English/Nat
The Hong Kong stock market leapt nearly 17 per cent on Wednesday morning following a rebound in Wall Street the previous day.
While many in the territory are relieved that the slide in the Hang Seng Index has stopped, others warn that more losses could be on the way.
And China is appears to be moving more cautiously about putting state-owned businesses up for public ownership in light of the recent market fluctuations.
By lunchtime in Hong Kong, the Hang Seng Index was looking very solid, as traders heaved a great sigh of relief across the market floor.
For a week now, Hong Kong's stock market has been fluctuating wildly, mostly in a downward direction.
But boosted by good news from New York, the territory's stocks shot back up Wednesday.
Investors say they hope the momentum keeps moving prices upwards.
Most analysts rank Hong Kong's fundamentals as being sound, but they warn that the big gains here and in other markets earlier in the year may still warrant more corrections before 1998.
SOUNDBITE: (English)
"The rally in Wall Street clearly boosted confidence, put to some people at least a foundation stone under the market and obviously provided a platform for recovery during the day. It's a brave person though who says that this rally is heading the market fundamentals in a different direction but I think it's still in a volatile period where a lot can happen"
SUPER CAPTION: David Dodwell, Communications Director, Jardine-Fleming
Before Wednesday's rebound, the Hang Seng had lost almost a third of its value over a week's time.
On Tuesday, the Dow Jones gained about half of its losses back, after a disastrous Monday.
In the Philippines, stocks and the peso strengthened as well.
On Tuesday Manila saw a four-year low, but by midday it had gained 73.97 points up to 1,814.15.
The Thai market, which also lost big on Tuesday, was mixed Wednesday, reflecting the nation's poor financial outlook.
Analysts say the slump that started in Bangkok has just about run its course in the region, although some economies have not yet hit bottom.
SOUNDBITE: (English)
"Across the region, across the Asian region, there is no market that's spared, so there are no more to suffer, in many respects, so could go a little further, the contagion has gone as far as it can spread basically"
SUPER CAPTION: David Dodwell, Communications Director, Jardine-Fleming
China appears to have been relatively unaffected by regional losses.
The yuan hit a three-year high against the U-S dollar Wednesday.
An interest rate cut has been announced as Hong Kong's lending rates go through the roof.
There could be a negative side for China, which has indicated a desire to raise money for troubled state-owned enterprises by selling some shares to the public.
SOUNDBITE: (English)
"China's equity markets, its investing markets are not well integrated with the global market, and so there isn't likely to be any substantial contagion. Insofar as China's reform process is based on raising funds in the international capital market for companies that need to be restructured, reorganised and so on, then obviously the corrections make that process tougher."
SUPER CAPTION: David Dodwell, Communications Director, Jardine Fleming
China will continue to benefit from its reunion with Hong Kong, but not without some discomfort.
Meanwhile, Hong Kong traders and investors continue to hope that Wednesday's rally is a sign of the return of the bull market that dominated the first three-quarters of 1997.
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