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Question (in Cantonese): Mr Tsang, now you are considering setting up a mortgage corporation. You say you support it. Does it mean that the Government will inject capital into it or would the Exchange Fund inject capital into this quasi government corporation?

FS (in Cantonese): I think we are still at the stage of engaging a consultant to study the issue. I think Mr Hui did explain to you clearly, the whole objective is to maintain stability in the financial sector. So if there is a need for capital injection or to give an undertaking or whatever, certainly the Exchange Fund would be the appropriate instrument and nothing else. I think that must be the fairest approach. But at this stage we are still just commissioning a consultant to look at the issue, so that nothing is set yet.

Question (in Cantonese): Financial Secretary, on economic prospects you say there would not be a drastic upswing in property prices and rental. What is the basis for that forecast?

FS (in Cantonese): I think this question should best be deferred to the economist. The property task force did some work and made some recommendations in 1994 and it is quite obvious that almost all the speculators have left the market. So now most of them are end-users or long term investors in the property market. I am sure Hong Kong people are very smart. After such a turbulent period in property prices, I don't think the same sort of speculative activities would re-emerge so soon. So that is why we expect stable prices.

Question (in Cantonese): We have asked some major developers. major housing estates prices have gone up by 10%-15% already. depressed prices by 30% with the measures, so what is your forecast? least half-way?

They say that in

Now you have Will it go up at

FS (in Cantonese ); I think when we look at the property market we do not just look at the movement in the past year or two. I think what is important is that in the last year or two there has been substantial moderation in the market. If you look at the number of transactions and property prices, it seems that in September last year the market bottomed out and then there was a gradual increase in prices.

Government Economist (in Cantonese): Now the recent rebound since October 1995, when compared to the drop from the peak in April 94, that was still modest. So in other words, in recent months, when compared to the peak two years ago, when you compare the prices I would say that there is still a very modest situation.

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