HKMA boss recalls hushed market intervention 20 years ago

Business | 11 Sep 2019 8:04 pm

Ouotgoing Hong Kong Monetary Authority, Chief Executive, Norman Chan Tak-lam has recalled in an article  the efforts to defend the financial stability during the Asian financial crisis 20 years ago.

"On Friday, 14 August 1998, the CEOs of the three largest stock brokers in Hong Kong were invited to the China Club in Central to attend a breakfast meeting called, at very short notice, by the Financial Services Bureau of the Hong Kong SAR Government,'' he writes.

"When they arrived, they were surprised to see me, and me alone. Hitherto the HKMA had had no dealings with the stock brokers in Hong Kong, as the Exchange Fund did not make any investments in equities at all. I asked them to finish their coffee and switch off their mobile phones, and then took them to the HKMA office.

"They were told, in strict confidence, that the Government had decided to intervene in the stock and futures markets to counter the double play. They would need to go back to their offices and open stock and futures trading accounts for the HKMA immediately, as we would soon be starting the operation on the very same day.

"That was the beginning of the stock market operation,'' he writes.

"The HSI reversed its downward trend and rebounded by 564 points, or 8.5 percent, that day. To check on the confidentiality of the operation, I asked my dealing room staff to enquire with market players during the day as to the reason for this rebound. None came back with any hints of the Government intervention. Of course, the news broke when Mr Donald Tsang, then Financial Secretary, Mr Rafael Hui, then Secretary for Financial Services, and Mr Joseph Yam, then Chief Executive of the HKMA, gave a press conference after market close that day," he writes.

Chan's recollections on the Asian financial crisis came as Gao Yanming, a member of the National Committee of the Chinese People's Political Consultative Conference, ran an advertisement on local media last month that many Hongkongers would have been reduced to poverty if the central government had not managed to maintain the prosperity of Hong Kong at all costs in 1998 by allocating an enormous sum of money to Hong Kong to defeat billionaire investor George Soros.


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