RESTRICTED
LO
5
Hong Kong Stock Market and Exchange Rate Fluctuations
Sharp fluctuations in the Hang Seng Index are more common than
in Western stock exchanges. In 1973 the Index fell from 1700 to
little more than 200. In August of this year (before the Prime
Minister's visit) it fell from over 1300 to 937. A number
of other factors, such as the world recession, reduced growth
forecasts, declining property prices and high international
interest rates are affecting the market. Similarly, the Hong
Kong dollar has been affected by the strength of the US dollar:
the Hong Kong dollar's rate against the pound is very similar to
that at the beginning of 1982.
Why is Lord Belstead not going to Peking?
I am here to see Hong Kong and will then be going to Brunei and
to Bangkok for the Heads of Mission Meeting. While I am here it
is extremely valuable to have a round-up of Hong Kong views on
the vital question of the future. [IF PRESSED] The Prime
Minister only recently explained our position to the Chinese.
do not think it would be right for me to go to China now. I
have full confidence in our Ambassador.
I
RESTRICTED
/2.