TNAG-1942-FCO40-2768-Internal-economic-situation-in-Hong-Kong-1989 — Page 33

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12.

In line with the movement of US dollar interest rates, local

money market interest cates fell during July. The 3- month Hong Kong dollar interbank rate, for instance, fell from 10 1/16% at the end of June to 8 3/4% at the end of July, while the 3-month Eurodollar deposit rate fell from 9 1/4% co 3 1/2%. The differential between these two interest rates narrowed to 1/4 of a percentage point in favour of the Hong Kong dollar сасе at the end OE July, from 13/16 Of а percentage point a month earlier.

13.

Following the movement of local money market interest rates, deposit rates set by the Hong Kong Association of Banks were revised downwards

downwards by half of a percentage point

point across the board on 10 July. At the end of July, the savings deposit cate was 5 3/4%, the 3-month and 12-month deposit rates were 7% and 8% respectively, while the best lending rate 10 1/2%.

14.

at

Local share prices showed a further recovery during July. The Hang Sang Index rose fairly steadily from 2 271 at the beginning of July and reached 2 547 on 19 July. It then eased somewhat before rebounding on the last few trading days to close the month at 2 571. This was 13% higher than at the end of June. The average daily turnover on the Stock Exhcnage was $916 million in July, compared with $1,213

$1,213 million In June.

the

15.

In the property mackec, the

pre-completion sales of several residential developments in the latter part of July met with a favourable response. The prices of these small to medium-sized flats were however 15%-20% below the levels prevailing in eacly May. The improved market sentiment suggests that the fall in prices in chis segment OE the residential property market may have been arrested. The prime site for

for office development at Garden Road was sold for ૩ price of $2.7 billion, which was in line with market expectations at the close of tender on 21 July.

in real terms in che

15.

On investment in machinery and equipment, retained imports of capital goods grew by First five months of 1989 compared with a year earlier. Within this category, cetained imports of industrial machinery for manufacturing use cose by only 5% in real cerms. In the building and construction industry, some slow-down in building works on private sector projects was reported in the last two

months.

Hong Kong Government Office August 1989