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BANKING

Hong Kong: Shell-shocked

"I went into my boss's office to ask if I could have a new computer. He said 'no and, by the way, you've been made redundant'." This was the rather typical experience of a junior equity analyst at Jardine Fleming in the new Hong Kong.

His colleague, a director with the same investment bank for nine years, was preparing for a two-week holiday. She jokingly offered a reduction in salary as her contribution to cost-cutting. She was told: "Actually, your job is gone. It was a hard decision to make but there it is." Over the next few days, more jobs were axed. The pattern has been repeated at many of Hong Kong's finance houses.

While the territory's unemployment rate is still only 2.5% the Chinese year of the tiger has not got off to a roaring start. Only six months earlier, the financial services sector had been convinced that Beijing would guarantee the markets at least one full year of abundant profits to show how much better Hong Kong would fare after the British departed. But these calculations didn't take account of the Asian crisis. Now, the mood everywhere is doom and gloom as retrenchment has begun in earnest.

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