XN000022-1992-07-06 — Page 2

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MONDAY, JULY 6, 1992

HK PLANNING CONFIDENTLY FOR THE FUTURE: FS

THE HIGHER LEVEL OF ACTIVITY AND SOPHISTICATION ATTAINED BY HONG KONG'S EQUITY AND DEBT MARKETS IN RECENT YEARS HAS PLACED THEM IN AN EXCELLENT POSITION TO SERVE THE FINANCING NEEDS OF OTHER ECONOMIES IN THE REGION.

THE FINANCIAL SECRETARY, MR HAMISH MACLEOD. SAID THIS TODAY (MONDAY) AT THE OPENING CEREMONY OF THE FOURTH ANNUAL PACIFIC-BASIN CAPITAL MARKETS FINANCE CONFERENCE.

HE TOLD PARTICIPANTS HOW HONG KONG HAD BEEN POSITIONING ITSELF IN THE FAST DEVELOPING GLOBAL FINANCIAL MARKET, COVERING THE INITIATIVES TAKEN IN THE PAST FEW YEARS TO ENHANCE THE OPERATIONS AND REPUTATION OF ITS MARKETS, AND THE VERY CLOSE ECONOMIC LINKS BETWEEN HONG KONG AND CHINA.

HE SAID THE CHINA DIMENSION WAS FEATURING PROMINENTLY AS AN IMPORTANT IMPETUS TO THE FURTHER EXPANSION OF HONG KONG'S FINANCIAL MARKETS BECAUSE OF THE INCREASINGLY CLOSE ECONOMIC RELATIONSHIP BETWEEN THE TWO PLACES.

HONG KONG AND CHINA ARE NOW EACH OTHER'S LARGEST TRADING PARTNER; AND THAT ABOUT 60 PER CENT OF CHINA'S EXTERNAL INVESTMENT COMES FROM OR THROUGH HONG KONG, HE SAID.

"IN THE OTHER DIRECTION, CHINA'S INVESTMENTS IN HONG KONG ARE ESTIMATED AT ABOUT US$10 BILLION.

"WITH A WELL-DEVELOPED FINANCIAL SECTOR, HONG KONG NATURALLY SERVES ALSO AS A FUNDING CENTRE FOR CHINA. SOME ESTIMATES SUGGEST THAT AS MUCH AS 90 PER CENT OF CHINA'S EXTERNAL BORROWING LAST YEAR WAS ARRANGED IN HONG KONG.

"MOST BORROWINGS WERE IN THE FORM OF SYNDICATED LOANS. HOWEVER, ON A NUMBER OF OCCASIONS CHINESE ENTERPRISES OR CHINA- INTEREST FIRMS HAVE TAPPED THE DEBT MARKET WITH ISSUES OF COMMERCIAL PAPER OR OTHER DEBT INSTRUMENTS. THEY HAVE ALSO STEPPED UP ACTIVITY IN OUR STOCK MARKET, HE SAID.

MR MACLEOD SAID FOR SOME YEARS. SOME CHINESE-RELATED COMPANIES HAD BEEN ARRANGING LISTING HERE THROUGH THE ACQUISITION OF SHELL COMPANIES.

"MORE RECENTLY, A NUMBER OF LOCAL COMPANIES HAVE BEEN RAISING FUNDS IN THE STOCK MARKET TO FINANCE THEIR EXPANSION IN CHINA.

"VERY SIGNIFICANT SUMS, BOTH FROM HONG KONG AND OVERSEAS, HAVE BEEN INVESTED IN SUCH SO-CALLED 'CHINA-CONCEPT' STOCKS TO BENEFIT FROM THE BURGEONING ECONOMY OF SOUTHERN CHINA.

"LIKEWISE, ISSUES OF CHINA'S B SHARES AVAILABLE FOR FOREIGN INVESTORS AND NOW LISTED ON THE STOCK EXCHANGES SHANGHAI HAVE ATTRACTED MUCH INVESTOR INTEREST.

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