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WEDNESDAY, MARCH 18, 1987
SPEAKING AT THE LEGISLATIVE COUNCIL DURING THE BUDGET DEBATE, HE SAID THAT FORMERLY WHEN CORPORATIONS NEEDED MONEY THEY WOULD RAISE IT THROUGH CAPITAL ISSUES OR SEEK FINANCE FROM BANKS.
NOW IT WOULD APPEAR THAT THEY COULD PRINT THEIR OWN MONEY WITHOUT GIVING SECURITIES OR PERSONAL GUARANTEES FROM DIRECTORS,
HE SAID.
MR POON SAID SUCH NEW INSTRUMENTS WERE USUALLY UNSECURED OR EVEN SUBORDINATED AND RELIED MAINLY ON THE REPUTATION OF THE ISSUING COMPANY.
THE RATIONALE WAS SUPPOSED TO BE THAT IT WOULD REDUCE THE RISKS OF BANKS IF THERE WAS AN ACTIVE SECONDARY MARKET.
+ BUT IF THERE IS NO SUCH MARKET TO SPREAD THE RISKS, IT SEEMS THAT THE BANKS, DEPOSIT-TAKING COMPANIES OR FUNDS ÁRE SHOULDERING A HIGH PROPORTION OF RISKS AT INTEREST WHICH IS SUBSTANTIVELY LESS THAN THAT FOR THE USUAL UNSECURED LOANS, + HE SAID.
HE ADDED THAT THE FINANCIAL SECRETARY HAD NOTED THIS SCENARIO IN HONG KONG AND THAT A CHANGE IN INTEREST RATE TREND WOULD IMMEDIATELY AFFECT THEIR MARKET VALUE CONSIDERABLY.
MR POON AGREED WITH THE FINANCIAL SECRETARY THAT BOTH THE DISCLOSURE OF SHARES IN PUBLIC LISTED COMPANIES AND INSIDER DEALING WERE CONTROVERSIAL SUBJECTS, BUT HE FELT THESE PROBLEMS NEEDED TO BE ADDRESSED.
HE SAID HE LOOKED FORWARD TO THE RECOMMENDATIONS OF THE STANDING COMMITTEE ON COMPANY LAW REFORM BUT HE WAS SURE THE
ISSUE WOULD BE FULLY DEBATED BEFORE ANY LAWS WERE INTRODUCED.
+ AS AN INTERNATIONAL FINANCIAL CENTRE, HONG KONG NEEDS TO BE SEEN TO MAINTAIN ITS REPUTATION IN THE FIELD OF PROTECTION OF INVESTORS AND PROPER ETHICS AND CONDUCT IN THE FINANCIAL SECTOR,+ HE SAID.
ON THE GOVERNMENT'S BUDGETARY POLICY, MR POON COMMENTED THAT THE GENERAL RULE OF KEEPING GOVERNMENT EXPENDITURE WITHIN THE GROWTH OF THE GDP WAS A SENSIBLE ONE.
HOWEVER, IT DID NOT MEAN THAT HONG KONG COULD NEVER GO INTO DEFICIT IN ANY ONE YEAR AND FINANCE IT BY ITS RESERVES OR ISSUING BONDS IF NECESSARY, HE SAID.
+ BUT THE AIM OF BUILDING UP OUR RESERVES GRADUALLY TO A STRONGER LEVEL CAN HARDLY BE FAULTED.
/+THERE ARE
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