TNAG-2127-FCO40-3037-Investment-in-Hong-Kong-1990 — Page 136

2.

accuracy of our figures and, subject to the views of Economic

Advisers and the DTI, might find ourselves with a paper much

more like that prepared by the CPU here. The core of it is

basically the unchallengable figures taken from our paper

but with obvious refinements. It could obviously not be used

as a public document nor was it intended to be because of the

somewhat downbeat opening of disclaimers and caveats appropriate

to explaining how an internal memorandum is constructed.

2. You are aware from the in confidence background material

accompanying your copy of our paper how we attempted to construct

the net assets and invisible earnings figures. It is no doubt

in those areas where more work needs to be done and where

individuals and companies can assist us but it is where the

greatest pitfalls are and you are right to be cautious. Stock

market values change constantly and so do managements and

ownerships. In the management definition we have certainly

not included all the companies we might have and this particularly

is where the illustrative nature of the paper comes in. The

figures were provided by Henry Keswick. Net asset figures

will also vary frequently with purchases and disposals e.g.

Cable and Wireless has sold 20 percent of its holding in Hong

Kong Telecom to CITIC and is now moving the £1 billion proceeds

offshore. CITIC's purchase has been funded largely by bank

funding in Hong Kong so a massive disinvestment could be argued

I understand that, on a harsh statistical basis, other

disinvestments could be argued too which together would show

}

a net decline in investment. An example of how this could be

arrived at would be including Standard Chartered Banks write

offs which have reduced its capital base.

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