"I like Hong Kong - it's a great city, very dynamic," said Prado, 38, who was recruited from Fidelity Investments in Tokyo six years ago. "But the fact that my kids and I have to strap on a gas mask every time we go outside is appalling."

Foul air cost Hong Kong US$300 million (HK$2.34 billion) in medical bills and lost productivity last year, a 3.8 percent increase from 1995, Hong Kong University calculates.

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With more than one day in four now marred by poor visibility, the city soon may be counting the cost of lost talent and investment, said Jack Maisano, president of the American Chamber of Commerce in Hong Kong.

"We're close to a tipping point where the negative investment impact is going to be measurable," said Maisano, 58, adding that evidence is still anecdotal. "Everybody knows someone who is leaving or has left, or is intending to leave."

Residents are not the only people affected by air quality, said Harry O'Neill, managing director in Hong Kong of Whitney Group (Asia), which specializes in recruiting financial- services executives. Potential hires from overseas are turning down job offers in Hong Kong because of health fears, he said.

"We've brought in quite a few people this year, but it's definitely a major consideration and we certainly have rejections," said O'Neill, 48, a resident of Hong Kong for 13 years. "It's not even that they want more money. People with young children seriously worry about living here."

Hong Kong's air contains almost three times more particles of soot and other pollutants than air in New York and Paris, and more than double the amount in London, according to Hong Kong University.

In Los Angeles, the most polluted US city, people breathe in 29 percent fewer such particles.

Residing in Hong Kong is worse than living at a Formula One race track, said Anthony Hedley, a doctor and professor of community medicine at the university.

"We have the worst pollution of all the socio-economic developed cities of our type in the world," he said.

The situation may be even worse because the Hong Kong government does not make public some of the most dangerous emissions, said Rob Morrison, chief executive in Hong Kong of CLSA, the Asian investment banking unit of Credit Agricole.

The Environmental Protection Department reports the amount of large, so-called respirable suspended particulates in the air rather than fine ones. In general, the smaller the particulates, the deeper they penetrate into the lungs, department reports show. Health effects range from respiratory irritation to lung- tissue damage that may lead to heart attacks, strokes and cancer.

"Hong Kong talks about being Asia's world city, but they use third- world calculation methodologies for calculating pollution," Morrison said. "If they had a fine sieve picking up the fine particulates, what would the reading be then?"

Melisse Craig is not waiting to find out. Her family compared four work options, including extending their 4-year stint in Hong Kong, before deciding to move to Singapore in July.

"We made our list of pros and cons," said Craig, 39, a homemaker from Toronto with children aged five and nine. "On the top of the cons list is the air pollution."

Some progress is being made. The city's 18,000 taxis completed a switch to cleaner liquid petroleum gas from diesel fuel in 2003. Unleaded gasoline has lightened the haze to white from brown, Maisano said.

Still, the number of hours when it was not possible to see farther than eight kilometers increased last year to 2,438, the equivalent of 102 days, from 960 hours in 1997, according to Hong Kong's meteorological office. The count excluded hours when fog, mist or rain were present.

ECA International, a London-based human resources consultant, recommends that companies pay a 10 percent hardship allowance to lure expatriates, partly because of air quality, said Lee Quane, its general manager in Hong Kong.

CLSA commissioned a report on Hong Kong's pollution in 2004 because the environment affects investment decisions, Morrison said. Foul air may depress the long-term value of residential property as well as having an impact on public health and the economy, the report found.

CLSA now is trying to persuade two senior recruits to settle in Hong Kong instead of Tokyo, which they would prefer, Morrison said.

"Pollution isn't the only issue, but it's definitely an issue," he said. "If you've got like for like situations, pollution will surely be a tipping point."

James Parsons is still making up his mind. A senior construction manager at ISG Asia, a property and design consultant, the Briton has lived in Hong Kong for five years and has a 14-week- old son.

Air pollution is among the top two or three reasons prompting him to move, said Parsons, 33, who plays field hockey and runs cross-country events.

"On some days, it's the top reason," he said. "We want a place that's a bit more healthy and open, and with cleaner air." BLOOMBERG