ABSTRACT
Forecasts on the prospects of Hong Kong’s post-1997 economy have often been based on subjective political beliefs rather than rational factual analysis. In 1995, a cover story of Fortune magazine predicted “the death of Hong Kong” after the handover (Kraar 1995). This agitated some local businessmen so much that they donated a handsome sum to establish the Better Hong Kong Foundation, the aim of which was to convince the rest of the world that Hong Kong would remain vibrant and alive. In contrast to the bearish view generally held by foreign journalists, there was also a belief that the economic integration with China would bring about unlimited profit opportunities. This sentiment dominated the market before the handover. Both the stock and the property markets reached historical peaks in mid-1997, a phenomenon that shortly afterward would set the stage for a free downfall.
