TNAG-1264-FCO40-1610-Future-of-Hong-Kong-confidence-in-Hong-Kong-1983 — Page 7

6. CIVIL SERVANTS.

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THE CIVIL SERVICE, ALTHOUGH OUTWARDLY CALM IS WATCHING DEVELOP-

MENTS CLOSELY. UNIONS HAVE SET UP STUDY GROUPS TO KEEP THEIR

MEMBERS INFORMED. TO-DATE 166 APPLICATIONS FROM SERVING CIVIL

SERVANTS FOR DISCRETIONARY REGISTRATION UNDER S4(5) OF THE BNA

HAVE BEEN RECEIVED, BUT THE RATE AT WHICH APPLICATIONS ARE

RECEIVED COULD ACCELERATE QUICKLY.

7. EXCHANGE RATES.

FOLLOWING THE INTRODUCTION OF THE NEW EXCHANGE RATE REGIME ON

17 OCTOBER, THE MARKET RATE HAS TRADED IN THE RANGE 7.78 TO 7.82

TO THE US DOLLAR. INTERBANK RATES HAVE FLUCTUATED WIDELY, BUT ON

BALANCE HAVE BEEN LOWER THAN IMMEDIATELY BEFORE THE SCHEME WAS

INTRODUCED. THE ASSOCIATION OF BANKS HAS THEREFORE BEEN ABLE TO

REDUCE ITS BEST LENDING RATES BY 2 1/2 PER CENT. THE FACT THAT

THE EXCHANGE RATE HAS STABILISED WITH INTEREST RATES BELOW

EARLIER LEVELS INDICATES THAT THERE HAS BEEN LESS PRESSURE TO MOVE

FUNDS OUT OF THE HONG KONG DOLLAR INTO OTHER CURRENCIES THAN

BEFORE. THE GOVERNMENT'S ACTION IN FIXING A RATE AT WHICH

CERTIFICATES OF INDEBTEDNESS ARE PRICED HAS DOUBTLESS REASSURED

THE MARKET THAT THE EXCHANGE FUND'S RESOURCES ARE SUBSTANTIAL.

BANKING FIGURES AND ANECDOTAL EVIDENCE ALSO LEND SUPPORT TO THIS

VIEW. MOREOVER THE HONG KONG DOLLAR NO LONGER APPEARS AS A

CURRENCY AGAINST WHICH SPECULATION MIGHT BE PROFITABLE.

3. STOCK MARKET.

DESPITE FAVOURABLE ECONOMIC INDICATORS INCLUDING A 37 PER CENT

INCREASE IN DOMESTIC EXPORTS IN MONEY TERMS BETWEEN AUGUST AND

OCTOBER A STABLE EXCHANGE RATE AND A FALL IN INTEREST RATES, ON

THE ONE HAND, AND THE ABSENCE OF UNFAVOURABLE POLITICAL DEVELOP-

MENTS, ON THE OTHER, INVESTORS HAVE REMAINED ON THE SIDELINES,

TURNOVER HAS BEEN LOW AND THE MARKETS HAVE MARKED TIME FOR TWO SUCCESSIVE MONTHS. AFTER REACHING A HIGH OF 896.53 ON 7 NOVEMBER, THE HANG SENG INDEX ENDED THE MONTH AT 852.9, DOWN 12 POINTS FROM OCTOBER'S CLOSE OF 865.33..

9. REGISTRATION/WINDING UP OF COMPANIES.

THERE HAVE BEEN NO SIGNIFICANT CHANGES IN THE MONTHLY AVERAGE

OF 940 OF INCORPORATION OF LOCAL COMPANIES. FOREIGN COMPANY

REGISTRATIONS ALSO REMAIN FAIRLY CONSTANT AT ABOUT 25 A MONTH.

AT THE END OF OCTOBER THERE WERE 1244 APPLICATIONS FOR BANK —

RUPTCY OR THE WINDING UP OF COMPANIES OUTSTANDING. THIS REPRESENTS

A 43 PER CENT INCREASE ON CASES OUTSTANDING AT THE END OF

SEPTEMBER, 1982 BUT THERE IS A COMPLEX OF REASONS FOR THIS. THERE

IS A GRADUAL MONTHLY BUILD UP.

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