ABSTRACT
The onset of the Asian Financial Crisis (AFC) in 1997 presented a huge challenge for the whole region, including both Guangdong and Hong Kong. There was simultaneously a serious possibility that the Hong Kong financial system might be unable to cope with the stresses generated by the AFC. The local non-bank financial institutions within Guangdong were widely discovered to be insolvent. The Thai devaluation set in motion the chain of events that became known as the AFC, as ‘contagion’ spread from one country in the region to another. The international speculators, such as the Soros Quantum Fund and Julian Robertson’s ‘Tiger Fund,’ spotted the underlying fragility of East Asian financial systems, and played a major role in precipitating the crisis that erupted in Thailand in July 1997. The size of the foreign currency trades that global financial institutions commanded was vast in comparison to the size of the economies of East and southeast Asia.
