INTERVENTION TO SAVE HONG KONG by Prof Charles Goodhart, Dr Lu Dai ( 9780199261109 )

Item Details

Title:

INTERVENTION TO SAVE HONG KONG
THE AUTHORITIES' COUNTER-SPECULATION IN FINANCIAL MARKETS

By:

Prof Charles Goodhart, Dr Lu Dai

Format:

Hardback

List price:

£105.00

Our price:

£91.88

Discount:

12.5% off

You save:

£13.12

ISBN 10:

0199261105

ISBN 13:

9780199261109

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Publisher:

OXFORD UNIVERSITY PRESS

Pub. date:

29 May, 2003

Pages:

224

Description:

Hong Kong asset markets were attacked by waves of speculation in 1997/8, and the economy was almost battered into submission. But the Hong Kong authorities fought back with an unconventional policy of counter-speculation in August 1998. The resulting conflict in asset markets was massive. Written from a position of detailed knowledge of events, the book combines lively analytical narrative, empirical records, and theory. It provides a fascinating story in itself, andinsights into what lessons academics and practitioners can learn from the turbulent events of the time.

Synopsis:

By August 1998, the Hong Kong economy had become threatened not only by the natural consequences of the Asian crisis (1997/8), but also by waves of speculation, betting that the authorities would be forced to abandon the linked exchange rate (to the US dollar). When facing previous speculative attacks (starting October 1997), the authorities had followed traditional policies of raising interest rates. But, by August 1998, such policies had helped to batter asset markets; property prices and output were falling, and confidence was low. Moreover, the speculators had developed an ingenious 'double-play', simultaneously selling both the foreign exchange market and the Hang Seng equity market short; whether the authorities used an interest rate defence, or abandoned the 'link', the speculators would gain either way. So, the authorities decided on a bold, unexpected and unconventional response to reports of a further attack. They would undertake counter-intervention, again both in the equity and foreign exchange markets. This was the largest, and most successful, counter-speculative intervention ever undertaken. In comparison to the size of Hong Kong's economy, it was massive.On one day - Friday, 28 August, 1998 - the authorities bought up around five per cent of the total capitalization of the Hang Seng. Despite the eventual success of the exercise, the authorities have been quite reticent about their actions, revealing only the aggregate amounts of purchases of each stock intervened. This book uses publicly available market data to trace out the authorities' actions on a blow-by-blow basis, primarily in the Hang Seng equity market, but also in the futures and foreign exchange market. The authors set the intervention in its economic context, describe its development, and assess its results. The book provides a fascinating story and insights into what lessons academics and practitioners can learn from the turbulent events of the time.

Illustrations:

Numerous tables and figures

Publication:

Imprint:

Oxford University Press

Returns:

Returnable

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