TNAG-1748-FCO40-2467-Visit-by-Sir-Geoffrey-Howe--Secretary-of-State-for-Foreign-a-1988 — Page 144

system.

CONFIDENTIAL

4.

We are also trying to resist suggestions within the OECD that

there should be some form of collective dialogue with the "four

dragons". We point not only to the disparate nature of the group

but also to the impossibility (for Hong Kong as well as ourselves)

of government contacts with the Taiwanese.

HONG KONG STOCK EXCHANGE

5.

After the October crash the Hong Kong Stock and Futures

Exchanges closed for four days and a support package totalling $4

billion for the Futures Exchange had to be put into place. In

January Mr Ronald Li, former Chairman of the Stock Exchange, and

some other members of the Stock Exchange Committee, were arrested by

the Independent Commission Against Corruption (ICAC) on corruption

charges. Further changes may be brought against other former

members of the Committee in due course. Despite these shocks share

prices in Hong Kong have recovered, in line with prevailing

international trends.

6.

The report of the Securities Review Committee, led by Mr Ian

Hay Davison, is due to be published on 2 June. The report will

review the constitution, powers, management and operation of the

Hong Kong Stock and Futures Exchanges, the Securities and

Commodities Trading Commissions, and the office of the Commissioner for Securities and Commodities Trading. The purpose of the review

is to recommend reforms to ensure the integrity of the markets and

to protect investors, thereby consolidating confidence in Hong Kong

an international financial centre.

as

CONFIDENTIAL