HONGKONG Inc left 1992 in better shape than when it entered, after experiencing some 25 per cent earnings growth and receiving a boost from southern China's vibrant economy. It is probably the first time this has happened in five years, following the Black Monday crash in 1987 which hammered the fortunes of many listed companies. This was followed by the Tiananmen Square massacre in Beijing in 1989, which accelerated a forecast economic downturn locally, while the six-month-long Gulf crisis and war a year later placed a dead hand on global economic growth. Corporate gearing is at historically low levels with many companies, including those in the Jardine group obtaining a healthy net cash position for the first time in more than a decade. The year will probably go down as one of the most eventful in Hongkong's corporate history. While it does not equal the scale of the drama that occurred in 1983-84 when the territory see-sawed from boom to bust, 1992 was a year when US institutional investors discovered Hongkong companies. Hongkong Telecom, with its listing on the New York Stock Exchange, was recognised as the territory's first truly global stock. Now the local market vies with New York for daily share turnover supremacy. The past 12 months will also be remembered for the ''Red Chip'' ramp in which anything with China in its name appeared to get a boost from events on the pro-economic reform mainland. This trend was so much in evidence that companies began changing their names to include the word China. Between January 1991 and December 1992 the number of listed vehicles whose names begin with China grew by 350 per cent from six to 21. Hongkong Bank's takeover of Midland Bank during the first half of the year and the subsequent re-rating of the stock in the second half dominated local corporate news. The train of events leading to the takeover were set in motion after Hongkong Bank of Australia announced a major improvement in its losses in February of A$37.8 million (about HK$201.02 million), 86 per cent less than previously. This was followed by Midland revealing a profit of GBP36 million (about HK$420.48 million). An 83 per cent jump in profits at Hongkong Bank sealed the fate of both banks as they joined hands in an agreed takeover by the Hongkong partner. Hongkong Bank saw off a challenge from Lloyds Bank and in the process created one of the world's top 10 banking institutions. During the year the Hang Seng Index got its newest constituent following Hutchison Whampoa's second - and this time successful - bid to privatise Cavendish International in a $5.84 billion transaction. The inclusion of CITIC Pacific, the mainland government-listed investment vehicle, underlined the ever-strengthening links between the territory and China and Hongkong Inc's growing acceptance of locally listed mainland vehicles. Falling interest rates in the previous 12 to 18 months triggered a major bull run on the Hang Seng Index last year. Stocks not only proved to be lucrative for investors; companies found issuing new stocks equally attractive. Some of the bigger cash-raising exercises included a rights issue at Amoy Properties which sought $2.29 billion in the summer. This was quickly beaten in total dollar terms by Sun Hung Kai Properties which raised $3.39 billion in a single placement, the largest transaction of its kind at the time. However, this was surpassed by a company in Mr Li Ka-shing's stable that dominated the headlines in a similar fashion to Hongkong Bank, but for distinctly negative reasons. Ever since the issue of covered warrants on both Hutchison Whampoa and Cheung Kong during the spring of 1991 both stocks had been dogged by negative rumours. The bad news surrounding Hutchison climaxed with the shock disclosure of an interim loss of $78 million in the autumn, a definite low point in the year for Hongkong Inc. The result was effected by a paper loss on a $1.42 billion provision against the declining value of Husky Oil in Canada. Within days of the financial announcement, the broking community was hit by the biggest cash call in the history of the exchange, via a placement, from Hutchison through the issue of 300 million shares at $14.90 to raise $4.47 billion. The negative rumours continued unabated, with the group's major investment in establishing a personal communications network in Britain the focus of attention. However, after cutting back expansion plans and shedding key senior staff at Hutchison Telecom, Mr Li personally reaffirmed the company's commitment to the network. The territory's two biggest hongs also found themselves in the news for better or worse. The finalisation of Jardine Matheson's secondary listing on the Hongkong exchange in favour of a primary listing in London brought to an end another controversial period in the group's history. Its unfortunate legacy of drug running on the mainland in the 19th century surfaced again in scathing attacks from Beijing on Governor Chris Patten's plans for greater democracy in Hongkong, which have been supported by Jardines. Swire Pacific came into its own as earnings from investment properties at Cityplaza, in Taikoo Shing, and Pacific Place, in Admiralty, catapulted group earnings to $2.18 billion at the interim stage in the autumn reporting season. Cathay Pacific experienced a mixed year, however. It started out as the darling of the Asian aviation industry in the spring, having survived the Gulf War almost unscathed, but negative sentiment towards the company on forecasts of falling earnings put the stock in the shade, and it ended as one of the worst-performing stocks on the Hang Seng. The airline's shareholding structure also changed during the course of the year with the sale by Hongkong Bank of its long-held 10 per cent stake in the company for $440 million. The stake was jointly and equally taken up by new mainland partners in the form of China National Aviation Corp and China Travel Services (Holdings) Hongkong. The deal was symptomatic of the inevitable implications of the 1997 handover and the continuing capital integration of Hongkong and southern China. As 1993 dawns Hongkong Inc stands on the brink of a new stage of development. Having grown and become successful in property development along with trade in a territory where land and labour are scarce, it is set to forge a new expansion path into China where land and people are bountiful. Not all the companies in the Hongkong Inc fold will survive this transition, but those that do will become huge property development and investment companies on a global scale as they extend their reach into the mainland where the demands to develop infrastructure along with housing appear endless.