What future for us ants in elephant territory?

Here is a question for you. How many ant colonies would willingly invite a herd of elephants to stomp on their anthill? The answer is one - Hong Kong's.

The futures market was a great idea when it was set up in the early 1980s. It offered investors the opportunity to hedge risk on the stock market with offsetting futures positions, and it promised to turn Hong Kong into a more sophisticated financial marketplace, ensuring it primacy as an Asian financial centre.

But, as they say, the road to hell is paved with good intentions. In 1987, the futures exchange did more to wreck than to create Hong Kong's financial attractions when negligence in maintaining the most obvious controls over it brought a collapse that saw a four-day closure of the stock exchange, severely shaking the confidence of investors.

And now a good deal of volatility from which Hong Kong suffers can be attributed to the games played on the futures. The thin weight distribution of the Hang Seng Index plus the free and liquid nature of the futures have made it a target for foreigners looking for easy markets to move.

What was intended as a hedging tool has become a tool of manipulation. It has made Hong Kong's financial markets among the region's most volatile although its financial underpinnings are much stronger than those of other Asian countries.

But this is what you must expect when you declare access to your tiny patch completely open to all comers and the elephants take you at your word.

The size of the American players in the futures market has become so great, what with their markets being up while Asia's are down, that they have come to rule it. This would be all very well if they exercised a benevolent rule which took Hong Kong's greater interests at heart but they do not. They are in it to enrich themselves and this is where their purpose begins and ends.