THE markets may be trembling up and down the coast of China, as Shanghai crumbles and Hong Kong quivers, but for one Briton it is boom time.

Crisis means opportunity for David Webb, a 41-year-old investment banker turned analyst who has flourished by saying the unsayable for almost a decade since Britain handed Hong Kong back to China.

At the time of the handover in 1997 there were worries in boardrooms and bars that China would stifle the free exchange of information that had made Hong Kong a thriving trade centre since the 19th century.

Nobody reading Webb’s website – and it is, indeed, called webb-site.com – could worry about that any more.

He launched it as “an independent, nonprofit commentary on Hong Kong’s corporate and economic governance” in 1998 and has been acquiring influential enemies ever since.

Here is a sample of Webb on the shenanigans at the China National Offshore Oil Corporation (CNOOC), a powerful mainland Chinese company that probably never considered that by listing in Hong Kong it would be exposed to this kind of scathing commentary: “The independent nonexecutive directors have done a poor job . . . the statement

in the CNOOC circular is false . . . you should vote against A3 (v) authorising the directors to set their own remuneration for the same reason that they don’t hand out blank cheques to their employees and invite them to set their own pay.”

Webb is also a private investor – “I’ve got a lot of money invested here” – and sometimes buys shares in companies so as to keep an eye on their accounts.

He hammers away at the same causes: the rights of minority shareholders, the wrongs of corporate cronyism and the inefficiencies of the state.

To embarrass big companies like CNOOC, ultimately controlled by the state council in Beijing, might count as quixotic. But many here would see taking on the wealthiest dynasty in Hong Kong, headed by the tycoon Li Ka-shing, as plain foolhardy.

That did not deter Webb, who believes that one of his finest moments was his lacerating analysis of the property and telecoms deals of Richard Li, the tycoon’s younger son.

“The government allocated the last prime site on Hong Kong island to the son of the richest man in Hong Kong without a tender – and Tung [Chee-hwa, then chief executive of Hong Kong] was very close to Li Ka-shing,” said Webb.

“Then Richard had a telecoms company, PCCW, whose equity bubble blew up to HK$140, now it’s HK$5. Shareholders really have lost 90% of their money. I called the top of that,” said Webb, with some satisfaction.

But here is the good part. Far from being ostracised or threatened, Webb has won a following among independent investors and financial institutions. He also has a band of discreet supporters inside the government.

Having started as a gadfly, he now sits on the takeover panel and has been elected as a director of the stock exchange – “there are 13 directors but only six are elected and seven are appointed by the government”, he said disapprovingly.

The Hong Kong establishment was shrewd in coopting its smartest critics even when colonial governors exercised autocratic power. As it becomes a global financial centre, its own interests require a forum for the rigorous, if sometimes unpalatable, assessment of risk or reward.

Sipping a coffee, surrounded by workers on their afternoon break in the Citibank Plaza, Webb outlined how this year’s bubble in the Chinese stock markets could set off a chain of consequences for global investors.

“Undoubtedly there is going to be a huge correction at some point. It builds up like snow on a mountain,” he said.

“Then Chinese stocks in Hong Kong will be hit. It’ll be not just the dual-listed shares but businesses that depended on explosive growth, like luxury and retail. We’ve had a bubble before but this time more people and more money are involved. There will certainly be a lot of unhappy people in the market.”

On Friday, the Shanghai composite index closed down 2.6% on the day after a week when government intervention subdued a surging bull market. More than 100m Chinese have opened brokerage accounts, 27m this year alone.

Chinese financial journalists have found plenty of anecdotal evidence that banks have breached their normal rules to extend loans for speculation in shares. Such stories are rife in Shanghai, where HSBC holds a stake in the locally based Bank of Communications.

“Bad debts may mount,” said Webb. “The market bubble accelerates first, then you could have a banking crisis.”

Now that some of the biggest Chinese banks have listed in Hong Kong or New York, a financial crisis potentially means much more than it did when the government restructured the banks at a cost of more than £140 billion in the 1990s.

Today, global institutions hold substantial stakes in some of the banks. Goldman Sachs, for example, locked in for three years when it committed $2.6 billion (£1.3 billion) to a 7% stake in the Industrial and Commercial Bank of China.

Webb speculates that in the event of a crisis the authorities could, in effect, renationalise the banks or call on foreign investors to inject more capital.

Investment bankers, lawyers and accountants, who have reaped fat fees from the gigantic flotations of Chinese banks, are all watching like hawks.

One certainty is that any such decision will not be taken transparently; it will be dictated by politics in Beijing.

That brings Webb round to his persistent advocacy for Hong Kong to boost its standards to prepare for the day when China’s capital markets, for all their volatility, emerge as rivals.

He is involved in government consultations on a new competition law, which he believes is needed to break the grip of local cartels, some owned by famous British names. He argues for better company law and a better accounting law.

“There has not been a lot of improvement in the stock exchange,” he said. “Reports are slow. Minority shareholders get information late compared with insiders. There’s no legal backing for the listings rules. There has not been a single criminal prosecution for insider trading.”

Nonetheless, Hong Kong continues to get many things right in the spirit of the laissez-faire economics instituted decades ago by the colony’s financial secretary, the late Sir John Cow-perthwaite. Income tax is almost flat at an average 15%. There are no capital gains or dividend taxes. Estate duty, or inheritance tax, was recently abolished.

That is not the only British legacy that matters, 10 years after the flag was hauled down on June 30, 1997.

“One of the great advantages of Hong Kong relative to its regional rivals is freedom of speech,” said Webb. “If I had been saying these things about Singapore companies I would have been sued into oblivion and if I had been doing it in Jakarta or Manila or Bangkok, I’d be dead.”

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