ENG-1965 — Page 20

8

REVIEW

the fact that the majority of the 114,000 depositors were small ones, an advance of $25 million was made from public funds after the courts had put the affairs of the bank into the hands of the Official Receiver. This enabled an immediate dividend of 25 per cent to be paid to depositors and other creditors. In the case of the Ming Tak Bank a similar advance of $10 million was made to reduce the interest charge on existing mortgages and finance the completion of half-built projects.

It was feared in Hong Kong that these events would harm the Colony's reputation overseas as a banking and business centre, but by mid-year it became apparent that no lasting harm had been done. Money was continuing-to come in from South-East Asia and from elsewhere. In a señse the Colony had demonstrated its basic financial strength. This was, in fact, never doubted in the main financial centres overseas and one heartening feature was the offers of assistance received from banks abroad-offers which it was never necessary, in the event, to take up.

In Hong Kong itself, recovery both of confidence and from tem- porary dislocations was faster than had at first seemed likely. Deposits soon recovered their previous level and then continued to grow steadily, the percentage increase in the five months July-November being just under 74 per cent. At the same time credit has remained tight, not so much because of an abnormal shortage of funds to lend as because of an unusually high demand. While other economic activities continued to expand, the over-supply of flats built specula- tively for sale resulted in a substantial growth in the demand for finance from real estate developers who had been accustomed to turn over their capital rapidly. Additionally—particularly towards the end of the year-banks were prudently aiming at raising their liquidity, in anticipation of Chinese New Year, to rather higher levels than had been customary in recent years.

Hong Kong's exports continued to grow at a very satisfactory pace. For the period January to October domestic exports were up by 13.5 per cent over the same period in 1964, and re-exports were up by 9.6 per cent. This was in spite of a substantial fall in exports to the United Kingdom due to the import surcharge imposed there in November 1964.

The promotion of exports is of vital importance to Hong Kong. Important developments during the year included preliminary work