Companies like Jardines which were not domiciled in Hong Kong had suffered because they had been prevented by the listing requirements of the Hong Kong Stock Exchange from buying back their own shares. Mr Keswick said that he intended to complain to the Hong Kong Government on both these counts.
3.
Mr Keswick's claim that the fall in Hong Kong share prices was partly due to the Hong Kong Government's failure to take earlier action to freeze Kuwaiti assets has also been reflected in local press comment (eg the Ta Kung Pao of 7 August). We are asking Hong Kong for their assessment of whether any substantial Kuwaiti holdings were in fact disposed of before the freeze took effect.
4. It is true that on Monday Hong Kong share prices fell more sharply than those in other major international centres. This was partly because of the sharp rise in Hong Kong share prices over the last two months (which was in any event due for a correction) and partly because of the market's perception that Hong Kong is particularly vulnerable to a recession in its main export markets caused by higher oil prices, given the territory's extreme dependence on foreign trade.
5. I attach a chronology showing the exact sequence of events leading up to freezing of Kuwaiti and Iraqi assets in Hong Kong late cn 6 August.
BAYABI/2
Rosaline Manda
R M Marsden
CONFIDENTIAL
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