XN000022-1996-04-03 — Page 51

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As to the queries on why Government should play a leading role in the mortgage corporation business, Members may recall that development of the secondary mortgage market is a subject that has been under the close examination by both the private sector and ourselves since the early 1990s. A very limited mortgage securitisation market emerged then but the momentum was not sustained because of illiquidity of the issues. In a joint HKMA-private sector study, some of the leading players in the private sector argued that a government supported mortgage corporation would give the liquidity, homogeneity and necessary impetus to the development of the secondary mortgage market. Private sector issues lacked these qualities to get the market going. Hence, clear government support of the corporation at the outset is desirable, as this will greatly enhance its acceptance by the market. From a wider perspective, our analysis suggests that the corporation will offer many benefits in the banking, monetary and home financing spheres. We therefore conclude that it is desirable for the Government to take a leading role to facilitate this venture.

The mortgage corporation will have a major role to play in the strength and stability of the Hong Kong financial system. It will be a primary channel whereby long term savings are safely utilised to finance long term assets, namely, residential mortgages. From the savings point of view, the growth of provident and pension funds, aided by the Mandatory Provident Fund System, would want high quality assets to invest in. With the development of a deep and liquid secondary mortgage market, the mortgage corporation would enhance Hong Kong's status and reputation as an international financial centre.

Thank you, Mr President.

End

Priority tasks on education and labour outlined

章非

Up to 90 percent of kindergartens will be eligible to join the revised Kindergarten Subsidy Scheme (KSS) and the rate of subsidy will be increased to take account not only inflation but also the annual salary increment for teachers.

Announcing this today (Wednesday) at the resumed debate on the Appropriation Bill 1996, the Secretary for Education and Manpower, Mr Joseph W P Wong said the revised Scheme was the result of a recently completed review of the KSS.