TNAG-2127-FCO40-3037-Investment-in-Hong-Kong-1990 — Page 126

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WAS REPRODUCED IN THE

1 1 29 SEPTEMBER 1989 ISSUE OF BRITISH BUSINESS''. THIS IS A TRIENNIAL SURVEY CONDUCTED BY THE STATISTICS DIVISION OF THE DTI. THUS ON TOP OF ITS OTHER LIMITATIONS, THE FIGURE IS BADLY OUT OF DATE. WE KNOW THAT THE VALUE OF MANY

ELEMENTS THAT WENT INTO THE FIGURE HAVE SIGNIFICANTLY INCREASED SINCE THEN. SIR ADRIAN SWIRE HAS TOLD US THAT OVER THE PREVIOUS TWO YEARS THE VALUE OF SWIRE'S OWN UK HOLDINGS HAS RISEN VERY

SIGNIFICANTLY.

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3. THE THREE KEY FIGURES PRODUCED BY MY PREDECESSOR IN HIS PAPER ''BRITISH BUSINESS IN HONG KONG: A REVIEW OF MARCH 1989 WERE (I) POUNDS STERLING 2.5 BILLION TO POUNDS STERLING 3 BILLION FOR NET ASSETS OF BRITISH COMPANIES IN HONG KONG : (II) POUNDS STERLING 6 BILLION, AT LEAST, FOR TOTAL NET ASSETS OF COMPANIES CONTROLLED FROM BRITAIN: AND (III) POUNDS STERLING 19 BILLION FOR THE TOTAL GROSS STOCK MARKET VALUE OF 'BRITISH OWNED, CONTROLLED OR MANAGED COMPANIES THE 'IN CONFIDENCE'' ANNEX WHICH RECEIVED A MUCH NARROWER DISTRIBUTION, BUT WHICH INCLUDED THE FCO AND DTI, SHOWED HOW THOSE FIGURES WERE DERIVED. THEY NO DOUBT COULD BE REFINED CONSIDERABLY, THOUGH NOT READILY WITHIN THE RESOURCES OF THIS OFFICE, E.G. THE FIRST OF THESE FIGURES ATTEMPTED A REASONABLY ACCURATE ASSESSMENT, BASED ON DIRECT ENQUIRIES, OF THE ASSETS OF 18 COMPANIES, BUT THEN MADE ASSUMPTIONS ON ABOUT 400 MORE (POUNDS STERLING 0.25 MILLION EACH). CLEARLY THIS FIGURE COULD THEREFORE BE VERY WIDE OF THE MARK AND IS MORE LIKELY TO BE LARGER THAN SMALLER. (HOLLOWAY STRESSED IT WAS A CONSERVATIVE ESTIMATE). MOREOVER MANY OF THE ASSETS INCLUDED IN THAT FIGURE WERE PROPERTY: THE PRICE OF PROPERTY HAS GONE UP A GREAT DEAL SINCE THEN, ALTHOUGH IT NOW APPEARS TO BE FALLING BACK AGAIN.

4. A USEFUL FIGURE IS THAT QUOTED BY SIR ADRIAN SWIRE IN HIS LETTER TO MR HESELTINE OF 27 FEBRUARY 1990 THAT T 'THE UNDERLYING VALUE OF THE UK HOLDING IN THE SWIRE GROUP OF COMPANIES IN HONG KONG ALONE IS SOME POUNDS STERLING 1200 MILLION, POSSIBLY AS MUCH AS POUNDS STERLING 1400 MILLION. SIMILARLY, HENRY KESWICK'S REFERENCE IN HIS LETTER OF 10 JANUARY TO THE SECRETARY OF STATE OF CABLE AND WIRELESS'S POUNDS STERLING 3,000 MILLION INVESTMENT IN HONG KONG TELEPHONE (20 PER CENT OF THAT HAS SINCE BEEN SOLD TO CITIC). 30TH FIGURES WERE USED TO DEMONSTRATE, WITH SOME VALIDITY, THAT THE POUNDS STERLING 1924 MILLION FIGURE FOR THE UK STAKE HERE IS 30 LOW.

5. SINCE OUR SOURCES FOR OFFICIAL FIGURES ARE SO VERY LIMITED, WE ARE DRIVEN TO LEAN ON THOSE PROVIDED BY HENRY KESWICK AND SIR

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