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British insurance companies here does help HK.
Specifically, it is worth recalling that the insurance cover for the construc- tion of the cross harbour tunnel came basically from the UK-and that this was secured at a time when it is re- ported, no other insurance markets were willing to provide cover for such a risk. Indeed, the whole saga of the financing of the cross harbour tunnel is an interesting evidence of the value of the HK/UK link - admittedly with. the proviso that HK had to do some pretty hard selling in the first case. Common UK links
In short, HK's growing importance as a financial centre, although based on a complex of factors, has benefitted from the City of London connection. Proof of this is perhaps to be found in the fact that, with the obvious excep- tion of Tokyo, the only other region in the Far East so far to have shown a comparable degree of development as a financial centre is another country with strong UK links-Singapore.
It has been suggested that the HK/ City of London link is not always beneficial. Much was made of our es- timate in our August article of $3000 -4000M having left HK for the UK during the height of the stock exchange boom. Some of the conclusions drawn by those observing this figure verged on the paranoid.
We have no reason to revise this figure, but there are a few points that should be clarified. Firstly, many British investors did no doubt make a handsome profit. They were the same investors who had the faith in
a
Hong Kong to take a risk by investing here. All investment involves degree of risk, and the reward for that risk is profit.
Secondly, for technical reasons, a repatriation of British capital could have been forecast once the OSA was abolished. This is again bound up with the 'dollar premium', and once the market here reached a certain level it was virtually certain some British funds would be withdrawn. The fact that the abolition of the OSA was fol- lowed a few months later by boom conditions in the Hong Kong market was fortunate for British investors but they were hardly responsible for starting the boom. Even without the boom, there would have been some withdrawal of British funds sooner or later. The boom of early 1973 pro- vided an occasion, rather than a
cause.
Original capital
Thirdly, the most importantly, the Chamber's figure covers only the volume of remittances. Much of this volume represents original capital as well as profits earned on that capital. The Chamber's figure, as appears to have been believed in some quarters, was most certainly not an assessment of the amount made by British inves- tors here. Quite a deal of it repre- sents what came here in the first place, not to mention remittances made in the normal way of trade, savings, in- vestment in the UK, etc.
Finally, we have no information on the ownership of this money. To assume that it was all remitted by Bri- tish investors is quite untenable. Much
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