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Cablegate: Hang Seng Rockets Up 13 Percent.

VZCZCXRO8942
RR RUEHCHI RUEHCN RUEHDT RUEHGH RUEHHM RUEHNH RUEHVC
DE RUEHHK #2003 3041032
ZNR UUUUU ZZH
R 301032Z OCT 08
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6143
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS HONG KONG 002003

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 Rockets Up 13 percent.

1. Following a moderate gain of 0.84 percent on Wednesday, the Hang
Seng Index jumped almost 13 percent on Thursday, to finish up 1628
points at 14,329, up 12.82 percent. The Federal Reserves 50 basis
point cut helped, but had been widely expected. The Chinese Central
Bank announcement that it would also cut its benchmark rates by 27
basis points undoubtedly helped Chinese stocks, but remarks by
Chinese Premier Wen Jiabao suggesting China would make "all out
efforts" to support Hong Kong's economy were the real market driver.


2. Wen promised to work with Hong Kong financial regulators on
contingency plans to handle risks; fast-track infrastructure
projects, including the HK-Macau-Zhuhai bridge project; guarantee
stable food supplies to Hong Kong; provide support for Hong
Kong-based SME's with operations in China; and extend the individual
traveler scheme to additional Chinese cities so Chinese tourists
will find it easier to come to Hong Kong.

3. Interbank liquidity loosened considerably for all tenures. HIBOR
on Thursday, October 30 was 0.7 for over night, up slightly from
down from 0.5 percent on Wednesday; 1. percent for one week,
unchanged; 2 percent for two weeks, unchanged from Wednesday; 2.45
percent for one month, down from 3.05 percent; 3 percent for two
months, down from 3.3 percent; 3.4 percent for three and six month
borrowing, down from 3.6 percent; 12 month loans dropped to 3.45
percent, also from 3.6 percent on Wednesday.

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