BEEAGK
CONFIDENTIAL
LORD GLENARTHUR'S LUNCH WITH THE HONG KONG AND SHANGHAI BANKING
CORPORATION ADVISORY COMMITTEE: 12 NOVEMBER
TALKING POINTS
1.
'
Hong Kong Stock Exchange. Hang Seng Index stands at about 2,000
(compared with a high point of 3,900). This fall of almost 50% is rather more than the world average. A topic of current interest is
the share issue by the Hong Kong tycoon, Li Kashing, which has had a
deadening effect on share prices. It would be interesting to have hosts' views on these developments, and on the prospects of a recovery of the market. From our point of view, a particularly encouraging aspect of the crisis was the helpful and constructive
attitude of the Chinese Govenrment: this is a good omen for the
future.
This
2. Commission of Enquiry into the Hong Kong Stock Exchange. The
Governor announced on 11 November that Mr Hay Davison would be Chairman of a Commission of Enquiry into the management and
operation of the Hong Kong Stock Market and Futures Market.
news has been well received. Lord Glenarthur should if necessary make clear that the appointment of Mr Hay Davison was purely a matter for the Governor of Hong Kong. HMG had no part in the
appointment.
3. Hong Kong Economy. Despite the Stock Market falls, the underlying state of the Hong Kong economy remains very good. But the Financial Secretary, Mr Piers Jacobs, said recently that the
falls might have a depressing effect on investment. Lord Glenarthur
may wish to seek the views of his hosts on the prospects for the
Hong Kong economy. The falling Hong Kong dollar should help to maintain the competitiveness of Hong Kong's exports. But inflation may increase.
4.
Thirteenth Congress of Chinese Communist Party.
Lord Glenarthur's hosts may ask him for an assessment of the
significance of the Congress. A background note is attached. From
Hong Kong's point of view, the clear ascendancy of the reformists in
CONFIDENTIAL