volumes are all dried up. I won’t be surprised if HSI will go back down to 12000 this year.

October 30th, 2008 | Tags: bear market, hang seng index | Category: General Trends | Leave a comment

The Dow drops over 500 points last week and it dropped 146 points on Friday. Oil is at its all time high as well. Hong Kong stock market will definitely open down tomorrow. It seems like the bears have come back and stocks will continue to be weak this week. Better to buy some put on the HSI / HSCEI to protect your gain.

May 25th, 2008 | Tags: hang seng index, hong kong stock market, HSCEI, Oil Price, Put | Category: General Trends | Leave a comment