damaged Hong Kong's reputation as a financial centre where
If the market had capital can be moved without restriction.
been open for restricted trading, (say) half day trading, we could still have claimed the "hype" that Hong Kong is a place where you can freely move your capital; but after this episode, the boast has been lost forever."
A Belgian businessman whose firm was involved in the Hong Kong market agreed.
13.
The Singapore Ambassador in Brussels, who was previously Deputy Secretary to the Singapore Monetary Exchange, said: "I was involved in setting up the regulatory system in Singapore for our futures exchange; we considered but rejected the possibility of establishing a minimum paid up capital for the exchange, and decided instead on a self-regulatory system whereby all brokers were jointly liable in the event of default of one of their members. Our system held up following the New York Exchange melt-down; Hong Kong's system was obviously going to run into problems in my view even before the melt-down occursed because the paid up capital of the Exchange was far too low. There were bound to be defaults leading to bankruptcy of brokers in a rapid market downturn, because the Hong Kong Exchange did not regulate the brokers' activities conscientiously, and allowed them to extend their margins of credit way beyond the point whereby losses could be covered by the exchange from its capital reserves in the event of a single broker's bankruptcy.
T
Comment
14.
Against this background, I believe that a recovery in the Hang Seng index will lead to the incidents of October being forgotten by the majority of people in Europe concerned with Hong
For them, Hong Kong through trading or other relationships. Kong's future as a financial centre will depend more on the world economic situation and its implications for Hong Kong's economy and its relationship with China. The chairman of the largest Belgian bank observed that the most significant point in the whole affair was the participation of PRC in the rescue operation.
/15.