Just like the soaring yuan and the mainland stock dealing frenzy in previous months, Beijing's decision to raise the stamp duty on share trading was a hot topic of discussion last week in Hong Kong. Though I have never been a stock trader, I nonetheless found myself looking anxiously to market signals. There is a simple reason for my anxiety. Regional integration has made Hong Kong a beneficiary of mainland China's economic boom.
But, by the same token, Hong Kong's line of defence against contagion, should the bubble burst across the border, is also quickly disappearing.
In fact, the Hang Seng Index fell following the Shenzhen Composite Index's drop last week. Mainlanders and Hongkongers alike have a big stake in China's runaway stock markets.
Ms Wu, a friend, personifies the advantages and disadvantages of regional integration. A native Hongkonger, she had a change of career direction shortly after graduation. After moving to Shenzhen with her husband, Ms Wu, once a passionate poet with a degree in comparative literature, joined the 100 million or so mainland residents with brokerage accounts. Thanks to the booming A-share markets, her assets doubled in a matter of years.
People like Ms Wu are unlikely to be deterred by the recent rise in stamp duty, or any similar measure to cool the red-hot market. Her trading is underpinned by a misguided belief that the central government will do whatever it can to prevent a stock market crash. After all, how could Beijing allow itself to lose face in front of an international audience as the 2008 Olympic Games approaches?
Although the 'one country, two systems' framework secures Hong Kong as a capitalist society, with a unique political system, it does not mean that we can be forever immune to economic and social risks spilling over from the mainland. In fact, it was the booming A-share markets there that reinvigorated the otherwise stagnant financial markets here.