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Hong Kong: How I saw off the speculators, by Donald Tsang

The government's intervention to prop up the Hong Kong stock market last year was necessary, says finance minister Donald Tsang - to keep the elephants of international capital from treading on Hong Kong's small and delicate pond. Our poll finds that most of Hong Kong's financial leaders agree. Tsang speaks to Steven Irvine about who was to blame for the speculative attacks, how the state holding will be unwound and the impact of mainland Chinese equities on the island's market.

Your intervention in the Hong Kong stock market was condemned almost universally six months ago. Now, according to our poll [see box], it has widespread support. Does that surprise you?

Let's put that in context. You said universally condemned. It was a very popular move in Hong Kong. It stabilized the market almost immediately. It also reassured long-term investors that this wasn't a Wild West market.

When I travelled in Europe and the US two months after our incursion in the market, I frankly found all my central bank and finance minister colleagues concurred with my moves. But you are also right to say there were lots of foreign critics of what we did at that time. Times have changed.

You have long been a market fundamentalist. Do you now accept that markets have limits and require intervention?

I am still a market fundamentalist, but I also believe there are times that markets can fail - in extreme circumstances. The financial crisis was quite unusual - perhaps the worst Asia has seen in 50 years. So there were extreme conditions. I maintain my strong belief in the market, but I have to accept that in certain circumstances the market can fail.

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