“Panic selling sends market crashing 8pc”, ran the headline in the South China Morning Post on Friday, December 4, 1992.

“Frenzied selling on the stock market wiped more than $110 billion off share prices yesterday in the fourth straight day of heavy losses,” the story continued. “Against a confused political background, the Hang Seng Index closed at 4,978.21, down 433.44 points, the most serious fall in its three-week [22.78pc] collapse from the November 12 record level of 6,477.11. There have been only two worse days: the 1,120-point plunge during the crash in October 1987 and 580 points the day after Chinese troops crushed the pro-democracy demonstration.”

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Behind the chaos was Beijing sabre rattling following governor Chris Patten’s maiden policy speech in October, which outlined proposals for constitutional reform and democratic elections in 1995. The move led Chinese vice-premier Zhu Rongji in mid-November to observe: “People cannot help but ask whether we still have to stick to the Joint Declaration between us.”

At the end of the month, Guo Fengmin, head of the Joint Liaison Group, complained: “Approval for the contract of the Container Terminal No 9 without consulting the Chinese side beforehand has violated the Joint Declaration.”

The last straw came when, on November 30, Beijing threatened to void business agreements straddling the 1997 handover. “Contracts, leases and agreements not approved by the Chinese side will be invalid after June 30, 1997,” ran the statement.

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Peregrine Brokerage’s John Mulcahy observed the next day: “The Beijing state­ment is illustrating to Hongkong the econo­mic cost of having democracy here.”

One merchant banker said: “We began with generic threats about democracy [...] Then we had the off-the-cuff threat to tear up the treaty, and now Beijing is focusing on tangible things the market and investors understand [...] They are threatening if Patten does not back down to put Hongkong into economic deep freeze.”

Nevertheless, one year on the Hang Seng Index had topped 9,700 points.