CONFIDENTIAL
retaliation from China would be loss of future business in
China.
- UK companies with major direct investments in Hong Kong could
have their share prices and profitability affected by loss of
confidence. However, the largest of these, Cable and Wireless, currently enjoys a monopoly on domestic and international fixed
line telecommunication systems which should help insulate the company from any short term confidence crisis.
-
DTI are conducting a second round of more detailed analysis on exposure of UK companies to Hong Kong and the potential impact
on any which may be vulnerable (Trafalgar House has been identified as a possible candidate).
The present amount of ECGD risk on Hong Kong is estimated to
be £1.2bn and on China £1.4bn, representing some 10% of total ECGD exposure. This could increase significantly if some further large scale projects go ahead.
Comment
6. The conclusions reached in the Treasury's interim report
suggest that no major UK interests are likely to be put at
serious risk by a decline in confidence, but that their future
business prospects could be seriously affected. In this
connection, we have suggested to the Treasury that further work
needs to be done on identifying UK companies' exposure to China
and their reliance on future business prospects in China eg GEC
has major interests in future large scale projects in Guangdong, particularly power stations.
The report brings out the extent of ECGD exposure, and could lead the Treasury to revive their request that Hong Kong and
7.
imp.break.ADM
SLM
CONFIDENTIAL
No comments yet.
Private notes are available after approval.