The Hong Kong Stock Exchange. JEFFREY AARONSON-NETWORK ASPEN

As Handover Approaches, Predictions of an Economic Boom
Two years ago, scores of Hong Kong watchers predicted that the colony's reversion to Chinese control would spell its death as Asia's financial center, the eighth-largest stock market and busiest shipping port in the world. Less than two months from the handover, Hong Kong stocks are nearing historical highs and inflation and unemployment are down. Surveys reveal a business community with major confidence that Hong Kong can continue turning once-poor people into multimillionaires. One investment strategist predicted recently that Hong Kong is on the verge of its biggest business boom in two decades. Where is this confidence coming from? For one, promises from incoming leaders that Hong Kong's current economic team will remain intact. And the fact that the Hong Kong dollar is backed by some $64 billion in foreign reserves. China's leaders, for their part, have repeatedly said they realize it is in their best interests to give Hong Kong the space and autonomy it needs to sustain its pattern of tremendous growth. But the real question is whether they realize that politics and business go hand in hand. -- Jenifer Mattos