Registry No.
CURITY CLASSIFICATION
DRAFT
To:-
SECRET
Type 1 +
From
D F MILTON
Top Secret.
Secret.
Confidential.
Restricted.
Unclassified.
IVACY MARKING
Mr Cortazzi
PS/Lord Goronwy-koberts
Telephone No. Ext.
Department
DSR11
......................................In Confidence
opies:
FLAG A
S/Mr Rowlands
r Smith
HONG KONG: INVESTMENT IN SOUTH AFRICAN STOCKS
1.
Lord Goronwy-Roberts agreed to the recommendation in Mr Stewart's submission of 16 February that the Governor of Hong Kong's attention should be drawn to his Government's SENIOR ECONOMIC holdings in South African stocks and the mnsitivity with ADVISER
which such investments might be regarded in the UK. wrote to the Governor accordingly on 22 February.
r Maud FRD
r Reid CSAD B r Lipsey
K
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Mr Murray
2. The Governor's reply is contained in his letter of 15 March. He says that the Hong Kong Government made one direct
investment in South African stocks in 1973 and that the Crown
FROM THIS YEAR Agents have purchased the remaining stocks. All them overseas
are Gbe
investments concealed in the accounts of the Exchange Fund, which are not published, and the Governor takes the view that, since the Hong Kong Government have not previously been criticised, it is unlikely that they will be in future. He advised that, if the Hong Kong Government were to sell their South African stocks at once, they would make a loss on some items and break about even on others, an outcome which would attract unfavourable comment from the Director of Audit and the Exchange Fund Advisory Committee. The Hong Kong Government will not be expanding their portfolio of South African stocks since South Africa has been removed from the list of designated countries in which investments are
made.
3. I think that the situation revealed by the Governor's letter is reasonably satisfactory. If the Hong Kong Government's investments in South African stocks were to come to public notice - and I am not as sanguine as the
/ Governor
SECRET
VERZAN ERE PARAZ
SA
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