TNAG-2126-FCO40-3036-Investment-in-Hong-Kong-1990 — Page 54

t

CONFIDENTIAL # 3

Report on Capital Investment in Hong Kong

Fourth Quarter of 1989

Summary

Investment in plant and machinery remained

weak in the fourth quarter of 1989. Retained imports of capital goods fell by about 19% in real terms in the fourth quarter of 1989 compared with the same quarter last year. For 1989 as a whole, these

retained imports recorded a decrease of about 28 in

real terms. In 1988, there was an increase of 17%. The sluggish domestic export performance, the slow-down in overall economic activity, the recent economic situation in China, and perhaps still the impact on investor confidence of the June events in

China have all dampened investment sentiment.

2.

The recovery of the property market since late July 1989 was sustained into the fourth quarter, although the pace of recovery varied between

sub-sectors. The market for residential property,

particularly for small to medium-sized flats, showed

a good performance in the fourth quarter. The demand

for office space in prime locations still held up well. On the other hand, the demand for shop space remained sluggish, while that for industrial property showed only limited improvement from the third

quarter.

G F 130

CONFIDENTIAL #