TNAG-0623-FCO40-771-Hong-Kong-Government-investments-in-South-African-stocks-1977 — Page 59

5

Flag A

Flag B

Mr Maud

CONFIDENTIAL COVERINGGSECRET

RE

HONG KONG: INVESTMENT IN SOUTH AFRICAN STOCK

RE' *

• 50.61 AFLBINT

102/2

HKK too 3.

1. I attach copies of minutes from Mr Smith drawing my attention to the fact that some part of Hong Kong's reserves are held in South African stock. Kr Smith is rightly concerned lest this holding come to public notice and be used as yet another weapon against the Hong Kong image.

2. I believe that the Treasury will already be aware of these investments. You will remember that the Treasury told us last summer (Barratt's letter of 23 June to Cortazzi) that the Hong Kong Government's management of its sterli holding left no cause for reproach. Furthermore, I understand from the Financial Secretary in Hong Kong that the Treasury and the Bank of England are kept thly informed on a ministerial basis by the Hong Kong Government of the value of Hong Kong sterling holdings. It appears then that the Treasury and the Bank are probably completely au fait with

Hong Kong's investment policies and with the fact of the South African investments. I think it likely also that the Hong Kong Government will have considered the effect of public opinion on South African holdings before they made the investment.

3. I shall be grateful for any comments you may have.

31 January 1977

Cc:

Mr Smith (Economists Dept)

CONFIDENTIAL COVERING SECRET

JA B Stewart

Hong Kong Department