External Factors in a Country Assignment Example | Topics and Well Written Essays - 2000 words

External Factors in a Country - Assignment Example It was clearly evident that the atmosphere of political turbulence affected the stock markets badly. Adding on the fuel, the Chinese and the British relations deteriorated further putting the markets in jeopardy. At that point of time, the market was also jittery about the rising US interest rates and moreover, the standoff that prevailed over the democratic reforms between the Hong Kong and China sent made the traders feel a little insecure. Hang Seng received a lot of foreign money in the period of 1992-1993 from different investors all over the world, which could sustain the market, at least to some extent. However, many traders argued that the investors had made huge investments eyeing the economic boom in China and not Hong Kong itself. They felt that the investors were looking to invest in China via the shares of the blue-chip companies in Hong Kong. To a large extent, their speculation seems right at the moment, because, at that time when there was absolute political instabili ty in the Hong Kong market, no investor would’ve come forward to invest in Hong Kong. Hong Kong’s governor had proposed to go ahead with the electoral reforms put forward by the British government had been straight away by China and had, in fact, enraged them to a great extent, thus signaling the break-up. Under such circumstances, it is too naive for one to expect the stock market to be functioning well.