1.dr/February/6.26
CONFIDENTIAI.
'in the Hong Kong equity
and
property markets.
Portfolio
investments in Hong Kong are a very small proportion of total
assets, and even if their value were reduced to zero
in a short
period, DTI do not believe this would jeopardise the viability of
the UK companies concerned.
16.
As for direct investment, most of the companies active in
Hong Kong undertake general (ie non-life) business. Their assets will be mainly in the form of deposits, Hong Kong government bonds and other secure and liquid instruments. Equities and property would typically form only a very small part of their portfolios.
Those companies with life offices in Hong Kong could have rather
more exposure to equities, but these businesses are small in relation to the size of the groups concerned.
17.
At annex II is a note by the DTI, with a list of the 31 UK
insurance companies active in Hong Kong, together with Lloyd's.
Other companies
18.
Annex III (provided by DTI) lists large UK companies with
major interests in Hong Kong.
19. Very broadly, the companies break down into two categories:
those such as the construction companies, with project work in
Hong Kong and China. For many of these, the impact of a serious
break with China would be felt mainly in future profitability.
Their existing contracts are to a large extent covered by ECGD,
and the main impact would be in loss of future business with
China. However, ECGD are checking the extent to which existing
contracts are, in fact, insured.
20. The second category, is of those companies with major
investments in Hong Kong, the value of which could be adversely affected by a loss of confidence. This, in turn, could hit their
share prices. Cable and Wireless is the most significant of
these: it earns over half of its profit from its Hong Kong
operations.
CONFIDENTIAL
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