Pre-handover capital flight from Hong Kong is almost complete, a poll has found, concluding risks for the Hang Seng Index are low despite a pessimistic outlook for the territory's political future. Credit Lyonnais Securities Asia, which commissioned the poll from the Chinese University to determine the risks of capital flight prior to next year's handover, said the risks were low because a large portion of the respondents' money had already been shifted overseas. The poll found that 23 per cent of respondents already had more than 50 per cent of their savings in foreign currencies. It also found that 31 per cent of respondents said they were likely to maintain more than 50 per cent of their savings in Hong Kong dollars following the handover. 'The possibility of local people selling large amounts of Hong Kong dollars in the run-up to the handover has been an imponderable but significant risk for the Hang Seng Index,' Credit Lyonnais said. 'This survey takes the debate beyond guesswork and concludes the risks for the Hang Seng Index are low. 'The poll suggests that the diversification out of Hong Kong dollars is advanced reflecting a pessimistic outlook. 'It suggests that, given the current outlook, the diversification process is almost complete.' The survey found the political outlook was dim after asking respondents to predict if four factors would either worsen or improve under the new Chinese administration. It found 47 per cent of respondents believed 'fairness' in the territory would become worse, 31 per cent said 'efficiency' would worsen, 49 per cent said 'corruption' would grow worse, and 38 per cent said 'openness' would too. Credit Lyonnais said the poll was the first to combine the general population's outlook for 1997 with an assessment of the outlook for a movement of savings out of Hong Kong dollars. 'Significant further movements of saving balances out of Hong Kong dollars would have a major impact on the Hong Kong economy and equity market,' Credit Lyonnais said. 'Under the operation of the currency board, such a movement of funds, without an offsetting purchase of Hong Kong dollars, would lead to a contraction of the monetary aggregates and ensuing problems for the economy and the equity market.' Credit Lyonnais, which released its survey yesterday, did not say how many people had been polled, who was questioned or over what period the survey was conducted. Another poll, released early this month, found 70 per cent of respondents believed Hong Kong's economy would continue to grow. That survey, by students at the Chinese University of Hong Kong's Department of Journalism and Communication, polled 1,146 people.
