The Hong Kong Futures Exchange's panel of forecasters from 10 banks predicts one-month and three-month HIBOR (Hong Kong interbank offer rate) will be near current levels in mid-June in the latest edition of the HKFE's bi-monthly newsletter "HIBOR Futures Market Update," published today.

The panellists' average forecasts for the final settlement price of One-Month and Three-Month HIBOR Futures on 14 June 1999 show they expect the one-month HIBOR to be 5.01% and the three-month HIBOR to be 5.35% on that date. The forecasts for the one-month rate range from 4.88% to 5.38% and the forecasts for the three-month rate are between 5.18% and 5.75%. On 4 May 1999, cash market rates were: one-month HIBOR at 4.73% and three-month HIBOR at 5.06%.

In the latest "HIBOR Futures Market Update's" front page-article, Wing Lung Bank FX and Treasury Department Head Anthony Tsui says a further cut in the prime rate is likely. Mr. Tsui's forecast is based on several factors including high real interest rates and the recent release of gloomy economic figures. He also points out the market is bracing for more deflation news. Mr Tsui concludes his article by saying: "A lower interest rate environment is required for Hong Kong to return to its growth track."

In another article, Steven Yip, Manager, Capital Markets Trading at Dao Heng Markets explains his organisation's newly created Hong Kong Government bond index. He says the Dao Heng Government Bonds Master Index enables investors to measure the performance of Hong Kong Government bonds and to compare their returns with those on other types of investment vehicles. The index also serves as an indicator of market expectations of long-term interest rates according to Mr. Yip.

Mr. Yip's article is accompanied by a list of the index's five sub-indices and tables that list its main characteristics along with the three types of instruments that are eligible for the index.

"HIBOR Futures Market Update," published by the Economic Research Department of the Hong Kong Futures Exchange, is provided to HKFE Members. It is also available at HKFE offices free of charge to interested members of the public.

For further enquiries, please contact HKFE Corporate Communications Manager Miss Chiu Yeung on 22842 9322.