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SOUTH CHINA MORNING POST
28 NOV 1973
Read by influential
One of the two English morning newspapers. members of the community. Circulation: 42,000.
UK link helps HK's financial growth'
Hongkong's growing importance as a financial centre, although based on a complex of factors, has benefitted from the London connection.
This view is put forward in the current issue of The Bulletin, the monthly publication of the General Chamber of Commerce.·
"Proof of this is perhaps to be found in the fact that, with the obvious exception of Tokyo, the only other region in the Far East so far to have shown a comparable degree of development as a financial centre is another country with strong UK links Singapore," the article says.
The chamber's article sets out to describe the financial links between HK and the UK, and to show how HK's financial strength relies in part on London.
Another UK link explored by the article is the role of the UK in providing finance for HK industry.
"This was facilitated by Hongkong's being a part of the overseas sterling area thus providing an incentive to channel UK funds to HK.
"This flow of funds helped in the development of our industry and the growth of our stock exchanges, as well as assisting in bringing to the Colony British banks and other institutions, whose expertise has helped in our development."
The ties between HK and UK are also evident in banking
and insurance practices and London is still probably the world's number one insurance market.
"Specifically, it is worth recalling that the insurance cover for the construction of the cross-harbour tunnel came basically from the UK and that this was secured at a time when, it is reported, no other insurance markets were willing to provide cover for such a risk," the article went on.
The problem of HK's reserves is complex and the chamber secs few feasible alternatives at the present moment to keeping our reserves in London.
"The U.S. dollar is likely to be prone to some pressure in international markets and furthermore, normally offers less attractive interest rates than sterling invested in London," the article said.
"Other currencies now standing strong оп world exchanges such as the West German mark and the Swiss franc, offer little or no yield and the governments concerned are reluctant to see their currencies used as reserve currencies, pointing to the UK as
associated with assuming this example of the problems
role.
Any
an
policy of diversification would to some extent put the HK Government into the role of exchange dealers playing the market."
J
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