TNAG-0612-FCO40-760-Visits-of-Lord-Goronwy-Roberts--Minister-of-State-for-Foreig-1977 — Page 17

CONFIDENTIAL

BRIEF F

HONG KONG GOVERNMENT'S INVESTMENT IN SOUTH AFRICAN STOCK

Background

1.

It has emerged that the Hong Kong Government have invested some of their surplus financial balances in South African stocks. The most recent figures available, those at 31 March 1976, indicate that their holdings at that time amounted to approximately £2.8 million sterling. The Hong Kong Government are, of course, within their rights Linvesting funds in such stock. However, given the sensitivity

surrounding the whole question of British investment in South Africa and given HMG's responsibility to Parliament for the actions of the Hong Kong Government, the latter's investment in South African stocks is itself a sensitive matter. (The Department's submission of 15 February, copy attached, refers).

Line to Take

2. The Minister of State might draw the Government's attention to

the sensitivity of the Hong Kong Government's investments in South

African stocks (it is not known whether the Governor himself is

aware of the position); say that we should not wish to suggest that

the Hong Kong Government should divest itself of their existing investments at once; advise that they ought not to expand their portfolios and should in no circumstances buy South African Defence Bonds; and suggest that the Hong Kong Government consider a gradual phased reduction of their holdings, provided that this did not cause

any significant financial disadvantage.

CONFIDENTIAL