BEFORE the unification of the current exchange in 1986, Hong Kong experienced booms and busts - notably in the early 1970s. In 1972, the now almost traditional post mid-Autumn festival boom got under way with the Hang Seng Index rising by more than 100 points in one day. As the index then measured only a little over 1,000, 100 points was significant. By contrast, the 1973 Middle East war shook the territory. 'Hong Kong suffers biggest dip in world stock markets,' reported the financial press. The value of shares had crashed 25 per cent in less than two months, wiping $1.2 billion off the value of the market. It did not end there. Less than a week later, millions more had been wiped out as the Hang Seng Index dropped 27 points to 423. This was the exchange's darkest hour ahead of the unification of the territory's four exchanges in 1986. One market or four, it was all the same as October 19, 1987 - or Black Monday - hit the world's equities. While every other major market in the world gritted its teeth and held firm against the storm of selling, the Hong Kong stock exchange outraged much of the investing community by announcing it was shutting its doors for an unprecedented four days. 'Hong Kong's credibility as an international financial centre was severely dented yesterday with its decision to close the stock market for four days,' thundered a commentator. The controversial closure failed to halt plunging stock values. When trading re-started after the four-day break and the weekend, the crash had only been postponed. The Hang Seng Index plunged 1,120 points to 2,242. The Hong Kong market was never to be the same again. Stock exchange chairman Ronald Li was eventually disgraced, and the authorities decided it was time to tackle the fact that the exchange had become a gambling den. The next big blow to Hong Kong share prices did not come from its international weaknesses, but from the tragedy of Tiananmen Square. On June 5, 1989, the day after the shootings, the Hang Seng Index plunged 22 per cent as frightened investors rushed to dump shares. It was a short-lived slump. As confidence returned, the Hang Seng Index began to climb again. Senior Chinese leader Deng Xiaoping's famous visit to Shenzhen in January 1992 cemented the view that, whatever happened in politics, the economics of the mainland were bullish for local share prices. The rest of the world got the message in September 1993 when US analyst Barton Biggs reported on the opportunities, sparking a flood of international buying for Hong Kong stocks, which sent the Hang Seng Index surging 1,480 points - close to 20 per cent - in two weeks. What goes up comes down. A bust came in 1994. The East Coast of the United States was again the source of a slump on Hong Kong stocks. Unlike 1987 when lightning struck Wall Street, in February 1994 it was the Federal Reserve in Washington that stirred one of the biggest stock and bond collapses in history. An apparently innocuous 25-basis point rise in the Fed funds rate tipped stock and bond markets the world over into decline. In 1994, the Hong Kong stock market went into slump losing more than 40 per cent at times as investors the world over lost confidence in equities and high risk investments and sought safer investments.