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4. SUCN ANECDOTAL EVIDENCE AS EXISTS DOES INDICATE CONSIDERABLE
DAMAGE TO CONFIDENCE WHICH IS LIKELY TO HAVE AN ADVERSE EFFECT ON
THE ECONOMY, ESPECIALLY AS REGARDS INVESTMENT. IN THE SHORT RUN
THE ECONOMY IS LIKELY TO CONTINUE TO PERFORM FAIRLY WELL.
HOWEVER, CONCERN ABOUT POSSIBLE DISRUPTION TO OUTWARD PROCESSING AND OTHER SIMILAR ARRANGEMENTS IN CHINA, PARTICULARLY GUANGDONG, IS LIKELY TO INCREASE THE SLOWDOWN IN THE ECONOMY THAT WAS ALREADY UNDERWAY. IT IS TOO EARLY, HOWEVER, TO MAKE A QUANTITATIVE ESTIMATE
OF THIS.
5. IT IS CLEAR THAT INTERNATIONAL INVESTOR CONFIDENCE IN CHINA HAS SUFFERED A SEVERE BLOW. GIVEN THAT INVESTORS IN HONG KONG INCREASINGLY TAKE THE CHINA FACTOR INTO ACCOUNT IN THEIR DECISIONS SOME OF THE ADVERSE EFFECTS OF THIS ARE LIKELY TO BE SEEN IN HONG
KONG. ALTHOUGH EXISTING BUSINESS IS LIKELY TO CONTINUE WITH ON-GOING INVESTMENT PROJECTS BEING COMPLETED, A WAIT-AND-SEE ATTITUDE OVER NEW INVESTMENT IS LIKELY TO PERSIST FOR SOME TIME.
6. THERE ARE THUS FEW QUOTE BULL POINTS UNQUOTE THAT CAN BE MADE BEYOND POINTING OUT THAT THE HONG KONG ECONOMY IS DOING ITS BEST TO CARRY ON BUSINESS AS USUAL, DESPITE THE ADVERSE IMPACT OF RECENT EVENTS. THE ECONOMY IS VERY UNLIKLY TO COLLAPSE IN THE SHORT-RUN
BUT MAY WELL SUFFER DAMAGE TO ITS LONGER-TERM GROWTH PROSPECTS.
C. PROPERTY MARKET
7. AS WITH THE ECONOMY AS A WHOLE, CONFIDENCE IN THE PROPERTY MARKET HAS TAKEN A SEVERE KNOCK. THE INITIAL IMPACT HAS REPORTEDLY
BEEN TO REDUCE DRASTICALLY THE NUMBER OF TRANSACTIONS TAKING PLACE.
THE NEXT STEP IS WIDELY EXPECTED TO BE A SHARP DOWNWARD ADJUSTMENT IN PRICES, BY PERHAPS 15-20 PER CENT. HOWEVER, IT IS THOUGHT BY SOME THAT A SHIFT IN PREFERENCE FROM PURCHASING TO
RENTING MAY MEAN LESS OF AN ADJUSTMENT IN THE RENTAL MARKET. LAND PRICES, IN PARTICULAR, ARE EXPECTED TO FALL SHARPLY, ALTHOUGH NO MAJOR TRANSACTIONS HAVE BEEN REPORTED SINCE JUNE 4 TO
PROVIDE OBJECTIVE EVIDENCE ON THIS.
D. TRADE
8. THERE IS NO DATA ON HONG KONG/CHINA TRADE RELATING TO THE
PERIOD SINCE JUNE 4. ANECDOTAL EVIDENCE SUGGESTS LITTLE DISRUPTION
DURING THIS PERIOD IN TRADE WITH GUANGDONG BUT INCREASED RELUCTANCE
ON THE PART OF FINANCIAL INSTITUTIONS TO PROVIDE THE NECESSARY
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