XN000022-1987-11-03 — Page 3

TUESDAY, NOVEMBER 3, 1987

THERE WERE OTHER LESSONS NEAR HOME, SIR DAVID WENT ON. AS THE EFFECTS OF THE SUDDEN DROP IN THE STOCK MARKET PRICES HERE AND AROUND THE WORLD WERE ANALYSED, IT BECAME CLEAR THAT HONG KONG FACED A SERIOUS PROBLEM WITH ITS FINANCIAL FUTURES MARKET.

IT WAS A RELATIVELY NEW MARKET, AND NOT ONE IN WHICH MOST PEOPLE IN THE COMMUNITY HAD ANY INVOLVEMENT.

AFTER THE SUSPENSION OF TRADING ON THE STOCK MARKET, IT BECAME

UNDERPIN APPARENT THAT, IF NOTHING WAS DONE TO

THE FUTURES MARKET,

HAVE BEEN THE MARKET MIGHT NOT HAVE BEEN ABLE TO REOPEN. THERE WOULD A KNOCK-ON EFFECT ON THE STOCK MARKET.

OF

"UNLESS THE POTENTIAL DAMAGE HAD BEEN HAVE BEEN SERIOUS EFFECTS ON THE WHOLE HONG KONG

11

HE SAID.

CONTAINED, THERE COULD THE FINANCIAL SYSTEM IN

BECAUSE OF THE SERIOUSNESS OF THE SITUATION THE GOVERNMENT HAD TO ORGANISE QUICKLY A SUPPORT FACILITY FOR THE CORPORATION GUARANTEEING CONTRACTS IN THE FUTURES MARKET, HE SAID.

THEIR

..

"THE PURPOSE OF THIS SUPPORT OPERATION WAS NOT то BAIL OUT

TAKEN THOSE WHO HAD

RISKS AND CALCULATED WRONGLY. JUST AS THEY PROFITED WHEN THE MARKET WAS IN

FAVOUR, 5.0 THEY NOW REMAIN LIABLE FOR THEIR LOSSES. THE PURPOSE WAS TO MAKE SURE THAT THESE LOSSES DID NOT SNOWBALL TO AFFECT THE WHOLE OF OUR ECONOMY.'

THE

A

IN

IMPORTANT SIR DAVID SAID IT WAS

ALSO ΤΟ REMEMBER THAT CREDIT FACILITIES WHICH HAD BEEN MADE AVAILABLE TO THE GUARANTEE

WERE A CORPORATION BY THE EXCHANGE FUND AND BY OTHERS

NOT LOAN, GIFT. "THEY WILL BE REPAID AND REPAID WITH INTEREST. THE RESOURCES THE EXCHANGE FUND ARE NOT ADVERSELY AFFECTED."

AS A RESULT OF THE SUPPORT OPERATION, THE SYSTEM HAD REMAINED INTACT, HE SAID. THERE WAS STILL NERVOUSNESS IN THE MARKET, ELSEWHERE. BUT HONG KONG HAD BEEN ABLE TO RETURN TO AND THAI WAS AN IMPORTANT ACHIEVEMENT.

ORDERLY

HERE AND TRADING,

ΤΟ THE SIR DAVID NOTED THAT HE HAD SAID IN HIS POLICY ADDRESS

LAST MONTH LEGISLATIVE COUNCIL

THAT HONG KONG SHOULD ALWAYS BE PRUDENT, EVEN WHEN THE ECONOMY WAS DOING WELL, BECAUSE IT WAS SUBJECT TO THE AFFECTS OF EXTERNAL FORCES AND HAD TO BE ABLE TO REACT QUICKLY IF STORMS CAME.

THE PRODUCTIVITY COUNCIL AT THIS

OUR ECONOMY OR

IMPORTANT

WAS DOUBLY

OWN

OF REFERRING TO THE WORK POINT, SIR DAVID SAID THAT IF THE INTERNATIONAL ECONOMY MIGHT BE AFFECTED BY RECENT EVENTS, I'T THAT THE TERRITORY SHOULD MAINTAIN ITS COMPETIVENESS IN WORLD MARKETS. THAT WAS WHY PRODUCTIVITY IN OUR INDUSTRIES WAS SO IMPORTANT.

THE PRODUCTIVITY COUNCIL, HAD AN IMPORTANT ROLE TO PLAY IN

HE WAS AREA, HE SAID, ADDING THAT

CONFIDENT THE

HAD COUNCIL DETERMINATION AND ABILITY TO MEET THE CHALLENGE POSED BY DIVERSE TASKS THAT LAY AHEAD.

THAT

THE

COMPLEX

AND

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