Black Monday 1987 Revisited: The Urgent Need for Proactive Financial Reform Amid Global Market Volatility

Commentary | The takeaway from Black Monday in 1987? Implement changes prior to a financial crisis hitting us

It's more than just fluctuations in the market. We need to grasp the underlying structural influences that at times surpass the authority of any individual national overseer.

In terms of American currency, eight stock markets experienced a downturn of 20-29 per cent, while three saw a decrease of 30-39 per cent. Additionally, three others, namely Hong Kong, Australia, and Singapore, saw a drop of over 40 per cent. The cumulative losses were projected to be around US$1.7 trillion, which is close to 10 per cent of the worldwide economy in 1987.

In Hong Kong, loans amounting to HK$4 billion were disbursed, with the Exchange Fund accounting for half of this sum and major banks covering the remainder. On November 16, the governor assigned the Securities Review Committee the task of examining the structure, administration, and functioning of both the exchanges and their regulatory bodies.

The study fundamentally determined that the idea of self-governance and market autonomy did not successfully evolve in Hong Kong. It's equally disheartening that the regulatory authorities responsible for monitoring the markets have relinquished their effective oversight.