As the financial crisis swept across East Asia in 1997, the Hong Kong government's first response was to arrogantly assert that it was much better positioned than others to weather the storm. Donald Tsang Yam-kuen, as financial secretary, claimed the crisis might well be over by the end of the year. However, as 1997 morphed into 1998, things got a lot worse in Hong Kong. The economy slammed into reverse, property prices tumbled by around 40 per cent and there was evidence that vulture-like investors were gathering for an attack on the Hong Kong dollar. Officials persuaded themselves that this was turning into a double play that involved both the currency and equity market. Joseph Yam Chi-kwong, then chief executive of the Hong Kong Monetary Authority, dramatically stated that he was facing a 'severe conspiracy'. At the end of 1997, with the Hong Kong dollar under pressure, the authorities engineered a scheme to put overnight interest rates up to a staggering 300 per cent. But the pressure did not ease and the government worked itself into a frenzy, culminating in an audacious raid on the stock market on August 28, when some HK$118 billion of public money was used to buy up blue chip stocks. The drama of this response caught global attention, but a great deal of it was not favourable. The economist Milton Friedman, one of the biggest cheerleaders for the Hong Kong economic system, declared the stock market raid to be 'insane'. Others, including Alan Greenspan, the head of the US Federal Reserve, were uncharacteristically frank in castigating the move. However, financier and philanthropist George Soros said in 2001 that the authorities did 'a very good job when they intervened to arrest the collapse of the Hong Kong market' and that the subsequent damage to the government's laissez-faire reputation was worth it. We now know that if the government had done absolutely nothing, many of the speculators in the Hong Kong market would have been forced out within a week or so because they were dangerously overexposed in the Russian market and desperately needed funds, sloshing around in Hong Kong, to cover their positions. Nevertheless, the government raid was claimed to be a great success and when some, but not all, of the shares acquired in 1998 were finally sold with the creation of the Tracker Fund, there was much crowing over how much profit had been made. The jury is still out on whether this was the best way to tackle the crisis. It is interesting to compare what happened in Hong Kong with normally interventionist Singapore. Like Hong Kong, Singapore went into the crisis with a much stronger economic and fiscal position than its neighbours, and while those countries were busy seeking ways of keeping money in their countries, the Singapore government relaxed controls and took some interesting initiatives to open up the economy. At the end of the day Singapore emerged from the ravages of 1998 with considerable strength, and so did Hong Kong. 19.5% The Hang Seng Index tumbled this much on October 27-28, 1997, as the city grappled with the outbreak of the Asian financial crisis