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The immediate impact of June 4 certainly
affected the economy. The stock market lost one
third of its value over three weeks in May and June.
Deliberate withdrawals from the Bank of China banking
group had a brief effect on liquidity, but this was
quickly dealt with in action by the Government and
the rest of the banking system. Property prices fell
by some 15-20%, back to the level of Easter last
year. Cancelled China tours badly dented tourism. So
did international television coverage of an otherwise
insignificant incident in Mong Kok, which fuelled
totally unrealistic fears of disturbances in Hong
Kong. Consumer sales fell in June; no one was in the
mood for spending.
But there was no panic. Thanks to the Hong
Kong/US dollar link, the exchange rate stayed stable.
Our newly reformed financial institutions absorbed
the strain without fficulty.
Indeed all parts of
the system held firm. That is one of the key messages
about the effect of the June tragedy on Hong Kong.
Since June Hong Kong has gone back to doing what
we do best - business. Private investment shows no
signs of slackening off. Let me give you a few
examples:
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