Crash of 1973 worse, says Arculli
The 'great crash' of 2008? Not according to Hong Kong Exchanges and Clearing chairman Ronald Arculli, who said yesterday that he was not too worried about the economy and that the crash in 1973 was even worse.
'In 1973, the Hang Seng Index dropped from 1,700 points to 1,200 ... and finally plunged to 150 points. We will be able to overcome this, as we have already gone through bad times before,' he said.
But Mr Arculli said other sectors, including retailing, could suffer with the banks tightening access to loans.
The crash 35 years ago was the first serious market disturbance in living memory.
But the city was hit again on October 19, 1987, when the Hang Seng Index fell a then-record 420.81 points, from 3,783.20 points to 3,362.39. The market was shut for four days. When it reopened on October 26, the index fell 1,120.7 points, or 33 per cent, in a single day.
It continued to fall after that, hitting a low of 1,876.18 on December 7.
Ten years later, the Asian financial crisis dragged stocks down again. The index fell from a peak of 16,673.27 on August 7, 1997, to 6,560.15 on August 13, 1998.
By mid-August, unemployment had risen to 4.8 per cent; it peaked at 6.2 per cent the following year. Gross domestic product contracted by 5.1 per cent and retail sales fell 17 per cent. The residential property market slumped. By the end of 1998, prices had fallen 44 per cent from their peak in October 1997.
The consumer price index began falling. Five years of deflation followed.
Hong Kong faced another severe challenge in 2003, when it was hit by severe acute respiratory syndrome. Hotels emptied and the airport was all but deserted amid panic over the cause and spread of Sars, which claimed 299 lives in the city.
The Hang Seng Index fell to a low of 8,409.01 on April 25. Unemployment peaked at 8.7 per cent between May and July.
The composite CPI fell 4 per cent in July 2003, the biggest drop in three years.
After recovering from the economic downturn caused by Sars, Hong Kong enjoyed steady growth up to 2007, when the economy expanded by 6.3 per cent, the most since 1997. The Hang Seng Index hit a record 31,638.22 on October 30.
