'CORRECT me if I'm wrong' has been Wall Street's cry for weeks. Last week it was wrong, and corrected, and investors quickly said goodbye to their romance with the United States stock market. For weeks we have been saying it had to happen; finally it did.
The Hong Kong exchange, roped as tightly as ever to the US market, was slammed down into the crevasse when Wall Street slipped - and several per cent was lopped off the index in one day.
The catalyst for New York's fall was software firm Microsoft's warning about earnings, and chip-maker Intel's below expectations earnings report.
Both Intel and Microsoft this year had been fund managers' dream shares and when a dark cloud appeared on the horizon fund managers dumped shares in an effort to lock in their own bonuses and profits for fund investors.
While Intel's earnings per share or sales of Microsoft's Windows 95 programme are not expected to affect the local economy, investors behave like sheep worldwide, and Wall Street often leads the flock.
The silver lining in this is that once international money recognises that the party is over in the US and corporate growth really has slowed, funds will flow to overseas markets. Hong Kong, notwithstanding its poor current fundamentals, will benefit indiscriminately from this.
On the other hand there are ominous signs. The US, Taiwan and China seem to be outdoing each other in diplomatic insensitivity. Taiwan, with the help of some US Republicans, seems keen to build up the Taiwanese independence movement and this has started blood boiling on the mainland.
