---------- Forwarded message ----------
Date: Thu, 8 Jan 1998 21:20:50 -0500
From: flw <[EMAIL PROTECTED]>
Subject: Mainland China Next?
There are signs the Asian Crisis is spreading to mainland China.
FLW
Share plunge fuels gloom in Hong Kong
THE TIMES 1\9\98 HONG KONG share prices, hit by a collapse of tourism and fears of
avian flu, continued to plunge yesterday, bringing the total fall so far this year to
14 per cent.
Worried Hong Kong residents gazed at stock market and
currency monitor screens outside banks yesterday. At one point, the stock
market fell below 9,000. It rallied later to end at 9,254, down almost 3
per cent.
It was the big investors who were fuelling the downturn,
analysts said, by selling Hong Kong dollars. American dollars are being
bought by companies which, while they need US money to clear future
debts, fear that the link between the two currencies established in 1983
will be broken. "It's panic selling after weeks of relative calm," said
one investment strategist.
At the same time, the market is awash with unanswered
questions: Why are foreign exchange reserves growing when they should be
declining? Is China pumping money into the territory, and if so what
happens if it stops? Why is there heavy selling of shares in mainland
companies?
The answer, many believe, is that China is now being drawn
into the general crisis. Some analysts think that the second phase of the
Asian economic crisis is now unfolding, with markets in Singapore and
Taiwan, which largely survived the first round, also being hit. The third
phase is the possible crunch in China, with its tens of millions of
unemployed or underemployed. Turmoil on the mainland would have
incalculable ramifications in the region.
