TNAG-2127-FCO40-3037-Investment-in-Hong-Kong-1990 — Page 127

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ADRIAN SWIRE, BOTH OF WHOM HAVE APPLIED CONSIDERABLE RESOURCES TO DELVING INTO THIS PROBLEM. HOLLOWAY'S ESTIMATES ALSO USED THEM E.G. HIS FIGURE OF GROSS STOCK MARKET VALUE OF BRITISH OWNED, CONTROLLED OR MANAGED COMPANIES (OF POUNDS STERLING 19 BILLION) WAS, AS HE ACKNOWLEDGED, TAKEN FROM HENRY KESWICK'S PAPER OF 1989 WHICH LISTED THE STOCK VALUE OF FIVE COMPANIES OR GROUPS (HONG KONG TELECOM, HONG KONG BANK, SWIRE PACIFIC, JARDINE MATHESON AND THE KADOORIE GROUP). HENRY KESWICK AND JARDINES HAVE SINCE USED A REVISED FIGURE

OF POUNDS STERLING 21 BILLION. JARDINES IN FACT REVISE IT MONTHLY

AND TELL ME NOW THE CURRENT FIGURE IS POUNDS STERLING 22 BILLION

FOLLOWING RECENT UPWARD MOVES IN THE STOCK MARKET HERE. IT IS OF

COURSE A PRECISE AND A MEASURABLE FIGURE. BUT ITS LIMITATION IS

THAT IT REFERS ONLY TO THOSE FIVE GROUPS. IT EXCLUDES ALL THE

INVESTMENT BY E.G. SHELL, GLAXO, ICI ETC ETC HERE BECAUSE THEY ARE NOT LISTED HERE. I BELIEVE THE CONCEPT OF BRITISH OWNED, CONTROLLED OR MANAGED COMPANIES IS A USEFUL ONE, BUT IT NECESSARILY IS AN ARBITRARY ONE: IT IS I ASSUME A KESWICK INVENTION TO PULL IN THE ABOVE COMPANIES ALMOST NONE OF WHICH, PERHAPS WITH THE EXCEPTION OF SWIRES, WOULD FALL COMFORTABLY WITHIN A MORE CONVENTIONAL DEFINITION OF BRITISH COMPANIES. IT ALSO HAS A TOUCH OF HENRY

KESWICK'S OWN PREJUDICES: THE KADOORIE GROUP ARE IN BECAUSE HE

APPROVES OF LORD KADOORIE (WHO HAS A BRITISH PEERAGE, WAS EDUCATED IN THE UK, BUT WAS NEVER OTHERWISE RESIDENT THERE AND WHO HAS NO BASE THERE NOW) BUT HUTCHISON WHAMPOA ARE NOT IN BECAUSE HE

DISAPPROVES OF LI KA-SHING. IT COULD BE ARGUED THAT BOTH ARE EQUALLY 'BRITISH MANAGED (ALTHOUGH NOT OWNED) (AND IT IS ''BRITISH MANAGED'' WHICH GIVES THE BIGGEST TROUBLE IN THIS

DEFINITION). NEVERTHELESS I THINK MOST PEOPLE WOULD CONSIDER SAY, THE KADOORIE COMPANIES OR THE HONG KONG BANK AS PRINCIPALLY

BRITISH, AND, SAY, THE HUTCHISON AND WHARF GROUPS AS PRINCIPALLY HONG KONG, BECAUSE OF THE CONTROLLING OWNERSHIP AND LEADING ROLE PLAYED BY SIR Y K PAO AND LI KA-SHING IN THE LATTER. THUS THE FIVE GROUPS DO I BELIEVE DESERVE TO BE INCLUDED IN THE ASSESSMENT OF BRITISH INVESTMENT IN HONG KONG, EVEN ALTHOUGH WE HAVE TO SEARCH FOR A STRANGE DEFINITION IN ORDER TO DO SO. HOWEVER CONFINING THE FIGURE TO THESE FIVE GROUPS OF COURSE ALSO LIMITS ITS USEFULNESS. A FURTHER FACTOR, AS HENRY KESWICK OFTEN REMINDS US, IS THAT THE HONG KONG STOCK MARKET THEN AND STILL IS TRADING AT EXCEPTIONALLY LOW P/E RATIONS ON ANY WORLD SCALE. A MOVE UPWARDS TO MORE NORMAL RATIONS, WOULD ADD VERY SIGNIFICANTLY TO THE POUNDS STERLING 21-22 BILLION FIGURE. THUS I CONCLUDE, IN RESPONSE TO YOUR TELNO 38, THAT THE FIGURE CAN AND SHOULD BE USED, BUT BEST PERHAPS BY INDICATING THAT IT REPRESENTS THE GROSS HONG KONG MARKET VALUATION OF THE MAIN OR LARGEST BRITISH OWNED, CONTROLLED OR MANAGED GROUPS IN HONG

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