Wall Street is not the only home of stock and securities trading that has a history dating back more than 100 years. In Asia, stock and securities trading dates back to 1866 and a stock exchange has existed in Hong Kong since 1891. In fact, Hong Kong boasted two stock exchanges until the end of World War II and in 1947 they merged to form the Hong Kong Stock Exchange, which dominated the Asian market until 1969.

The tremendous growth of Far East economies in the early 1970s saw the creation of three other Asian stock exchanges, including the Far East Exchange founded in late 1969. The four stock markets merged to become the current Stock Exchange of Hong Kong in 1986.

Asian Miracle

The rise of stock and securities trading in Asia over the past 20 years is due in part to what was known as the "Asian Miracle," which saw nearly one-half of financial capital being invested in developing nations flowing into the Pacific Rim, as the region also is known. Aside from Hong Kong, the jewel of capitalism in Asia, the economies of countries such as Thailand, South Korea, Singapore, and Indonesia also saw an infusion of foreign money.

During the 10-year period from 1985 to 1995, the Thai economy grew at a rate of 9 percent a year and South Korea ranks as the world's 11th largest economy. The booming economic climate and optimistic financial projections resulted in a big rise in stock prices and overly aggressive speculation.

Asian Crisis

As with financial speculation in the United States, the excessive investment in risky deals reached a head in mid-1997 and boom turned to bust. Based partly on unsound real estate dealings in Hong Kong and other Pacific Rim countries, the Asian market took a tumble. Instead of centering on the New York Stock Exchange, the nightly news carried reports of the slumping Hong Kong market. The terms "Hong Kong" and "stock market" became precursors of bad news.

This affected currencies, stock markets, and the prices of other assets of several South East Asian economies. In addition to real estate speculation and over investing in risky enterprises in Asia, the crisis also was triggered by events in Latin America, which never saw boom times. As a result, western investors lost confidence in Asian securities (and the developing world in general) and began to pull money out, creating a snowball effect.