People used to think that Hang Seng was a surfing term. But now you’ve really got to pay attention to international markets.
—David Wyss, Chief Economist, DRI
When the World Bank, the International Monetary Fund, and the International Finance Corporation decided to hold their 1997 annual meeting in Hong Kong, the idea—which must have seemed like a good one at the time—was to celebrate the peaceful handover of Hong Kong to the mainland Chinese in an atmosphere of buoyancy and optimism.
There were, after all, any number of reasons to be bullish on Asia.
- The Asian tigers—South Korea, Thailand, Taiwan, Indonesia, Malaysia—were riding high.
- China, the next tiger, was booming to beat the band.
From Kuala Lumpur to Jakarta, from Manila to Shanghai, pricey condos were rising over rice paddies. Water buffalo were grazing peacefully beside Mercedes-Benzes and John Deere bulldozers.
As the world approached the next millennium, the smart money was betting on the dawning of a new age of dominance by the world powers girding the Pacific Rim.
And then . . .
The Happy Handover
At the stroke of midnight, June 31, 1997, all but a few disgruntled wet blankets of Hong Kong society celebrated the return of the British colony to its motherland.
On the morning of July 1, the short-term survival of the “Hong Kong way of life”—its freewheeling, free-market financial system—seemed as solid as Norman Foster’s futuristic, fortress-like Hong Kong & Shanghai Bank headquarters. ...