XN000022-1986-10-07 — Page 2

TUESDAY, OCTOBER 7, 1986

CS: ECONOMIC STRENGTH LIES IN FREE MARKET POLICIES

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THE STRENGTH OF HONG KONG'S ECONOMY LIES IN ITS FREE MARKET POLICIES, IN THE FREE FLOW OF FUNDS IN AND OUT OF THE TERRITORY, IN HAVING NO TAX ON FOREIGN INVESTMENTS NOR TAX ON CAPITAL GAINS, THE CHIEF SECRETARY, SIR DAVID AKERS-JONES, SAID TODAY (TUESDAY).

SPEAKING AT THE OPENING CEREMONY OF THE FIFTH EAST ASIAN STOCK EXCHANGES CONFERENCE, SIR DAVID SAID FREE COMPETITION WOULD PRODUCE RESULTS MORE EFFECTIVELY THAN RESTRAINTS ON TRADE, MORE SENSITIVELY THAN INTERVENTION BY GOVERNMENT IN COMMERCIAL" DECISIONS AND MORE WISELY THAN BY THE PUBLIC SECTOR SUBSIDISING THE PRIVATE SECTOR.

HE SAID THAT THIS ECONOMIC PHILOSOPHY WAS GUARANTEED A LONG

HE LIFE BY THE SINO-BRITISH AGREEMENT ON HONG KONG'S FUTURE. QUOTED THE SECTION WHICH STATED THAT THE HONG KONG SPECIAL ADMINISTRATIVE REGION SHALL MAINTAIN THE CAPITALIST ECONOMIC AND TRADE SYSTEMS AS WELL AS THE MONETARY AND FINANCIAL SYSTEMS PREVIOUSLY PRACTISED AND SHALL RETAIN THE STATUS OF AN INTERNATIONAL FINANCIAL CENTRE.

HE ALSO QUOTED THE SECTION CONCERNING THE FREE OPERATION OF FINANCIAL BUSINESS AND THE FREE FLOW OF CAPITAL WITHIN, INTO AND OUT OF THE HONG KONG SAR AND STATING THAT NO EXCHANGE CONTROL POLICY SHALL BE APPLIED.

SIR DAVID SAID THE NEW STOCK EXCHANGE OF HONG KONG, WHICH WAS OFFICIALLY OPENED YESTERDAY (MONDAY), WAS THE HUB OF THE SECURITIES MARKET IN THE TERRITORY AND IN TECHNOLOGY COULD STAND COMPARISON WITH ANY STOCK EXCHANGE IN THE WORLD.

HE NOTED THAT SINCE OPENING ITS DOORS FOR TRADING ON APRIL 2 THIS YEAR, THE STOCK EXCHANGE, WITH ITS IMPROVED EFFICIENCY OF COMPUTER TRADING, HAD SEEN THE VOLUME OF TRADING INCREASE GREATLY.

+TOTAL TURNOVER FOR THE FIRST HALF OF THIS YEAR, AT $36.5 BILLION, WAS 12 PER CENT HIGHER THAN IN THE PREVIOUS SIX MONTHS. THE TOTAL VOLUME OF FUNDS RAISED THROUGH THE STOCK MARKET AMOUNTED TO OVER $6 BILLION IN THE SAME PERIOD, HE SAID.

BUT THE CHARACTER OF THE MARKET HAD CHANGED AS IT HAD ELSEWHERE. INSTITUTIONAL INVESTORS AND INSTITUTIONAL BUYING RELYING HEAVILY ON DETAILED RESEARCH AND ANALYSIS, INSTEAD OF SMALL INVESTORS, NOW HAD A MAJOR SHARE OF THE VOLUME OF TRADING.

+THIS CHANGE S ILLUSTRATED BY THE GROWTH IN THE NUMBER OF IN 1978, THERE WERE UNIT TRUSTS AND MUTUAL FUNDS IN HONG KONG. IN 1978, 34, NOW THERE ARE .97 AUTHORISED FUNDS MANAGING U.S.$20 BILLION, → HE SAID. +THE RANGE OF INVESTMENTS AVAILABLE IN HONG KONG PROVIDE ADDITIONAL INCENTIVES FOR GROWTH.+

.K