On Propping up the Stock Market -  98
Not the South China Morning Post

Leon
Irrelevant Reasons for Propping Up the Hang Seng Index

by our Canada-based columnist, Leon

There are basically two types of people that invest in the stock market: long-term and short-term investors. Long-term investors understand that the market fluctuates but they ainít really bothered by it since stocks tend to appreciate over the long run. Short-term investors aim for the quick buck but they understand that the market can fluctuate either way and there are much bigger risks involved when compared to long-term investing. If these people canít grasp this simple fact they should hit the books before playing more games.

What Hang Seng experienced over the last 12 months can definitely be considered as a major drop. However, this correction shouldnít be surprising considering the performance of other stock markets and the lack of devaluation of the Hong Kong buck against the Greenback. As mentioned before, long-term investors are in for the duration so they shouldnít really lose too much sleep over it. As for short-term investors, well, you suck and what happened is just too bad. Such are the risks for making a quick buck.

According to Bow-tie Tsang, the most important reason for the government to prop up the index was to safeguard the interests of ordinary investors. Hang Seng will eventually recover from the current correction so the governmentís policies were a waste of effort and monetary reserves. Long-term investors do not really gain much benefits. As for short-term investors, they ainít ordinary investors. The government has no obligation to stick out its neck to save their asses.
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