HK Shares End Roller Coaster

Yesterday, HK shares ended almost flat after 5 days of volatile trading. The Hang Seng Index closed down 12 points at 22,443.

Last Thursday saw the HS Index down over 200 followed by down over 400 on Friday. When the US market closed down on Friday, everyone expected Monday to be a bloodbath. Monday was up over 200 followed by over 400 up on Tuesday on the back of good results from HSBC and Hang Seng Bank (which against all expectations reported net profits up lover 50%).

But this was not to last. Wednesday followed with over 700 points down giving back the gains over the last 2 days.

The worries were of course related to the sub prime loan fiasco in the US. Major concerns were that hedge funds will need to liquidate in order to meet margin calls in the US, or at least taking profits. Since, most major funds are also exposed to hedge funds, this can turn into a snowball.

Over the longer term, with the liquidity in Chiona, HK will weather this through as more funds are diverted our way via the QDII. But over the shorter term, we should expect to see more volatility.