XN000022-1977-10-26 — Page 12

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WEDNESDAY, OCTOBER 26, 1977

NEED TO RESTORE HEALTHY STOCK MARKET STRESSED

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THE HON. P.G. WILLIAMS TODAY URGED THE GOVERNMENT TO MAKE PROPOSALS TO RECREATE A HEALTHY STOCK MARKET AND TO RESTORE ITS ABILITY TO PROVIDE CAPITAL FOR HONG KONG'S ENTERPRISES.

SPEAKING AT THE ANNUAL POLICY DEBATE IN THE LEGISLATIVE COUNCIL, HE SAID THE ABILITY TO RAISE CAPITAL ON THE LOCAL STOCK MARKET WAS ONE OF THE QUESTIONS MOOTED BY POTENTIAL OVERSEAS INDUSTRIALISTS WHEN COMPARING THE MERITS OF HONG KONG AND ITS NEIGHBOURS.

+ IT IS UNFORTUNATE AND DAMAGING TO HONG KONG THAT PRESENTLY THE ANSWER IS A NEGATIVE ONE, HE REMARKED.

MR. WILLIAMS SAID THERE ARE SEVERAL FACTORS FOR THE LOW-LEVEL TURNOVER AT THE LOCAL STOCK MARKET EVEN WITH GOOD COMPANY RESULTS ON THE WHOLE.

+POSSIBLY THE MEMORY OF LOSSES INCURRED AFTER THE BOOM OF 1972/73 IS AN INHIBITING FACTOR.

+THE ATTRACTIONS OF THE PROPERTY MARKET AND HOUSE OWNERSHIP IS CERTAINLY TAKING MONEY AWAY FROM THE STOCK MARKET AND AN OVERHEATED PROPERTY MARKET HAS ITS DANGERS.+

BUT HE NOTED THAT A MAJOR FACTOR IS THE +FOG THAT SHROUDS THE TAXATION OF THE SO CALLED HABITUAL TRADER IN STOCKS AND SHARES+.

HE SAID THE INLAND REVENUE DEPARTMENT PUT INTO THE EFFECT THE PRACTICE OF TAXING HABITUAL TRADER AT A MOST VOLATILE TIME RESULTING IN GENERAL CONFUSION.

MR. WILLIAMS SAID NO DEFINITION OF A HABITUAL TRADER HAS BEEN FORTHCOMING AND THE INLAND REVENUE DEPARTMENT HAS ASSERTED ITS RIGHT TO LOOK BACK INTO TRANSACTIONS OVER AN UNSTATED NUMBER OF YEARS.

+AT PRESENT MANY WEALTHY INVESTORS ARE LOCKED OUT OF THE MARKET TO PROTECT PROFITS MADE IN 1972/73. THEY FEEL THEY CANNOT AFFORD TO TRADE FOR FEAR OF PROMPTING A REVIEW OF EARLIER TRANSACTIONS AND THEY COULD BE LOCKED OUT FOR YEARS.+

HE SAID HONG KONG'S IMAGE AS A FINANCIAL CENTRE IS BEING HARMED AND IT IS ALSO BEING COUNTER PRODUCTIVE INASMUCH AS +THE GOVERNMENT ARE NOW RECEIVING A MUCH REDUCED INCOME BECAUSE OF THE PAUCITY OF TRADING IN SPITE OF THE FACT THAT THE STAMP DUTY WHICH WAS DOUBLED IN 1972 TO DAMPEN THE BOOM HAS NEVER BEEN REDUCED+.

ON DIVERSIFICATION OF INDUSTRY, MR. WILLIAMS WELCOMED THE GOVERNOR'S PROPOSAL PARTICULARLY ON THE PROPOSED ALLOCATION OF LAND AT FORMATION COST FOR ACTIVITIES WHICH WILL DIVERSIFY THE INDUSTRIAL BASE AND DIRECTLY OR INDIRECTLY LEAD TO THE INTRODUCTION OF HIGHER LEVELS OF TECHNOLOGY.

HE SAID THERE IS SCOPE FOR DEVELOPMENT WITHIN OUR EXISTING RANGE OF INDUSTRIES BUT THERE IS A LIMIT AND UNLESS THE BASE CAN BE EXTENDED TO INCLUDE SOME LAND INTENSIVE ACTIVITIES OF A SERVICE TYPE, FOR EXAMPLE A FOUNDRY, NEW INDUSTRIES CANNOT BE SERVED AND WOULD NOT BE VIABLE.

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