TNAG-0623-FCO40-771-Hong-Kong-Government-investments-in-South-African-stocks-1977 — Page 18

CODE 18-//

CONFIDENTIAL

Alineta

Mr Milton (HKD)

23/3.

HONG KONG : MONETARY AFFAIRS

Reference....

RE

18

No. 41

READOR IN

29 MAR 1977

HKK 102/1

1. I had a meeting with Blye, Secretary for Monetary Affairs, yesterday. He had just come from talking in Zurich with their Swiss bankers (UBS) on the new sterling/ variable currency basket bond offer.

2.

3.

Subjects of interest to you which arose were:

a)

b)

c)

d)

Investment in South Africa - whilst the Governor is formally replying,

The other six they would plead guilty to only one purchase in 1973.

SA investments were acquired without their knowledge by the Crown Agents who run one of their portfolios. There would be no publicity in future as those investments would be hidden in the unpublished Exchange Fund Accounts. (A wider issue could arise here in that CA are under ODM and hence FCO's wing are any instructions re South African investments for Colonial Governments in force?)

(now +15%)

Hong Kong - it is still continuing to appreciate quickly and some concern is now being expressed by Blye as exports may become overpriced. (I raised this issue in my Christian telegram of 22 November 1976.) contingency planning seemed evident.

- whilst we receive the annual accounts, the Exchange Fund Accounts monthly unaudited ones are available locally. I would suggest we consider asking for these as it will enable us to follow more closely their monetary and exchange rate policies and actions.

-

No

Hong Kong $ bond issues the World Bank would still like to issue a US$50 million in Hong Kong, but progress has been halted because of the local taxation at source policy. Blye was hopeful they would solve this one.

He welcomed my visit in the

Blye said this was his first call at FCO and he liked our "Open Door" policy and saw this as a way of removing problems of the past. summer when we would have a longer talk.

23 March 1977

D

Mr Duffy (HKD)

Mr Stewart

1.

Der

wh Elved.

си

omen dunh

Adrian Mith

Senior Economic Adviser

G 72/G

8815

I will take account of paragraph 2(a) of Mr Smith's minute in a draft submission that Mr Cortazzi has asked me to do in connection with the Governor's reply of 15 March (just received) to Mr Murray's letter of 22 February. The Governor's letter also mentions that a number of the South African stocks were purchased by the Crown Agents and I think that Mr Smith is right to say that this point needs looking into. I will raise it with FRD who are, I think, the "lead" department on the Crown Agents, in connection with the draft submission.

/I should

CONFIDENTIAL