Hong Kong dollarhovers near upper limit

The Hong Kong dollar narrowly moved near the top of its trading band against the US dollar yesterday, despite repeated intervention by the Hong Kong Monetary Authority (HKMA) last week, as the territory continued to attract fund flows. The local currency traded between 7.7501 and 7.7502, just a whisker below its upper limit at 7.7500 to the US dollar. Two dealers said they had not seen any speculative activity in the Hong Kong dollar.

"The inflow of funds was probably to the stock and property markets," one dealer at a regional bank said.

Since last Wednesday, the HKMA conducted several interventions on capital inflows, injecting a total of HK$28.675 billion into Hong Kong's banking system.

Sept air cargo throughput falls 4.3 pct yr/yr

Air cargo throughput via Hong Kong fell 4.3 percent in September, the smallest monthly decline in a year, while imported cargo rose for a second straight month, a further indication that global trade flows are improving, data from Hong Kong Air Cargo Terminals Ltd shows.

Cargo exports from the city fell 7 percent from a year earlier, but that was modest compared with a 20.5 percent drop for the first nine months of this year. Cargo imports from the United States and Europe rose 9.3 percent and 10.2 percent respectively in September from a year earlier, Hactl said in a statement yesterday.

SFC fines Sun Hung Kai Investment Services Ltd

The Securities and Futures Commission (SFC) has publicly reprimanded Sun Hung Kai Investment Services Ltd (SHKIS) and fined it $4,000,000 for internal control failures that contributed to market misconduct yesterday.

Following an inquiry into dealing in the shares of QPL International Holdings Ltd in 2003, the Market Misconduct Tribunal (MMT) found on January 22 that Edmond Chau Chin Hung, a former responsible officer of SHKIS, and Connie Cheung Sau Lin, a former account executive of SHKIS, engaged in false trading and price rigging, contrary to the Securities and Futures Ordinance, for the period from 6 May to 10 June 2003.

Mark Steward, the SFC's Executive Director of Enforcement, said, "Sun Hung Kai Investment Services Ltd had in place appropriate policies segregating client and proprietary trading which, in this case, were not properly implemented or policed.

"SFC will hold firms to account for their failure to ensure their compliance systems are working properly," he said.

China sets new rules on inbound portfolio investors

China has formally relaxed rules on inbound portfolio investment, raising the maximum sum a single institution may invest to $1 billion from $800 million, the State Administration of Foreign Exchange (SAFE) said.

The new rules governing China's Qualified Foreign Institutional Investor (QFII) program also shorten the lock-up period for insurers and pension funds to three months from the one-year requirement that other investors must follow.

The changes, which came into effect on September 29, are broadly in line with draft proposals released in early September.

According to a statement on SAFE's website, the currency regulator had granted investment quotas totaling $15.72 billion to 78 investors by the end of September.

UBS was the only investor to have used its full $800 million quota.

Separately, SAFE said actual capital inflows under the QFII programme had reached $14.50 billion at the end of August compared with a cumulative approved quota at the time of $15.32 billion.

China Daily/Agencies

(HK Edition 10/13/2009 page4)