2DCRET
2
Hong Kong underwent a property and banking crisis which was in
relatively small part a result of the loss of confidence arising
from concerns about the political future of Hong Kong. The
crisis which centred upon two major property companies, EDA
and Carrian, around a dozen deposit-taking companies (the so called
DTCS) and at least one local bank, has contributed to the mood of
uncertainty. Earlier in the year the property crisis appeared
lump in
to have been contained, but the combination of continued slu
the local property market, the complicated financial structure
and activities of Carrion potentially the colonys largest ever
-
t
bankruptcy and the damaging effects on the highly geared property sector of the recent interest rate increases, make this a very
worrying joker in the pack.
A few (smallish) DTC, were forced to close early this year and one
or two significant companies may still go, as a result of their
involvement with Carrian, but no banking failures occurred
Local Garda s
←
in
clearers, the Hong Kong Bank
part because of the support of
or Chartered (the latter a subsidiary of the British owned Standard
Chartered). In the last few days, however, there have been reports
of heavy demands on the local banks to which the Governor himself
an local depositons wught to withdraw badanids or convent them with is dollars, refers -
One bank at least, Sun Hungkai, is said to have issued a statement reassuring depositors of its
continued viability. This pressure on liquidity, together with
the potential losses to banks running open positions switched in to
Hong Kong dollars (a common feature of local balance sheets in the
past), constitutes a
significant strain on the banking system.
The very sharp falls in the exchange rate over the weekend
followed the fourth round of talks in Peking, on 22 and 23 September,
1
4
No comments yet.
Private notes are available after approval.