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| Tsang: greater transparency among governments should be matched by the hedge funds |
Hong Kong withstood handover from Britain to the UK with scarcely a tremor, withstood the onset of the Asian financial crisis in 1997 far better than its neighbours, has shrugged off plunging property prices despite a disproportionate amount of its wealth and economic activity being tied to property, and today remains a world-class city despite pollution from mainland China that, were it any other regional centre, might be sufficient to dissuade companies and employees from locating to it. Two things might destroy Hong Kong: an increase in the tax rate or a collapse of the Hong Kong dollar. As an article of faith Hong Kong has maintained full convertibility of its currency while pegging the exchange rate to the dollar.
Tsang acted in extraordinary circumstances when he intervened in the equity market. A popular story in Hong Kong has it that his office had received intelligence that speculators were spreading rumours designed to cause runs on the local banks. There was a sense that real civil disorder might follow.
Since the crisis, the Hong Kong stock market has appreciated massively making Tsang look like one of the smartest investors in Asia, a label that makes him squirm.