Hong Kong shares -- 2 (Hong Kong has smaller room for rate cuts: G.K. Goh)

At 11:11 am, the Hang Seng Index was down 270.89 points at 12,952.97 on turnover of 2.70 bln hkd, while the Hang Seng March contract last traded at 12,931 points.	    Chu Siu Wah, head of research with G.K. Goh, said there is smaller room for Hong Kong to cut interest rates than the U.S.	    Chu said the recent exchange rate and interbank rates were pointing to capital outflows from the Hong Kong market.	    "We are seeing capital outflows and that is serious. Even if the U.S. Federal Reserve had cut interest rates by 75 basis points last night, it will be possible for Hong Kong to cut just 50 basis points (on Friday)," Chu said.	    "I do not think Hong Kong has as much room as the U.S. to reduce interest rates," Chu said.	    Meanwhile, Chu said he was not surprised with the Fed's latest 50 basis point interest rate cuts which were in line with his expectations.	    "What the Fed does is to keep inflation (under control) and maintain healthy GDP growth. Fluctuations of the equity market are not the Fed's consideration," Chu said.	    "Alan Greenspan was doing the right thing to cut interest rates by 50 basis points overnight, although many equity investors wanted more," Chu said.	    Chu said it is hard to forecast how many basis points the Fed will reduce for the rest of this year.	    "Economic indicators (in the U.S.) have been mixed. Not until the first quarter GDP figures comes out, will we have a clear direction," Chu said.	    HSBC fell 1.00 to 91.75 and Hang Seng Bank shed 1.75 to 88.00.	    Bank of East Asia shed 0.20 to 17.90, while Dao Heng Bank was unchanged 1t 37.80.

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