Premier's remarks made the market quake; the yuan game is almost over, says broker
The Hong Kong stock market tumbled to a three-week low yesterday after Premier Wen Jiabao's remarks that Beijing would not bow to foreign pressure when deciding to revalue the yuan.
Bucking overnight gains on Wall Street, the benchmark Hang Seng Index slid 199.78 points, or 1.44 per cent, to close at 13,667.03. Trading was hectic on a turnover of $17.67 billion.
In remarks to a United States Chamber of Commerce delegation on Monday, the premier said China would move forward in its currency reform as long as 'conditions permit' but that the issue of revaluation was a matter of 'China's sovereignty'.
Mr Wen's comments - which did not rule out a revaluation - dashed market hopes that such a move was imminent, analysts said. This led to an outflow of capital from Hong Kong, which serves as a proxy investment destination for funds seeking to benefit from any appreciation in China's currency.
The souring of Sino-US trade relations and the recent strengthening of the greenback also contributed to the fall.
