But did he need to do it?
To hear Financial Secretary Donald Tsang Yam-kuen tell the story now, the stock market could have collapsed and interest rates shot up to 50 per cent had he not intervened to stop predatory manipulators in August 1998 with HK$120 billion of stock purchases.
He anguished over the decision, he says, but his only other choices were to impose controls on foreign exchange flows or abandon the peg to the US dollar.
It was a successful campaign. The intervention marked the bottom of the Hang Seng Index after the financial crisis in 1997 and he doubled his money in less than two years, making him the most successful institutional investor in our history although he always protests that he did not do it to make money. Thanks anyway, sir.
In fact you could argue that he restored financial confidence in the entire region. That buying campaign marked the bottom in stock markets for Asia overall. Revival required a spark of official confidence somewhere and he provided it. But then look at the chart of the index since August 13, 1998, when it hit its very bottom.
The first tiny blip upwards on the left is all that it rose during the intervention. Do we really think that intervention provided the fuel the rest of the way up from 7,800 to a peak of 18,292 in March 2000?
