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The Chief Executive, Mr Tung Chee Hwa, said today (Monday) that in dealing with market manipulators, the Government must adopt appropriate measures to maintain the integrity and orderliness of the currency, stock and futures markets to protect Hong Kong's economy and members of the public from unnecessary losses.

"This is what is expected of a responsible government," he stressed.

"From reports in the local media, the decision and measures taken by the Government have received the support of most Hong Kong people," he said.

Mr Tung is meeting Legislative Councillors and representatives from political parties in groups today and tomorrow to listen to their views on future policy directions. He met representatives from the Democratic Party, Liberal Party and the Breakfast Independent Group this afternoon.

At the meetings with Party representatives, the Chief Executive reaffirmed the Government's commitment to maintaining Hong Kong's status as an international financial centre. He said the Government had devised measures to strengthen the operation and monitoring system of our financial markets.

"We have used as reference what is being done in major financial markets such as those in the US, UK and Australia in drawing up the measures," he said.

"We believe these measures will effectively deter market manipulators from controlling and distorting our markets but will not affect those investors engaging in normal transactions. In fact, the interests of these investors will be even better protected.

"I hope that the relevant organisations and Government departments will implement these measures as soon as possible. As for some of the measures that require the enactment of legislation, we will introduce relevant Bills into the Legislative Council very soon. We hope the Council will take into consideration the overall interest of the community and support these Bills in order to deny market manipulators any opportunity to upset the market order," he said.

The Chief Executive said : "When the financial markets are manipulated, the free market system cannot function normally and investors will stop coming. This is exactly the unusual situation our markets have been facing in recent months.

"Therefore, we must adopt effective measures to quickly restore order in the free markets to ensure their proper functioning in a bid to attract investors.

"We have been studying various feasible and effective measures to improve the markets. We must first identify the problems and work out measures to tackle these problems after careful deliberation. We will implement the measures only when the time is right because any pre-mature move may be tantamount to over-regulation," he explained.

The Chief Executive reiterated that unity amongst members in the community was vital for us to overcome the present difficulties.

"The Government cannot announce the measures against market manipulators too early or they may be able to take advantage of this and defeat our cause. When the time is right, we will give a thorough explanation to members of the public. In this respect, the Government needs the full cooperation and understanding of Legislative Councillors," he said.

Mr Tung stressed: "We are not pinpointing or excluding a certain category of investors. Our regulations and measures will apply equally to all local and overseas investors. We will certainly not introduce exchange control as this goes against the free market principles we are committed to uphold."

He said that upholding the free operation of financial business and markets, regulating and supervising their operation in accordance with the law, are matters within the autonomy of the SAR. He said that the Government had informed the CPG of its decision to enter the markets after the decision was made, and that the CPG, while expressing support, had not intervened in any way.

The Chief Executive pointed out that with the globalisation of financial markets, financial leaders all over the world should come up with a set of international regulations to increase the transparency of capital flow and to prevent market manipulation. He and other Government officials will seek opportunities to exchange views with financial leaders world-wide on this issue.

End/Monday, September 14, 1998

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