TUESDAY, AUGUST 25, 1987
TRADE WITH CHINA WAS THE MAIN FACTOR BEHIND THE RAPID GROWTH IN HONG KONG'S RE-EXPORTS IN THE FIRST HALF OF 1987. REFLECTING THE RE-EMERGENCE OF HONG KONG AS CHINA'S ENTREPOT, CHINA NOW ACCOUNTS FOR OVER THREE-QUARTERS OF HONG KONG'S RE-EXPORTS, WHETHER AS A SOURCE OR AS A MARKET.
AND
COMPARING THE FIRST HALF OF 1987 WITH THE SAME PERIOD IN HONG KONG'S IMPORTS GREW IN REAL TERMS BY ABOUT 34 PER CENT, RETAINED IMPORTS BY ABOUT 24 PER CENT.
1986,
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OF THIS DOMESTIC
THE REPORT FURTHER POINTS OUT THAT IN THE FIRST HALF YEAR THE GROWTH RATE OF THE VALUE OF TOTAL EXPORTS (I.E. EXPORTS PLUS RE-EXPORTS) OVER THE SAME PERIOD LAST YEAR, AT 40 PER CENT, WAS ROUGHLY THE SAME AS THAT OF IMPORTS. HENCE A VISIBLE TRADE GAP OF SIMILAR MAGNITUDE TO THAT IN TIE FIRST HALF OF 1986, EQUIVALENT TO 4 PER CENT OF THE VALUE OF IMPORTS, WAS RECORDED IN FIRST HALF OF 1987.
THE
ON THE FINANCIAL SECTOR, THE REPORT NOTES THE FOLLOWING DEVELOPMENTS. FIRST, THE MARKET EXCHANGE RATE OF THE HONG KONG DOLLAR REMAINED CLOSE TO THE LINKED RATE OF HK$7.8 TO US$1 DURING MOST OF THE FIRST HALF OF 1987. HOWEVER, REFLECTING A FURTHER DECLINE IN THE EXCHANGE VALUE OF THE US DOLLAR AGAINST OTHER MAJOR CURRENCIES, THE OVERALL VALUE OF THE HONG KONG DOLLAR, IN TERMS OF THE TRADE-WEIGHTED EXCHANGE RATE INDEX, FELL FROM 64.8 AT THE END OF DECEMBER 1986 TO 61.4 AT THE END OF JUNE 1987.
L
SECOND, RELATIVELY LOW LOCAL INTEREST RATES AND BUOYANT ECONOMIC ACTIVITY LED TO A STRONG DEMAND FOR LOANS. AS A RESULT, LOANS AND ADVANCES BY DEPOSIT-TAKING INSTITUTIONS, HONG KONG DOLLAR DEPOSITS AND THE HONG KONG DOLLAR MONEY SUPPLY ALL GREW RAPIDLY DURING THE FIRST HALF OF 1987. THE FOREIGN CURRENCY COMPONENT DEPOSITS AND OF THE TOTAL MONEY SUPPLY GREW EVEN FASTER.
OF
RATES BOTH
THIRD, REFLECTING MOVEMENTS IN MARKET INTEREST LOCALLY AND IN THE UNITED STATES, DEPOSIT RATES SET BY THE HONG KONG ASSOCIATION OF BANKS WERE REVISED ON FIVE OCCASIONS (A DOWNWARD REVISION IN JANUARY, FOLLOWED BY FOUR UPWARD REVISIONS UP ΤΟ JUNE) AND THE DIFFERENTIAL BETWEEN THE HONG KONG DOLLAR AND US DOLLAR MONEY MARKET INTEREST RATES NARROWED ΤΟ ABOUT 1/4 PERCENTAGE POINT IN FAVOUR OF THE LATTER BY THE END OF JUNE 1987.
FOURTH, SHARE PRICES ON THE LOCAL STOCK MARKET INCREASED SHARPLY DURING THE FIRST HALF OF 1987, SUPPORTED BY FAVOURABLE ECONOMIC FUNDAMENTALS AND STRONG BUYING INTEREST FROM BOTH LOCAL AND OVERSEAS INVESTORS. FURTHER, THE HONG KONG STOCK INDEX FUTUREŠ MARKET, WHICH WAS THE LARGEST OUTSIDE THE UNITED STATES, RECORDED A SUBSTANTIAL INCREASE IN TURNOVER DURING THE SAME PERIOD.
/ON THE