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Interest rates


Towards the end of last year, the global credit crisis had reached critical mass in the Hong Kong fixed-income markets. For the previous six years, the Hong Kong basis spread - the spread between US dollar and Hong Kong dollar cross-currency interest rate swaps - had been trading in positive territory, albeit limited at about +10 basis points (bp).

Between November and March, it fell 70bp to -60bp before recovering to -40bp as of mid-September. While that is not as dramatic as in South Korea, whe

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