XN000022-1978-11-30 — Page 2

THURSDAY, NOVEMBER 30, 1978

MONEY SUPPLY DOWN IN OCTOBER

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THE MONEY SUPPLY FELL SLIGHTLY IN OCTOBER, DESPITE A RISE IN THE NUMBER OF REPORTING BANKS FROM 80 THE PREVIOUS MONTH TO 82.

A GOVERNMENT SPOKESMAN SAID M1 (NOTES AND COINS AND DEMAND DEPOSITS AT LICENSED BANKS) FELL BY $544 MILLION, OR 2.5 PER CENT, IN OCTOBER AT THE END OF THE MONTH IT WAS 25 PER CENT ABOVE WHAT IT WAS IN OCTOBER, 1977. M2 (M1 PLUS TIME DEPOSITS AND SAVINGS DEPOSITS) ALSO FELL IN OCTOBER, BY $191 MILLION, OR 0.3 PER CENT, TO A LEVEL 27.6 PER CENT ABOVE THAT AT THE END OF OCTOBER, 1977.

IT WAS THE FIRST FALL IN M2 SINCE MARCH, 1977.

THUS, THE SPOKESMAN SAID, THE GROWTH RATE OF BOTH MEASURES HAD FALLEN AT THE END OF SEPTEMBER, M1 HAD BEEN 30.2 PER CENT ABOVE SEPTEMBER, 1977, AND M2 HAD BEEN 30.3 PER CENT UP.

HE SAID THERE APPEARED TO HAVE BEEN A RELATIVE SHIFT IN THE COMPOSITION OF THE MONEY SUPPLY, WITH A FALL IN DEMAND DEPOSITS BEING PARTIALLY OFFSET BY INCREASES IN TIME DEPOSITS AND SAVINGS DEPOSITS.

+THIS REVERSES THE EXPERIENCE OF THE PREVIOUS FOUR MONTHS, WHEN DEMAND DEPOSITS GREW RELATIVELY FASTER THAN TIME AND SAVINGS DEPOSITS,+ HE SAID.

HE SAID THAT COMPARING THE AVERAGE FOR THE PERIOD AUGUST TO OCTOBER, 1978, WITH THE SAME PERIOD OF 1977, TO SMOOTH OUT SEASONAL FLUCTUATIONS IN THE FIGURES, M1 SHOWED AN INCREASE OF 27.3 PER CENT AND M2 AN INCREASE OF 28.7 PER CENT.

THE SPOKESMAN SAID A SUBSTANTIAL INCREASE IN LOANS AND ADVANCES IN HONG KONG WAS RECORDED IN OCTOBER, WITH THE TOTAL OUTSTANDING RISING BY $2,057 MILLION TO A LEVEL 41.5 PER CENT ABOVE THE LEVEL IN OCTOBER, 1977.

+THIS INCREASE MAY PERHAPS HAVE BEEN INFLUENCED BY ANTICIPATION OF THE OCTOBER 30 INCREASE IN BANKS' BEST LENDING RATE,+ HE SAID.

HE SAID THE INCREASE IN ADVANCES IN OCTOBER WAS FINANCED BY INCREASED BORROWINGS FROM BANKS OUTSIDE HONG KONG, WHICH WERE NOT INCLUDED IN THE CALCULATION OF THE MONEY SUPPLY- THIS CALCULATION WAS BASED ON DEPOSITS FROM THE GOVERNMENT AND THE PRIVATE SECTOR (OTHER THAN BANKS) AT ALL LICENSED BANKS IN HONG KONG.

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