Personal Finance: Thanks, Woody

Don't say you weren't warned. If Hong Kong looked rocky last weekend, it looks positively white knuckle now. Sentiment has taken a hammering and the real worry is whether the problems in Hong Kong will create a ripple that will wash across to the far side of the Pacific and cause more upsets in America.

Wall Street had more than a tinge of unease sweeping around its trading floors as the slide in Hong Kong gathered momentum. It took Alan Greenspan to restore calm.The turnround in share values was dramatic, reinforcing the view that professional sentiment on the street has been bearish for so long that there must be a pile of cash out there waiting to take advantage of any setback.

By the way, Alan Greenspan's record is impressive, but am I the only one who thinks he looks like Woody Allen? When you are looking for comfort during the red-tinged days of investor panic, somehow a degree of gravitas is required. It is worth remembering that his steadying words this time were delivered when the Dow Jones index was still significantly higher than at the time he made his "irrational exuberance" statement.

A lot of water has flowed under the bridge since that earlier utterance and it is true that there seems every reason to believe the US economy is on pretty firm ground.

Mr Greenspan's major achievement has been to restore the strength of the US banking system. Yet it is in the area of banking and finance that the biggest danger lies out in the Pacific Rim. The rise in interest rates introduced by the Hong Kong Monetary Authority to help protect the dollar peg cannot have helped the property market. The extent of borrowing for investment in the stock market and for property purchases in the area is difficult to gauge but sustained falls in the value of these financial assets could put quite a burden on the lenders.

On balance I am optimistic that these problems will prove to be locally containable, but it is no more than prudent to treat South-east Asia as a cheap place for holidays and little else. It is by no means certain that the authorities in Hong Kong will hold the line in maintaining the value of the currency, although this would probably help both property and the stock market as the need for higher interest rates would recede.

Local dynamics remain in place, giving this region the edge in investment attraction. But growth will be slower for the time being. Those who want to make money without experiencing severe heart palpitations should exercise a little patience for now.

Brian Tora is chairman of the Greig Middleton investment strategy committee and can be contacted on 0171-655 4000.