XN000022-1989-08-25 — Page 4

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FRIDAY, AUGUST 25, 1989

THE CORRESPONDING RATES OF INCREASE FOR THE CPI(B) AND THE HANG SENG CPI IN THE SECOND QUARTER OF THIS YEAR WERE 9.9 PER CENT AND 11.0 PER CENT.

IT APPEARS THAT THE RECENT INFLATIONARY PRESSURES WERE LARGELY DOMESTICALLY GENERATED.

OF THE VARIOUS COMPONENTS OF THE CPI(A), THE FASTEST INCREASES IN PRICES WERE RECORDED IN FOODSTUFFS (INCLUDING MEALS TAKEN AWAY FROM HOME), TRANSPORT, AND SERVICES.

THE LABOUR MARKET REMAINED GENERALLY TIGHT DURING THE FIRST HALF OF 1989.

THE

THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE AND UNDEREMPLOYMENT RATE WERE 1.4 PER CENT AND 0.8 PER CENT RESPECTIVELY IN THE SECOND QUARTER, WHILE IN THE FIRST QUARTER THEY WERE 1.3 PER CENT AND 0.8 PER CENT.

LABOUR INCOMES INCREASED FURTHER BOTH IN MONEY TERMS AND IN REAL TERMS. DURING THE 12 MONTHS ENDING MARCH 1989, LABOUR RESOURCES CONTINUED TO SHIFT FROM MANUFACTURING TO THE SERVICE SECTORS.

IN THE PROPERTY MARKET, THE DEMAND FOR MOST TYPES OF PROPERTY WAS STRONG AT THE EARLY PART OF THIS YEAR.

SIGNS OF CONSOLIDATION EMERGED FOLLOWING SUCCESSIVE INCREASES IN MORTGAGE RATE AND A FURTHER INCREASE IN PROPERTY PRICES DURING THE FIRST QUARTER.

SINCE EARLY JUNE, TRADING ACTIVITY HAD QUIETED DOWN ABRUPTLY. PROPERTY PRICES WERE REPORTED TO HAVE FALLEN BY AN AVERAGE PER CENT BY THE END OF THE MONTH.

POTENTIAL BUYERS AND SELLERS OF PROPERTY WERE ADOPTING A WAIT-AND-SEE ATTITUDE. IN THE RESIDENTIAL MARKET FOR LARGE FLATS HAD EXPERIENCED A GREATER DEGREE ADJUSTMENT THAN THAT FOR SMALL AND MEDIUM-SIZED FLATS.

OF 15-20

GENERALLY

SECTOR. THE OF DOWNWARD

THE DEMAND FOR SHOPPING AND OFFICE SPACE ALSO WEAKENED THE MIDDLE OF THE YEAR.

TOWARDS

THE DEMAND FOR INDUSTRIAL PROPERTY HAD ALREADY SIGNS OF CONSOLIDATION SINCE THE EARLY PART OF THIS YEAR. EVEN THE DEMAND FOR STORAGE PREMISES WAS SUSTAINED.

BEEN

SHOWING THOUGH

THERE WERE, HOWEVER, SIGNS OF REVIVAL IN THE PROPERTY MARKET OVER THE PAST FEW WEEKS.

IN THE FINANCIAL SECTOR, THE FOLLOWING DEVELOPMENTS DURING THE FIRST HALF OF 1989 ARE NOTEWORTHY,

FIRST,

THE MARKET EXCHANGE RATE OF THE HONG KONG DOLLAR AGAINST THE U.S. DOLLAR REMAINED STABLE. THIS WAS SO EVEN IN LATE EARLY JUNE, AMIDST THE UNREST IN CHINA.

MAY

AND

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