Financial Systems, Markets and Instruments

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EF3333
Financial Systems, Markets and Instruments
Mini-project 1

Group List

Fung Chin Wang 52598931
Liu Wai Ho 52592350
Lin Yuen 52593960
Chan Kwok Leung 52610309
Group List

Fung Chin Wang 52598931
Liu Wai Ho 52592350
Lin Yuen 52593960
Chan Kwok Leung 52610309

Content
The Asian financial crisis in 1997……………………………………………………..…….……P.3

2008 financial Tsunami…………………………………………………………………..……………P.4

The Hong Kong Stock market ………………………………………………………………………P.7

The Hong Kong property market………………………………………………………….………P.10 Conclusion ………………………………………………………………………….………….……………P.15

Interest rate

The interest rate is the consideration of the borrower to pay the loan, the lender for the return.

Consumers will prefer the present to make consumption more than future consumption opportunities for the lenders to lend funds to give up the existing consumer. The interest rates are consumer lender delay compensation, the borrower early consumption costs.

Under the linked exchange rate system, the Hong Kong interest rate movements ought to par with the United States.

In 1994, economist Paul Krugman published an article criticizing the "Asian economic miracle" argument. He believes that economic growth in East Asia is a long time to increase capital investment structure. However, the growth of total factor productivity is actually minimal. Krugman believes that only the total factor productivity growth can bring long-term prosperity, rather than capital investment. Krugman himself admitted that he did not foresee the crisis, but also did not anticipate the depth.

The collapse of the reasons there is a dispute. Thailand's economy due to the "hot money" into a bubble; bubble expansion process in need of money. The same situation occurred in Malaysia and Indonesia, the situation in these two places is more complicated because of the existence of crony capitalism. The mid-1990s, Thailand, Indonesia and South Korea in the private sector has a huge current account deficit, fixed rates to maintain encourages outward borrowers and lead to financial and industrial enterprises to bear the additional foreign exchange risk.

The mid-1990s, a series of events has an impact on the economic environment: the devaluation of the Yuan and the yen, rising U.S. interest rates and thus a stronger U.S. dollar, the semiconductor prices of dips, these affect their economic growth. When the U.S. economy recover from the recession in the early 1990s, Greenspan's Federal Reserve start raising interest rates to fight inflation. Compared to South Asia has been higher short-term interest rates to attract hot money, which makes the United States to become more attractive investment destination than other Asian countries, which inflated the value of the dollar. For monetary anchor dollar South Asian countries, the higher dollar makes their exports more expensive, and loss of international competitiveness. Meanwhile, in the spring of 1996, the South Asian country's export growth is expected to significantly decline, exacerbated by their current account.

The Asian financial crisis in 1997

Hong Kong implement linked exchange rate system since October 17, 1983. Hong Kong's linked exchange rate system is a fixed exchange rate regime. Under the linked exchange rate system, the Hong Kong dollar peg to HK $ 7.80 to U.S. $ 1 exchange rate with the U.S. dollar. Under the linked exchange rate system, the exchange rate stability, primarily through Hong Kong's three note-issuing banks (Bank of China, Hong Kong and Shanghai Banking Corporation, Standard Chartered Bank) arbitrage activities reached a self-regulating mechanism, to be called.

From 1997 to 1998 for the emerging countries in Asia is the most painful year. This year, most of the time, the eyes of the world invest in the emerging markets in Asia. George. Soros and his operation of the Quantum Fund, led by international speculators from May against the baht attack and opened a...
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