*********************************************

Following is the transcript of a media session given by the Chief Executive, Mr Tung Chee Hwa, after attending the Executive Council meeting held this (Tuesday) morning:

Mr Tung: In the last few days, our Financial Secretary and Chief Executive of the Monetary Authority had announced a series of measures aimed at making sure that our linked exchange rate is as strong as ever, and that our stock and futures markets can operate in an orderly and transparent manner. And this is done to avoid our markets being manipulated. These measures are taken after really a great deal of very careful thought and planning. In fact, our colleagues in the financial sector of the Government had been working day and night, on the one hand looking at the markets, and on the other hand devising suitable measures. I think their professionalism and dedication are to be highly commended.

Hong Kong is one of the freest markets in the world, and we aim to maintain it that way. The reason why we entered the market in all this was because we felt that and we saw a clear linkage between activities in the futures market and stock market on the one hand and the foreign currency market on the other. And we did this to correct distortions that had been created by those who were manipulating our market and nothing else.

Hong Kong is going through a difficult period of adjustment and this will continue for some time. External environment continues to be unsettled and in that process, a stable interest rate environment for us to recover is very important to us. A volatile interest rate environment will create difficulty to our economic recovery, and disturb our financial foundation, as well as our banking. They eventually affect our banking. So all the measures that we have taken so far are aimed at this objective. These are difficult times. I hope that these measures which have been taken, I know, will be widely supported by the community. Thank you very much.

Reporter: You mentioned that Hong Kong was one of the freest markets in the world. How concerned are you that the regulations you are introducing might affect Hong Kong's freedom?

Mr Tung: I am not concerned at all because I think these regulations are made really to improve our transparency, to improve the way we will regulate ourselves to ensure that we continue to be a very free market, and to ensure that our market will not be manipulated.

Transcript of Chief Executive's media session (Chinese)

End/Tuesday, September 8, 1998

NNNN