A/0/H.K.4
36
5
A
4, MILLBANK,
WESTMINSTER,
LONDON, S. W. 1.
(ABBEY 7730)
Dear Caine,
26th November, 1946.
об
We have given some consideration to the question of the Hong Kong University Staff Provident Fund about which you wrote in your letter 54147/3/46 and the first thing that occurs to us is that, unless there are any special reasons to the contrary, the overdraft with the Bank should be liquidated by the sale of investments. If there were any prospect of wiping out the overdraft from contributions in the near future it might be desirable to leave the investments intact, but I assume there is no chance of that.
We cannot identify the investments from your letter - presumably they are either 3% War Loan 55/59 or 3% Savings Bonds 55/65, but in either case the yield on the present market price is only about 2%, so there is no advantage in keeping them, even if it were possible, to borrow at 2%, the present Joint Colonial Fund rate to participants in the Fund.
It would not, we think, be justifiable for us in general to advance Joint Colonial Fund monies to non-Government Colonial bodies in competition with the Banks but, if there are reason which make it desirable for the Provident Fund to retain its investments as long as possible, we should be prepared to make the necessary advance in this case on the grounds (which the Colonial Office may consider it desirable to communicate to the Hong Kong and Shanghai Banking Corporation in order to forestall any possible representations from them) that this would be a part of the general arrangement already envisaged whereby we should act for the University in the matter of purchases in this country, etc.
S. Caine, Esq., C.M.G.
/ We