CO129-605-5 Government loans 4-2-1948 - 8-1-1949 — Page 36

17.

Sec. 1/2062/46.

SAVINGRAM

To the Secretary of State for the Colonies.

From the Governor, Hong Kong.

36

CGSF: omr

!

Date

9th

No.

831

December 1948.

CONFIDENTIAL.

Your telegram 1245 of 2nd December, 1948. (14)

Rehabilitation Loan Ordinance.

Events in China have not in practice had the effect of increasing the attraction of investment in Hong Kong. They seem instead to have given rise to a vague feeling of insecurity based on doubts as to whether H.M.Government will in the last resort take a firm line in the face of a determined communist threat. This has been reflected on the local stock exchange where dealings have shown a drop of over 10 per cent.

20 With regard to the suggestion in paragraph 4 of your telegram that in any future issue it might be possible to arrange for bearer bonds to be issued only to residents of Hong Kong, it is evidently not realised that rather less than $150,000 of the recent issue of $50,000,000 was tak en up by persons not resident within the Colony. The overwhelming bulk of the issue was taken up by local institutions and local residents, and I think that you will agree that there would be little point in complicating any new appeal to the public by the issue of two types of bonds when there is every reason to suppose that the registered issue would be on a negligible scale.

3. I would again emphasise that the Hong Kong investor will not interest himself in any investment which is not issued in the form of bearer bonds, and I trust that in view of the negligible response which may be expected from residents elsewhere, I may be authorised to issue in bearer form the whole of the next instalment of the Loan up to a nominal value not exceeding $20,000,000 when such issue becomes necessary. I

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have every hope that a further issue of this limited amount could be placed locally. There is no immediate urgency, but I should like to feel that I have your authority to take the appropriate measures directly such a step becomes necessary and an opportune manent occurs. I should prefer

to raise a further $20,000,000 on the same terms as the earlier issue before experimenting with premium bonds which of course would also have to be in bearer form.