!
CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO TELNO 988
OF 060445Z APRIL 92
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PERSONAL FOR RICKETTS, HKD.
YOUR TELNO 592: EXCHANGE FUND ORDINANCE: APPROVED INVESTMENTS.
1. THE INITIATIVE FOR THE PROPOSED INVESTMENT IN U.S. EQUITIES CAME FROM THE EXTERNAL MEMBERS OF THE EXCHANGE FUND ADVISORY COMMITTEE (EFAC), THOUGH WE FULLY SUPPORT IT. THE CONCEPT WAS THAT WE WOULD MOVE CAUTIOUSLY AND IT WAS RECOGNISED THAT THE TIMING MIGHT NOT BE OPPORTUNE AT THE PRESENT MOMENT. NEVERTHELESS, IT WAS FELT STRONGLY THAT THE EXCHANGE FUND SHOULD HAVE THE CAPACITY TO MAKE MODEST EQUITY INVESTMENTS ON THE LINES INDICATED IN OUR TELNO 718. WE DO NOT ENVISAGE ADDITIONAL RESOURCES BEING REQUIRED TO MONITOR WHAT WILL ESSENTIALLY BE A PASSIVE FORM OF INVESTMENT AND BELIEVE WE CAN COPE WITH OUR PRESENT STRUCTURE.
2. NON-GOVERNMENT MEMBERS OF THE EFAC ARE NOT AWARE OF THE DEVELOPMENTS ALLUDED TO IN PARA 3 OF TUR AND FOR REASONS OF CONFIDENTIALITY WE DO NOT PROPOSE TO PUT THEM IN THE PICTURE UNTIL MUCH FURTHER DOWN THE ROAD. THEY ARE AWARE THOUGH THAT WE ARE SEEKING THE SECRETARY OF STATE'S CONSENT AND IN ALL THE CIRCUMSTANCES WE WOULD LIKE TO BE ABLE TO TELL THEM AT THE NEXT EFAC MEETING, ON 1 MAY, THAT CONSENT HAS BEEN OBTAINED, THOUGH WE SHALL BE HAPPY TO MENTION YOUR CAUTIONARY REMARKS ON TIMING.
WILSON
YYYY
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