CONFIDENTIAL
Companies like Jardines which were not domiciled in Hong
Kong had suffered because they had been prevented by the listing requirements of the Hong Kong Stock Exchange from
buying back their own shares. Mr Keswick said that he
intended to complain to the Hong Kong Government on both
these counts.
3. Mr Keswick's claim that the fall in Hong Kong share
prices was partly due to the Hong Kong Government's failure
to take earlier action to freeze Kuwaiti assets has also
been reflected in local press comment (eg the Ta Kung Pao of
7 August). We are asking Hong Kong for their assessment of
whether any substantial Kuwaiti holdings were in fact
disposed of before the freeze took effect.
4. It is true that on Monday Hong Kong share prices fell
more sharply than those in other major international
centres. This was partly because of the sharp rise in Hong
Kong share prices over the last two months (which was in any
event due for a correction) and partly because of the market's perception that Hong Kong is particularly
vulnerable to a recession in its main export markets caused
by higher oil prices, given the territory's extreme
dependence on foreign trade.
5.
I attach a chronology showing the exact sequence of events leading up to freezing of Kuwaiti and Iraqi assets in
Hong Kong late on 6 August.
Rosalind Manda
R M Marsden
BAYABI/2
CONFIDENTIAL