XN000022-1990-07-12 — Page 2

THURSDAY, JULY 12, 1990

1

NO NET OUTFLOW OF MONEY FROM HK

BOTH FROM THE GEOGRAPHICAL AND FROM THE CURRENCY VIEWS, THERE HAS NOT BEEN ANY OUTFLOW OF MONEY FROM HONG DEPUTY SECRETARY FOR MONETARY AFFAIRS, MR JOSEPH YAM, SAID (WEDNESDAY).

POINTS OF KONG, THE YESTERDAY

THAT

SPEAKING AT THE CANADIAN CLUB IN TORONTO, MR YAM STRESSED THERE HAD NOT BEEN ANY NET OUTFLOW OF MONEY FROM HONG KONG OR FROM THE HONG KONG DOLLAR.

HE SAID THAT WITH 1997 ON THE HORIZON AND WITH EVENTS SUCH THOSE IN JUNE 1989, IT WAS VERY EASY FOR ONE TO POINT TO THE MOVEMENTS OF MONEY AND JUMP QUICKLY TO THE CONCLUSION THAT THERE "CAPITAL FLIGHT" FROM HONG KONG.

ENORMOUS

WAS

"BUT IT WAS IMPORTANT TO TRY AND LOOK CAREFULLY FOR

EVIDENCE,"

HE SAID, "AND EVIDENCE IS SIMPLY NOT THERE."

TOTAL

HE SAID THAT IF MONEY WAS MEASURED BY THE DEPOSITS IN THE BANKING SYSTEM, THEN MONEY IN HONG KONG TRIPLED OVER THE FIVE-YEAR PERIOD FROM 1985 TO 1989, THAT THE SIGNING OF THE JOINT DECLARATION AT THE END OF 1984.

AMOUNT OF HAD NEARLY WAS SINCE

KONG TOTAL CENT, MR

MONEY FROM HONG IN 1989 WHEN THE MYTH OF OUTFLOW OF RECEIVED INCREASING ATTENTION, AS A RESULT OF EVENTS IN CHINA, DEPOSITS IN THE BANKING SYSTEM IN HONG KONG GREW BY 19 PER YAM SAID.

THE AVERAGE THE HONG KONG

HE SAID THAT THE GROWTH IN 1989 WAS SLOWER THAN GROWTH RATE IN PREVIOUS YEARS, BUT THIS WAS BECAUSE ECONOMY WAS EXPERIENCING A SLOW DOWN.

IN ANY CASE, EVEN AT 19 PER CENT WAS VERY HIGH BY INTERNATIONAL STANDARDS, HE ADDED.

TO NOT SUPPORT

HONG KONG DOLLAR TURNING TO THE OUTFLOW OF MONEY FROM

CURRENCIES, MR YAM STRESSED THAT THE FACTS DID

FOREIGN THIS CONTENTION ALSO.

1984, HONG KONG ON AVERAGE PER ANNUM, BROADLY

SINCE THE SIGNING OF THE JOINT DECLARATION AT THE END OF MONEY

HONG KONG DOLLARS, AS MEASURED BY THE AMOUNT OF DOLLAR DEPOSITS IN THE BANKING SYSTEM OF HONG KONG, HAD BEEN GROWING AT A HEALTHY RATE OF 16 PER CENT CONSISTENT WITH THE GROWTH RATE OF THE ECONOMY, HE SAID.

REGARDING THE FALL IN THE SHARE OF HONG KONG DOLLAR DEPOSITS TO VERY TOTAL DEPOSITS IN HONG KONG, FROM ABOUT 60 PER CENT AT THE END OF 1984 TO ABOUT 45 PER CENT AT THE END OF 1989, MR YAM SAID THERE WAS A GOOD EXPLANATION BEHIND THIS.

AS HONG KONG HAD BEEN DEVELOPING RAPIDLY AS A FINANCIAL CENTRE, MORE AND MORE FOREIGN FUNDS IN FOREIGN CURRENCIES WERE INTO HONG KONG, HE SAID.

BEING MOVED

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