TNAG-1951-FCO40-2779-British-capital-investment-in-Hong-Kong-1989 — Page 88

CONFIDENTIAL #3

G.F. 326

12

-

Feedback from Industry Department

26.

Some qualitative information on recent trends in capital investment in the manufacturing

industries was obtained by the Industry Department during regular factory visits and from contacts with

manufacturers. The information, which is largely

specific in nature and probably subjective, is

summarised below :

(i) The overall investment situation in the

third quarter of 1989 was relatively

quiet. Local manufacturers were generally adopting a cautious attitude in making further investments, although in certain

industries investment activity was still

maintained. Apart from the impact of the June events in China, contributory factors include the slow-down of the world economy,

protectionist sentiment in the major overseas markets, and the sluggish

performance of Hong Kong's domestic exports

since the second quarter.

(ii) Investment in the textiles and clothing industries showed a mixed picture.

Investment in the spinning and weaving

sector was mainly for replacement purposes,

while investment in the cut-and-sewn

garment sector was steady. As regards the knitwear sector, a major supplier of computerised knitting machines reported a

substantial decline in sales in the third

quarter over a year earlier. On the other hand, investment in the dyeing and

finishing sector was more active.

CONFIDENTIAL **