Hong Kong experienced some of the most dramatic action of all the financial markets in east Asia in 1997 and 1998, with short-term market interest rates rising on occasion to several hundred per cent, the stock market falling 60 per cent, the market subject to highly aggressive trading tactics by a range of participants, and talk of attacks on the currency peg, all culminating in an unprecedented $15 billion intervention by the authorities in the stock market in August 1998.

The gyrations in Hong Kong's financial markets were the consequence of a series of aggressive speculative attacks in late 1997 and 1998. These attacks appear to have been much more than simply market participants positioning to take advantage of expected changes in asset prices at a time of domestic and regional uncertainty. Rather, in a number of instances it appears that speculators – especially highly leveraged institutions, and some macro hedge funds in particular – had large positions and tried to force prices in equity, interest-rate and exchangerate markets to move in a direction that put their positions in profit, but which also tended to force prices in these markets to overshoot. In some instances, highly leveraged players appear to have tried to take advantage of the negative correlation that developed between interest rates and stock prices to engineer stock-price falls by pushing on interest-rate markets.