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in Hong Kong or complicate task of negotiators.
FOR USE ONLY IF PRESSED
Hong Kong Stock Market and Exchange Rate Fluctuations
8. Sharp fluctuations in Hang Seng Index more common than in
western Stock Exchanges. Of course uncertainty over Hong Kong's
future periodically affects market but there are other factors eg world recession, worldwide strength of US dollar, high international
interest rates. State of Hong Kong's economy basically very sound.
Cause for concern is political not economic.
Recent measures to stabilise the Hong Kong dollar
9. In late September and again 15 October, Hong Kong Government
took certain measures to stabilise the Hong Kong dollar. Key
element was indirect linking of Hong Kong to US dollar at a rate of Hong Kong dollars 7.80=US dollars 1, and abolition of local tax paid on Hong Kong dollar deposits. Hong Kong stock market and currency have responded well.
Falklands/Hong Kong
10. Wrong to compare. Circumstances very different. 92% of Hong Kong held by lease due to expire 1997. Furthermore, agreed common aim: maintenance of Hong Kong's stability and prosperity. This is
basis for talks. Gives grounds for confidence that satisfactory negotiated settlement can be reached.
BACKGROUND
11. Mr Atkins will be aware that in 1982 the Chinese Government began to focus more closely on the question of the future of Hong Kong. They publicly stated that they intended to 'recover' sovereignty over the whole of Hong Kong, but that they wished to maintain its prosperity and stability. Useful contacts between
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