Which 1997 financial crisis caused the Hong Kong stock market to fall sharply after the territory’s handover?

The Asian financial crisis caused Hong Kong’s stock market to fall sharply after the territory’s 1997 handover.

Hong Kong was transferred from British to Chinese sovereignty on July 1, 1997. Later that year, regional currency turmoil and investor fear spread into Hong Kong, where the Hang Seng Index experienced severe volatility. The territory maintained its currency peg to the U.S. dollar, a policy that came under intense pressure.

In October 1997, the Hong Kong Monetary Authority raised interest rates sharply to defend the peg. Higher rates and regional panic intensified the equity-market decline, although the currency link survived.

The Hong Kong episode formed part of a broader crisis involving Thailand, Indonesia, South Korea, Malaysia, and other economies. It is distinct from the 2008 global financial crisis and from Hong Kong’s later market corrections.