TNAG-1640-FCO40-2287-Economic-situation-in-Hong-Kong-1987 — Page 4

CONFIDENTIAL #

Report on Capital Investment in Hong Kong

Third Quarter of 1987

Summary

In line with the buoyancy of the economy

over the course of 1986 and the first nine months

of 1987, i.e. before the recent adjustments in the

world's financial markets, the growth rate of

investment in plant and machinery picked up

substantially in the third quarter. Retained

imports of capital goods increased by 49% in real terms in the third quarter over the same quarter

last year.

There was a sharp increase in

investment in industrial machinery for use in the

manufacturing sector. But even stronger growth was

recorded for investment in plant and machinery

other than for manufacturing use.

2.

As regards investment in property, while

planned developments of residential property recorded a marked increase in the third quarter of

1987 over the same quarter last year, reductions in

the floor area represented by consents to commence

construction were recorded for commercial and

industrial property. Building plans of all types of property, in terms of total usable floor area for which consent to commence work had been given,

rose by 18% in the first nine months of 1987 over

the same period last year. The property market

remained active during the third quarter, and the

demand for most types of property was still strong.

CONFIDENTIAL #