Link-Exhange Rate System

Should LERS be continued? On 23 and 26 OCT 2007, The Hong Kong fiscal Authority (HKMA) intervened TWO condemnations in the securities industry, for the first time since May 2005, to increase liquidity and curb the Hong Kong Dollar (HKD)s strength. The interventions is very normal as the HKMA has already given the toil to defend the peg by buying US dollars (USD) and merchandising HKD simultaneously in order to settle the excess get hold of of HKD in universal. The economy in USA turns bad delinquent to the mortgage problems. (refer to table 6A1 and 6A2); An expansion of the qualified domestic institutional investors program (QDII) whereby mainland investors can buy Hong Kong Stocks; The upcoming Initial public offer (IPO) such as e-commerce portal Alibaba.com hold most Four thousand one million million million HKD ( tabular array 6B: newly listing Companies Statistic); The to a higher place three main factors associated heavy demand for the local currency, i.e. HKD. Table 6A.1 Global Mortgage-Backed and Asset-Backed Securities [pic] Sources: Thomson Financial According to data from Thomson Financial, the amount of newly issued mortgage-backed and asset-backed securities reached USD1,542 billion in the first half of 2007, accounting for 37.5% of the newly issued debts in the global debt capital markets. Table 6A.

2 Institutions with losses in complete prime business(by date) [pic] Sources: Bloomberg, bank of communication Some banks sponsor off-balance-sheet vehicles which are leveraged and single-valued function loans to invest in the sub-prime related acknowledgment products. This make investors and market players worried, as they are unsure whether the counterparties have these kinds of investment. This is a impart of confidence in the financial market, and this could further lead to credit crisis if lenders are worried about defaults on borrowers and take a conservative approach by refusing further lending. Table 6B New Listing Companies Statistic Year Quarter No. of new listed family Fund Raised (000HKD) 2006 Q2... If you want to get a good essay, order it on our website: Orderessay

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