VZCZCXRO6473
RR RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHNH RUEHVC
DE RUEHHK #1991 3021039
ZNR UUUUU ZZH
R 281039Z OCT 08
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6125
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS HONG KONG 001991 
 
SIPDIS 
 
STATE FOR EAP/CM AND EEB/OMA, TREASURY FOR OASIA 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD HK CH
SUBJECT: Hang Seng Bounces 14.35 percent, Regains Monday's Losses 
and More 
 
¶1.  A day after the biggest single day drop in the Hang Seng Index 
since 1989, the Index regained all of what it had lost on Monday and 
more.  By the end of Tuesday trading, the Hang Seng Index was up 
14.35 percent to 12,596, a gain of 1580 points, the largest one day 
gain since 1997.  Volume was higher than recent norms at almost HKD 
85 billion.  A big loser on Monday, HSBC led the rebound, gaining 20 
percent from yesterday.  Even Band of East Asia (BEA), which issued 
a profit warning early in the day, saw its shares rise.  Banking 
stocks across the board performed well with ICBC up 16 percent, Bank 
of Communication up 23 percent, and Bank of China up 22 percent. 
Chinese property companies were the only shares that continued to 
trade lower.  Sinoland fell 1 percent while China Overseas Land 
Investment dropped 10 percent. 
 
¶2.  Local analysts were skeptical about the prospect for additional 
gains.  Wild swings have become the norm in recent days, and many 
expected today's gains to be given back in short order.  Chinese 
Premier Wen Jia-bao, on a visit to Russia, told the press that China 
had confidence in Hong Kong's economic fundamentals and would 
support the Special Administrative Region during the global 
financial crisis.  Financial Secretary John Tsang told reporters 
that the government "has a set of measures ready and will act if 
needed", but he also warned that the market would continue to be 
volatile. 
 
¶3. Interbank liquidity loosened considerably for all tenures.  HIBOR 
on Tuesday, October 28 was 0.6 for over night, down from 1 percent 
on Monday; 1.25 percent for one week, down from 2 percent; 2.5 
percent for two weeks, down from 2.75 percent, 3.25 percent for one 
month, down from 3.8 percent; 3.6 percent for two months, down from 
4.05 percent; and 3.85 percent for three, six, and twelve month 
borrowing, down from 4.15 percent for three and six month borrowing 
and 4.1 percent for 12 month loans on Monday. 
 
Roach, Fung, Davies, Lau head Economic Task Force 
 
¶4.  Hong Kong Chief Executive Donald Tsang announced the creation of 
a high-level economic task force to monitor and assess the impact of 
the global financial crisis on the Hong Kong economy.  The task 
force will be chaired by Tsang and consist of ten members, including 
Morgan Stanley Asia Chairman Stephen Roach, Standard Chartered 
Executive Director Mervyn Davies, Chinese University of Hong Kong 
Vice Chancellor Lawrence Lau and local tycoon Victor Fung.  The move 
fulfills one pledge in the Chief Executive's recent policy address 
and will advise the government on ways to overcome the financial 
crisis and promote new business opportunities in Hong Kong.