XN000022-1987-11-20 — Page 3

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FRIDAY, NOVEMBER 20, 1987

HE SAID THIS WAS PARTLY BECAUSE HINDSIGHT WAS MUCH NORE OF A SCIENCE THAN FORESIGHT, AND PARTLY BECAUSE THERE WAS RESISTANCE ΤΟ CHANGE, WHICH WAS A COMMON ATTITUDE AND BY NO MEANS THE MONOPOLY OF CIVIL SERVANTS.

"BE THIS AS IT MAY, UNDOUBTEDLY WE NOW HAVE A WILLINGNESS, INDEED A DETERMINATION, IN OUR COMMUNITY ΤΟ ENSURE THAT NECESSARY CHANGES ARE MADE AND I CAN ASSURE YOU THAT THESE WILL TAKE PLACE,' HE BAID.

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RECENT KVENTS HAD GIVEN THOSE INVOLVED IN INTERNATIONAL MARKETS AND IN THEIR SUPERVISION A USEFUL OPPORTUNITY TO TAKÉ STOCK, HE SAID.

"CHANGE HAS BEEN DRIVEN BY MARKET FORCES BUT IT 18 ARGUABLE WHETHER MARKET STRUCTURES, REGULATORY REQUIREMENTS, AND MOST IMPORTANT OF ALL, RISK PERCEPTION HAVE BEEN ABLE TO KREP PACE WITH THESE DEVELOPMENTS.

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MR NENDICK POINTED OUT THAT, IN HONG KONG, PROPOSALS IN THE PIPELINE, SUCH AS A SECOND MARKET IN SECURITIES OR THE INTRODUCTION OF A HONG KONG DOLLAR INTEREST RATE FUTURES CONTRACT, WOULD NOW HAVE TO BE POSTPONED UNTIL THE MARKETS WERE ROBUST ENOUGH TO ABSORB THEM.

HE SAID THIS MIGHT MEAN WAITING UNTIL AFTER THE SECURITIES REVIEW COMMITTEE HAD MADE ITS REPORT AND ITS RECOMMENDATIONS HAD BERN IMPLEMENTED.

"I AM CONFIDENT THAT THE SECURITIES REVIEW COMMITTEE WILL DO A THOROUGH AND WORTHWHILE JOB IN IDENTIFYING WHAT CHANGES ARE NECESSARY IN ORDER THAT HONG KONG CAN MAINTAIN, AND INDEED DEVELOP, ITS ROLE AS A MAJOR INTERNATIONAL FINANCIAL CENTRE."

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REFERRING TO THE MARKET CRASH, MR NENDICK SAID IT WOULD HAVE CHANGED INVESTORS' PERCEPTION THE WORLD OVER OF THE RISKS INVOLVED IN EQUITY INVESTMENT, AT LEAST FOR THE TIME BEING.

HE SAID, "STOCKS AND SHARES SHOULD NEVER BE SEEN A9 AN ALTERNATIVE TO KEEPING READY CASH IN THE BANK.

"THOSE WHO INVEST WISKLY FOR A PERIOD OF YEARS IN SOUND COMPANIES WITH GOOD MANAGEMENT WILL SHARE IN THE PROSPERITY OF THE COMPANIES CONCERNED, BUT NO ONE CAN BE ASSURED OF CERTAIN PROFIT IF THEY USE THE STOCK MARKET FOR SHORT-TERM INVESTMENT.

MR NENDICH ALBO SAID THE CRASH HAD SHOWN THAT EVENTS OUTSIDE HONG KONG COULD HAVE A PROFOUND EFFECT ON THE LOCAL MARKETS, WHICH MEANT THAT HONG KONG COULD ONLY EXPECT A FULL MEASURE OF CONFIDENCE TO RETURN WHEN THAT CONFIDENCE RETURNED IN OTHER CENTRES.

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