1
461-
SECRET
8
26. 9.83
то
MP PERETZ
HMÌV
HKK
100/7
Coples to
Mr Holland
Mr Kirby
к.ч.
From me K.Y. BUTLER KA
B OF E (601:4374).
$240.
20 OCT 1983
INDEX
Mr Elston
Mr Allsopp
cc Mr Unmica
HONG KONG: THE CURRENT SITUATION
1 Youde's
telex to PM's Private Secretary gives a useful
summary of the position as it stands.
2 Some additional background may be helpful.
influence.
The pressure on
the exchange rate and the stockmarket over the past year cannot
be attributed to a single factor. In recent weeks political
uncertainty, fuelled by an intensified campaign of Chinese
propaganda and the nervousness surrounding the UK/China talks
over the future of Hong Kong, has been overwhelmingly the chief
As the Governor's telex says, the more encouraging news
that the local real economy is emerging from recession has had
virtually no impact on the markets: the Financial Secretary's mid--
term statement on the economy, on Friday 16 September, anticipated
real GDP growth of 6%, compared with the 4% forecast in the February
budget and a 2.4% outcome in 1982, with a 10% increase in the
growth contribution from exports (compared with 7% in the budget);
the exchange rate subsequently fell through HK$8.00 over the week-
end following to an, at the time, new record low of HK$8.375.
Looking further back, however, other factors played a part,
least the extremely strong US dollar (which reached a peak in
effective terms in early August, 10.1% up on its end December '82
level compared with its 15% gain against the Hong Kong dollar over
the same period). In addition, in the closing months of last year