WEDNESDAY, AUGUST 22, 1984
5
TRADE BALANCES FOR FIRST TIME IN YEARS
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HONG KONG'S TRADE IN GOODS AND SERVICES HAS IMPROVED TO THE EXTENT WHERE IT MAY NOW BE IN BALANCE FOR THE FIRST TIME IN SEVEN YEARS, THE DEPUTY SECRETARY FOR MONETARY AFFAIRS, MR ANTHONY LATTER, SAID TODAY (WEDNESDAY).
SPEAKING AT THE LUNCH GIVEN BY THE YOUNGER MANAGERS' CLUB OF THE HONG KONG MANAGEMENT ASSOCIATION, MR LATTER NOTED THAT THE DEFICIT IN 1982 WAS $7 BILLION.
HE FELT THAT SINCE THAT YEAR, THERE HAD BEEN A FAVOURABLE SHIFT IN THE BALANCE OF INTEREST, PROFITS AND DIVIDENDS BECAUSE OF RELATIVELY DEPRESSED EARNINGS IN HONG KONG AND THE DEPRECIATION OF THE LOCAL CURRENCY. THIS DEPRECIATION AUTOMATICALLY ENHANCES THE HONG KONG DOLLAR VALUE OF, FOR EXAMPLE, A GIVEN AMOUNT OF US DOLLAR INTEREST RECEIPTS.
+THUS THERE HAS ALMOST CERTAINLY BEEN A SUBSTANTIAL IMPROVEMENT IN HONG KONG'S CURRENT ACCOUNT WITH THE REST OF THE WORLD OVER THE PAST TWO YEARS,+ MR LATTER SAID.
ON THE OVERALL CAPITAL ACCOUNT, MR LATTER CONCEDED THERE WAS +REASONABLY CLEAR EVIDENCE OF INCREASED OUTFLOWS FROM HONG KONG.
FOR INSTANCE, EXPORTERS APPEARED TO HAVE BEEN RETAINING MORE EARNINGS OVERSEAS THAN FORMERLY, WHILE THE INCREASE IN FOREIGN CURRENCY DEPOSITS WITH BANKS AND DTC'S HAD RESULTED IN SOME OVERALL OUTFLOW EVEN THOUGH PART OF THE INCREASE HAD BEEN MET BY BANKS FROM THE IR OWN SOURCES AND PART SIMPLY REPRESENTED A SHIFT INTO HONG KONG OF EXISTING FOREIGN CURRENCY DEPOSITS FROM ELSEWHERE.
+EVEN SO, THE EXTENT OF ANY OUTFLOWS SHOULD NOT BE EXAGGERATED. THERE ARE, FOR EXAMPLE, LIMITS ON THE EXTENT TO WHICH DISINVESTMENT MAY HAVE TAKEN PLACE: LOCAL ASSET VALUES HAVE BEEN DEPRESSED AND MAY HAVE DISCOURAGED REALISATIONS, AND THE SHARP FALL IN THE EXCHANGE RATE UP TO LAST SEPTEMBER AND OCCASIONAL SHARP INCREASES IN INTEREST RATES SINCE THEN HAVE ON BALANCE BEEN DETERRENT FORCES,+ HE SAID.
BUT HE ADDED THAT ON THE OTHER SIDE, OVERSEAS INVESTMENT WAS SURELY STILL COMING INTO HONG KONG'S INDUSTRIAL AND COMMERCIAL SECTORS.
+GIVEN THE LEVEL OF OVERSEAS INVOLVEMENT IN THESE SECTORS AND THE PROSPECT OF PRIVATE SECTOR CAPITAL FORMATION RUNNING AT SOME $45 BILLION THIS YEAR, THERE MUST SURELY STILL BE A CONSIDERABLE INFLOW OF CAPITAL ON THIS SCORE, WHETHER VIA RE INVESTMENT OF EARNINGS OR NEW MONEY, MR LATTER SAID.
+ IN SUM, THOSE WHO CLAIM THAT THERE IS A FLIGHT OF CAPITAL FROM HONG KONG OF DESPERATE AND SEVERELY DAMAGING PROPORTIONS SHOULD BE VERY CRITICALLY CROSS-EXAMINED.
/+AT
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