HK Shares Rocket Higher after Flirt with Abyss

HONG KONG (Reuters) - Hong Kong investors piled back into the stock market on Wednesday, fuelling a stunning rise of more than 16 percent and defying the crash earlier this week which shook financial foundations around the world. Investors took Wall ...

HONG KONG (Reuters) - Hong Kong investors piled back into the stock market on Wednesday, fuelling a stunning rise of more than 16 percent and defying the crash earlier this week which shook financial foundations around the world. Investors took Wall Street's record point gain overnight as the "buy" signal they had been waiting for following Hong Kong's 13.70 percent plunge on Tuesday. The Hang Seng blue chip index surged 1,512.42 points, or 16.69 percent, to close the morning session at 10,572.31 after collapsing 1,438.31 points, or 13.70 percent, on Tuesday -- its biggest point loss ever. Brokers said Wednesday's blast-off was extraordinary after several days when investors seemed to have given up and Hong Kong appeared to be infected with the currency and equity virus that had devastated many Asian markets since July. Hong Kong leaders, who predicted the market had bottomed out after Tuesday's ruinous session, remained silent on Wednesday, but Financial Secretary Donald Tsang seemed to sigh with relief as he swept past reporters to make a private luncheon address. Chief Executive Tung Chee-hwa exuded confidence on Tuesday and said he was confident about the stock market's future, but he shied away from a visit to the stock exchange on Wednesday. His office dodged questions about the visit's postponement, saying no fixed date had ever been set and Tung would pay a courtesy call to the exchange sometime soon. Tung is facing his severest test since Britain surrendered the capitalist outpost of 6.5 million people to communist China in July, ending 156 years of colonial rule. More at ease in the business world than the political arena, Tung has himself fallen victim to recent stock market turmoil. World equity markets have been feeding off each other for the past 10 days, sending dramatically mixed signals to dazed investors, with a succession of plunges and then unexpected rebounds. Investors in Hong Kong had feared that Wall Street stocks would fall steeply again on Tuesday after the Hang Seng Index's plunge, but the Dow industrials fought off initial losses to close 337.17 points, or 4.71 percent, higher at 7,498.32. Local interbank rates also moved lower on Wednesday which prompted some investors to venture back into the market and look for bargains after the Hang Seng Index closed near support of 9,000 points on Tuesday. One-month HIBOR (Hong Kong Interbank Offered Rate) fell to 13.25 percent, compared with 17.5833 percent on Tuesday.

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