Day Two: Dow Down Again

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NEW YORK: It's day two of the Wall Street selloff, but this time there's a different reason to be bearish: Bad news from the tech sector. Companies supplying semiconductor makers fell out of favor, sending the Nasdaq down 20.33 points to 1,650.92, while the Dow fell 132.36 to 7,715.41. Still, as any good TV analyst will tell, one broker's sell off is another broker's buying opportunity. That theory was confirmed today as Hong Kong's Heng Seng index recovered from the Thursday selloff, making a tremendous comeback of nearly 280 points.

All of which leaves investors wondering what on earth went wrong yesterday? As the dust settles, the main culprit in Thursday's Hong Kong sell-off has been identified as the raising of the market's interbank interest rates to a nose-bleedingly high 300 percent (when they returned to a more sensible 10 percent Friday, stocks also went back to normal).

The wacky 300 percent rate hike was part of the former British colony's defense of its currency under attack from speculators and slipping from its U.S. dollar peg. "We are trying to beat off speculative attacks on the dollar," said the Beijing-appointed chief executive Tung Chee-hwa. "We will succeed in that."

A warning, then, that this could happen all over again. As Tsutomu Asaoka of Japan's Matsui Securities says: "It might be a short-lived Hong Kong flu, but it's too early to talk about the viability of the stock market."