XN000022-1992-05-29 — Page 7

FRIDAY, MAY 29, 1992

FIRST, THE MARKET EXCHANGE RATE OF THE HONG KONG DOLLAR AGAINST THE U.S. DOLLAR REMAINED STABLE.

HOWEVER, INFLUENCED

OF

THE U.S. DOLLAR BY THE STRENGTHENING OF AGAINST OTHER MAJOR CURRENCIES, THE EFFECTIVE EXCHANGE RATE INDEX THE HONG KONG DOLLAR ROSE FROM 109.2 AT THE END OF 1991 TO THE END OF MARCH 1992.

112.5 AT

LUNAR

MONEY

SECONDLY, AMIDST A SEASONAL DEMAND FOR MONEY AROUND THE NEW YEAR AND SHARE SUBSCRIPTION ACTIVITIES DURING MARCH, LOCAL

TIGHTENED DURING THE MARKET INTEREST RATES FIRMED UP AS LIQUIDITY FIRST QUARTER.

DEPOSIT

KONG ASSOCIATION OF

BANKS, NEVERTHELESS REMAINED UNCHANGED IN THE QUARTER.

ADMINISTERED BY THE HONG RATES

LOANS

AND ADVANCES

A LESS RAPID SLOW-DOWN IN LENDING

SHOWED THIRDLY, DOMESTIC INCREASE DURING THE FIRST QUARTER, PARTLY DUE TO THE RESIDENTIAL MORTGAGE LOANS FOLLOWING A TIGHTENING OF MORTGAGE POLICY BY THE BANKS IN NOVEMBER LAST YEAR.

THE BROADER DEFINITIONS OF THE HONG KONG DOLLAR ALSO RECORDED SLOWER INCREASES DURING THE QUARTER.

MONEY SUPPLY

FOURTHLY, DURING THE FIRST QUARTER THE STOCK MARKET WAS BOOSTED BETWEEN THE SATISFACTORY OUTCOME OF THE SPECIAL 301 NEGOTIATIONS CHINA AND THE UNITED STATES AND BY FAVOURABLE CORPORATE RESULTS.

BY

ΤΟ A 4,938 (THE

THE HANG SENG INDEX ROSE FROM 4,297 AT THE END OF 1991 HIGH OF 5,071 ON MARCH 13, BEFORE CLOSING THE QUARTER AT INDEX ROSE FURTHER TO 5,988 ON MAY 28).

AND PRICE THE GOVERNMENT ECONOMIST SAID IN REVIEWING THE GDP

DEVELOPMENTS, ADJUSTMENTS FORECASTS FOR 1992 IN THE LIGHT OF THESE

APPROPRIATE. THE WERE MADE TO THE COMPONENT FORECASTS WHERE DEEMED UPDATED FORECASTS ARE SHOWN IN THE TABLE ANNEXED.

IN THE EXTERNAL SECTOR, DOMESTIC

ARE EXPORTS LOWER

FORECAST ΤΟ EARLIER

THE THAN TO REMAIN

SLIGHTLY INCREASE BY 1% IN REAL TERMS, FORECAST. DOMESTIC EXPORTS TO CHINA ARE LIKELY WHILE THOSE TO THE UNITED STATES ARE EXPECTED TO CONTINUE TO IN THE COMING MONTHS.

ROBUST, IMPROVE

THE

OF HONG

THE RECENT DEPRECIATION OF THE HONG KONG DOLLAR ALONG WITH U.S. DOLLAR SHOULD HELP TO IMPROVE THE PRICE COMPETITIVENESS KONG'S PRODUCTS IN THE OVERSEAS MARKETS.

THIS MAY PROVIDE A PARTIAL OFFSET TO THE WEAK DEMAND IN GERMANY EXPORTS AND THE UNITED KINGDOM. ALTHOUGH THE PERFORMANCE OF DOMESTIC

WAS A IN THE FIRST FOUR MONTHS OF THIS YEAR WAS RATHER SLACK, THERE PICK-UP IN ORDERS-ON-HAND.

HAVING REGARD TO THE SHARP INCREASE IN THE FIRST QUARTER, FORECAST GROWTH RATE IN REAL TERMS OF RE-EXPORTS FOR 1992 AS A IS REVISED UPWARDS FROM 20% TO 24%.

THE

WHOLE

/ASSUMING SATISFACTORY