TNAG-0623-FCO40-771-Hong-Kong-Government-investments-in-South-African-stocks-1977 — Page 54

4100

(four stocks in one case and two in the other).

There are no Hong Kong Government holdings in South

African defence bonds to our Kunwledge. ARGUMENT

autonomy,

Urue....

3. It is clear that the Hong Kong Government has been

within its rights in investing funds in South African

stocks. It would not be consistent with the degree of

financial economy that the Hong Kong Government hase

been allowed to acquire during the post-war period for

us to attempt to influence its decisions on the placing

of investments, which have presumably been determined

Ruancial by normal commercial considerations. Nor is there ---

anything objectionable in what the Hong Kong Government have has done so far as sterling is concerned. Following the

ending of the Sterling Guarantee Arrangements in late

1974, the Treasury have accepted that the Hong Kong Government may diversify their sterling holdings. When

the question arose in another context last summer the

Treasury informed us that the gradual and careful way in

which the Hong Kong Government had diversified out of

sterling left "no cause for repproach". Moreover, the

Treasury are kept regularly informed of the Hong Kong

Government's investment policies and have been aware of

the investments in South African stocks. The Treasury

have said that they have no complaints to offer from **

their point of view.

4.

This said, the Hong Kong Government's investment in

because & South African stocks is a sensitive matter given the

our commercial relations with South Africa which a wand attack sensitivity of the whole question of British investment bost at home and abroad For these rasmo HMG what is

in South Africa/HMG responsible to Parliament for

the actions of the Hong Kong Government and could come

under embarrassing criticism if it became known that the

ÀSA* *ZAK PRGIEAMZPE H# invested in South African

It is not Gunment pokay

to place

restintime o

m

normal

civil trade and investment in Santt Aforia. But investment in South Aforier Pronment strek bu

ка

JG-

ко

very different mults from investment by

ma

business coconD.

And, as the recent

こ

Case of investment =

SAJ Defence Bont

by Barlay's Banks

Sant Aforier/Subistuing