The US subprime mortgage problem has not brought any systematic impact to Hong Kong's banking sector, Financial Secretary John Tsang says. He urged shareholders to act according to their ability and be aware of fluctuating market conditions.

The Hang Seng Index closed at 20,672 points today, down 703 points or 3.29% on yesterday. Mr Tsang told reporters that the plunge was mainly due to a number of external factors, including global market conditions and the US subprime mortgage problem.

Noting local market transactions were in order, the interbank market operated smoothly and orderly, and the Hong Kong dollar exchange rate remained stable, Mr Tsang said, adding that the city's financial system is capable of handling market volatility.

He said the Government and financial institutions are monitoring the markets. The Monetary Authority has reviewed information submitted by local banks and found the US subprime mortgage problem has not brought any systematic impact to the sector.