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CONFIDENTIAL
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much of it
The contractors for the Bank of China building are the Japanese Kumagai Gumi, who are also responsible for the second cross-harbour tunnel project which is expected to be completed in the Autumn (several months ahead of budget) and a massive new Cultural Centre on the Kowloon side. The activities of Kumagai Gumi are only one part of a more widely based and rapidly increasing Japanese involvement and presence in Hong Kong. In the first four months of 1989, Japanese investment in the local property market
is estimated to have reached by companies for their own use HK$3.2bn (£250mn approx) compared with estimated amounts of HK$4.6bn and 4.45bn for the whole year in 1988 and 1987 respectively. The number of Japanese banks continues to rise, the pressure coming mainly from the regional banks, and Nicolle has recently reached an agreement with the Ministry of Finance to limit new Japanese entrants to two per year. (The Hong Kong authorities. have also put down a marker with the Japanese that, if a further round of opening of the Tokyo Stock Exchange takes place, they would expect James Capel to be let in. John Gray at HSBC put it as a case of wanting to attend the party but finding it difficult to afford the dress! Membership is not so attractive to Capel in cost terms as it once was, but they would feel slighted if others were let in now but they were not admitted). The Japanese use. Hong Kong as a training ground for their younger managers who are likely, subsequently to move on to the more sophisticated international centres and Japanese banks, with the Bank of China group, are the most aggressive elements in the local market.
9 All this Japanese activity, reflects a confident view from Tokyo of Hong Kong's future. The evidence is that this is broadly
While the Japanese shared by the international business community.
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see Hong Kong's importance particularly as a base for developing business with China - - they also, incidentally, attach considerable value to it as a centre for information others from outside the area are attracted by Hong Kong's situation as a regional centre for doing business with the rapidly expanding countries of the Asia/Pacific rim. In the banking sector, Italian and Irish institutions have been among the recent newcomers and Nendick mentioned that considerable enthusiasm was being shown by US security firms. In recent months, Morgan Stanley, Salomons and several others had either arrived for the first time or expanded
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