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HONG KONG, Jan 23, 2008 (AFP) - Hong Kong share prices staged a spectacular recovery Wednesday, rallying 10.7 percent and wiping out Tuesday's record plunge, as interest rate cuts here and in the US salvaged investor confidence, dealers said.
The Hang Seng index closed up 2,332.54 points at 24,090.17, off a low of 22,647.28 and a high of 24,239.98.
The performance marks the index's biggest one-day point gain in its history. The previous record was set on October 29, 1997, when it surged 1,705 points.
On Tuesday, the index tumbled 2,061.23 points or 8.7 percent, its largest one-day point drop ever, in a regional market rout sparked by worries over the US economy.
Late Tuesday, the Fed lowered the federal funds rate by 75 basis points to 3.5 percent, responding to a global plunge in stock markets sparked by worries over the US economy.
The Hong Kong Monetary Authority followed the Fed's move by cutting the base rate for its discount window by 75 basis points to 5.0 percent. The base rate is HKMA's reference rate for lending overnight funds to local banks.
Taking the lead, HSBC, Bank of East Asia and Standard Chartered Bank announced quarter-percentage point cuts in their best lending rates. Other banks are expected to follow suit.
Property stocks surged following the rate cuts.
China financials provided additional support after Beijing allowed mainland banks to obtain stakes in insurance firms, with the sector also boosted by positive earnings guidance from Bank of China and Bank of Communications. Jiangxi Copper tumbled 19 percent on news of a huge fund-raising plan.
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