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MONDAY, MAY 26, 1986
ON THE EXTERNAL SECTOR, THE REPORT NOTES THAT THE PERFORMANCE OF DOMESTIC EXPORTS TO HONG KONG'S MAJOR MARKETS VARIED, WHILE DOMESTIC EXPORTS TO MOST MAJOR MARKETS RECORDED SOME GROWTH IN REAL TERMS IN THE FIRST QUARTER OF 1986, THOSE TO CHINA AND TO THE UNITED KINGDOM DECLINED.
IMPROVED ECONOMIC GROWTH AND STOCK REPLENISHMENT IN THE UNITED STATES AS WELL AS THE DEPRECIATION OF THE HONG KONG DOLLAR AGAINST MOST MAJOR CURRENCIES LIKE THE DEUTSCHEMARK AND THE YEN WERE PROBABLY THE MAIN FACTORS BEHIND THE RECOVERY IN DOMESTIC EXPORTS TO THE UNITED STATES, JAPAN AND SOME EUROPEAN MARKETS.
HOWEVER, DOMESTIC EXPORTS TO CHINA CONTINUED TO BE ADVERSELY AFFECTED BY CHINA'S INCREASED CONTROLS OVER ITS FOREIGN EXCHANGE SPENDING.
COMPARING THE FIRST QUARTER OF 1986 WITH THE FIRST QUARTER OF 1985, RE-EXPORTS DECLINED BY AN ESTIMATED 6 PER CENT IN REAL TERMS, WITH MOST OF THE DECREASE OCCURRING IN RE-EXPORTS TO CHINA. HOWEVER IMPORTS GREW BY ABOUT 1 PER CENT IN REAL TERMS, AND RETAINED IMPORTS GREW BY ABOUT 7 PER CENT.
THE REPORT FURTHER POINTS OUT THAT OVER THIS PERIOD, THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS) DECLINED BY 2 PER CENT, WHILE THE VALUE OF IMPORTS GREW BY 3 PER CENT.
AS A RESULT A VISIBLE TRADE GAP OF 5 PER CENT WAS RECORDED IN THE FIRST QUARTER OF THIS YEAR, COMPARED WITH A VISIBLE TRADE SURPLUS EQUIVALENT TO 1 PER CENT OF THE VALUE OF IMPORTS IN THE FIRST QUARTER OF 1985.
ON THE FINANCIAL SECTOR, THE REPORT NOTES THE FOLLOWING DEVELOPMENTS. FIRST, THE EXCHANGE RATE OF THE HONG KONG DOLLAR REMAINED STEADY AGAINST THE U.S. DOLLAR AND MOVED WITHIN THE NARROW RANGE OF HK$7.80 TO HK$7.82 PER U.S. DOLLAR THROUGHOUT THE FIRST QUARTER OF 1986, NOTWITHSTANDING THE GLOBAL WEAKNESS OF THE U.S. DOLLAR DURING MOST OF THIS PERIOD.
SECOND, HONG KONG DOLLAR DEPOSITS CONTINUED TO RECORD A STABLE GROWTH RATE IN THE FIRST QUARTER, WHILE FOREIGN CURRENCY DEPOSITS CONTINUED TO GROW RAPIDLY, REFLECTING, AMONG OTHER THINGS, THE DEVELOPMENT OF HONG KONG AS AN INTERNATIONAL FINANCIAL CENTRE. THE MONEY SUPPLY SHOWED SIMILAR CHANGES.
THIRD, HONG KONG DOLLAR MONEY, MARKET RATES WERE SLIGHTLY BELOW THE CORRESPONDING U.S. DOLLAR INTEREST RATES THROUGHOUT THE FIRST QUARTER BUT THE GAP NARROWED TOWARDS THE END OF THE QUARTER.
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