XN000022-1989-05-06 — Page 3

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SATURDAY, MAY 6, 1989

HE NOTED THAT THE OJECTIVES OF SUCH POLICY DIALOGUES WOULD BE TO FOSTER THE EXCHANGE OF EXPERIENCE IN ECONOMIC DEVELOPMENT AND, WHERE APPROPRIATE, TO ENHANCE THE CO-ORDINATION OF MARCO-ECONOMIC ADJUSTMENT PROGRAMMES AND EFFORTS.

"SUCH DIALOGUES COULD THEN SERVE AS THE BASIS FOR THE BANK'S PROJECT AND PROGRAMME LENDING POLICIES TO INDIVIDUAL DMC'S," HE POINTED OUT.

TURNING TO HONG KONG'S ECONOMIC PERFORMANCE, MR NENDICK SAID HONG KONG WAS WELL AWARE OF THE FACT THAT THE HONG KONG ECONOMY, BEING HIGHLY EXTERNALLY ORIENTED, WAS SUSCEPTIBLE TO FLUCTUATIONS IN THE WORLD ECONOMY AND TO CHANGES IN DEMAND FOR ITS PRODUCTS IN ITS MAIN OVERSEAS MARKETS.

"TO PROVIDE STABILITY WITHIN A VOLATILE WORLD OF BUSINESS AND INVESTMENT, THE GOVERNMENT REMAINS TO MAINTAIN THE LINKED EXCHANGE RATE SYSTEM, AT THE US$1 TO HK$7.80.

FOR THE CONDUCT FIRMLY COMMITTED PRESENT RATE OF

"THE LINK HAS, SINCE ITS ESTABLISHMENT IN OCTOBER 1983, PROVIDED EXCHANGE RATE STABILITY TO HONG KONG AND ENGEDERED A STABLE AND PREDICTABLE FINANCIAL ENVIRONMENT IN WHICH BUSINESS CAN CONTINUE TO BE CONDUCTED WITH CONFIDENCE.

"WE DERIVE NO UNFAIR BENEFIT FROM MAINTAINING THIS LINK: THIS YEAR, AS LAST, WE EXPECT ΤΟ RUN A MODEST DEFICIT ON OUR TRADE BALANCE, HE SAID.

SAID A

ON HONG KONG'S STOCK AND FUTURES MARKETS, MR NENDICK NEW REGULATORY AUTHORITY, OUTSIDE THE CIVIL SERVICE, KNOWN AS THE SECURITIES AND FUTURES COMMISSION, WAS ESTABLISHED BY STATUTE ON MAY 1, 1989, IN LINE WITH RECOMMENDATIONS MADE BY THE SECURITIES REVIEW COMMITTEE.

THIS COMMITTEE WAS SET UP AFTER THE OCTOBER 1987 STOCK MARKET CRASH TO CONDUCT A COMPREHENSIVE REVIEW OF HONG KONG'S STOCK AND FUTURES MARKETS AND THEIR REGULATION.

ALSO

MR NENDICK SAID THE SECURITIES REVIEW COMMITTEE RECOMMENDED FUNDAMENTAL REVISIONS TO THE CONSTITUTION AND INTERNAL

MANAGEMENT OF BOTH THE STOCK AND FUTURES EXCHANGES.

"THE STOCK EXCHANGE ACCEPTED THE COMMITTEE'S RECOMMENDATIONS AND A NEW STRUCTURE, WHICH FULLY MEETS THE SPIRITS OF THOSE RECOMMENDATIONS, WAS PUT IN PLACE IN OCTOBER 1988.

"A START HAD ALSO BEEN MADE ON THE ESTABLISHMENT OF A CENTRAL CLEARING AND DEPOSITORY SYSTEM WHICH IS EXPECTED TO BE FULLY OPERATIONAL IN 1990, HE SAID.

"

MR NENDICK