Other Aim Seen In Intervention In Hong Kong
HONG KONG -- The government's unprecedented intervention in the stock and futures markets here last week came ahead of financial and economic news, all of it expected to be bad, causing market participants to question assertions that the action was aimed only at battling speculators.</br></br>The intervention, a retreat from the city's legendary commitment to free markets, is causing some politicians and investors to ask whether officials were aiding the interests of Hong Kong's corporate barons as the economy heads into deep recession.</br></br>Many of the stocks purchased by the government in Friday's intervention were in companies controlled by big developers, many of them key constituent stocks of the blue-chip Hang Seng index. The government said its stock purchases were meant to reflect the broad market, and were aimed at hurting financial speculators who were selling stocks and futures as a way of pressuring the Hong Kong dollar lower. The Hong Kong currency is linked to the U.S. dollar, but some investors are trying to force Hong Kong to break that peg.</br></br>The government's approach to last week's intervention has raised hackles. The government is led by Tung Chee-hwa, a former shipping magnate who is close to the handful of powerful tycoons who control much of this city's wealth. His cabinet is a virtual plutocracy of senior business leaders, whose popularity has sagged along with the economy this year. Last month the government's public-opinion poll showed that 54% of the population was dissatisfied with its performance, more than twice last year's disapproval rating.</br></br>Because the intervention boosted the stock market sharply Friday, some market participants wondered whether the intervention was meant to distract from gloomy financial news coming this week. The government will release unemployment figures today.