CONFIDENTIAL
5
H.K.$ mns.
Total Bank Advances
Advances to Professional and Priva te Individuals
(2) as a percentage of (1)
(1)
(2)
A. March 1972
12.328
1,992
16,2%
B. September 1972
15,298
3,378
22,1%
C. December 1972
17,726
3,746
21.1%
D. March 1973
21,383
5,247
24.5%
E. Change March 1973
over March 1972
+ 9,055(+73%) +3,255 (+163%)
Thus, over the year ended March 1973 bank advances as a whole rose by
73%, i.e. far in excess of the growth of GNP at current prices of
about 17%. It is possible indeed, probable that some part of
advances outside loans to professional and private individuals, which
themselves increased by no less than 163% over the same period, may
have been used for stock exchange operations. Furthermore, a
proportion of finance house advances, for which there are no figures,
were probably employed for the same purpose. Faced with this situation
in January the Banking Commissioner, in the absence of powers to
control bank advances, requested the banks voluntarily to reduce
their advances against shares. By and large the request is believed
to have been complied with. However, it is clear that ideally the
overall credit expansion, including that part directly supporting the
stock market, should have been curbed at a much earlier stage: and
it no doubt would have been had the necessary powers been available.
Indeed, it is understood that the Banking Commissioner had urged
action as early as mid-1972 but strong opposition voiced by the
Hongkong Bank at the time was supported by the Financial Secretary
and hence no restrictive measures were then taken. It is also
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