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The Exchange Fund Advisory Committee has approved the adoption of a revised investment strategy for the Exchange Fund to bring down the present holdings of local equity from 17 per cent to five per cent, the Financial Secretary, Mr Donald Tsang said in the Legislative Council today (Wednesday).

Delivering his 1999-2000 Budget, Mr Tsang said: "I will be asking the Exchange Fund Investment Ltd to advise me on how best this should be done without causing any disruption to the market."

Explaining the background, he said: "Following our incursion into the stock market last August, the Exchange Fund acquired a substantial Hong Kong equity portfolio.

"We have undertaken to review this level of holding, having regard to the requirement of the Exchange Fund to hold a portfolio of liquid US dollar assets that will provide at least a 100 per cent backing for our monetary base."

That, the Financial Secretary said, took the form of a comprehensive review of the Exchange Fund's overall investment strategy which had now been completed.

END/Wednesday, March 3, 1999

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