Which 1998 crisis caused the Hong Kong stock-market crash and led to a major intervention by the territory’s government?

The Asian financial crisis caused the Hong Kong stock-market crash of 1998 and prompted a major intervention by the territory’s government.

The crisis began in Thailand in 1997 after pressure on the baht, then spread across several Asian economies. Investors withdrew capital, currencies weakened, and companies and banks faced heavy foreign-currency debts. Hong Kong’s currency peg limited monetary flexibility while its stock and property markets came under intense pressure.

In August 1998, the Hong Kong government bought shares in the market to counter speculative attacks and defend financial stability. The purchases became associated with the Exchange Fund, and the government later sold the portfolio through the Tracker Fund of Hong Kong.

The crisis was not simply a stock-market event. Currency regimes, bank balance sheets, property prices, and international capital flows all interacted. The 1998 intervention remains a notable example of a government directly entering an equity market.