WORLD markets continued to hog the limelight last week, and we can expect much more volatility ahead as investors' already frayed nerves take another working over. While Asia's woes have given the bears rich fodder over the past year, negative sentiment is increasingly emanating from the more resilient markets of the United States and Europe as the impact of the region's downturn takes a whack at the bottom lines of companies there. Increasingly, the West is casting a few sideways glances to the East, and in particular at the continued lack of direction from Tokyo and the rumbling uncertainty over the stability of the yuan. Little wonder then that those sharks of globalisation, the international currency speculators, are circling our tiny sanctuary once again. Even less wonder that our own shark-killer, Donald Tsang Yam-kuen, should don his wetsuit and take the plunge - speaking before leaving for a three-day visit to Turkey, Mr Tsang once more dared the bad boys to do their there worst. And depending on your point of view, you either cheered or sneered. As things stand at the moment, Mr Tsang can no doubt hold out. What it really boils down to is whether you think it is all worthwhile. Would you use your last glass of water to douse a fire? Well, it all depends on what you stand to lose in the blaze and how long it will take to refill the glass. The real question for Hong Kong is how long will it take before our cups runneth over once more. There is no doubt that the Hong Kong dollar is too expensive. But will it be too expensive six months, or one year down the road? That largely depends on whether the problems Hong Kong and the rest of Asia are facing now are merely short-term blips on the horizon, or whether they are symptomatic of a deeper malaise. Chief Executive Tung Chee-hwa yesterday pinned the hopes for recovery, if not outright rebirth, on the host of small and medium-sized enterprises jostling for survival. 'Hong Kong's economy is experiencing painful adjustment. But after this adjustment, the small and medium enterprises will play the role of an engine in our economic revival,' he said. Great news. Further, Mr Tung pledged to build an environment conducive to the healthy operation of such smaller companies. Bravo! But how is he going to do this? By creating more liquidity in the market. By encouraging banks to dole out capital. But it is difficult to see how borrowing expensive money to pay for expensive labour in expensive premises and so produce expensive goods and services is really going to hone Hong Kong's competitive edge.