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Following is the transcript of remarks made by the Financial Secretary, Mr Antony Leung, to the media concerning possible impacts on Hong Kong economy arising from the military action against Iraq at the Central Government Offices (West Wing) this (March 20) afternoon:

Financial Secretary: As you know, the military action against Iraq started this morning. I have checked with the Chairman of the Securities and Futures Commission as well as the Chief Executive of the Hong Kong Monetary Authority. We can assure the public that all the markets are functioning smoothly, and the volatility in the market is acceptable. Obviously, in times like this I urge small investors to be extra careful when they are making investment decisions. Then there is also a lot of co-ordination among the various regulators, the Government and the Stock Exchange, as far as contingent measures are concerned. So there is really nothing to worry about.

On the economic front, as long as the military conflict is a short one, we do not believe that there will be adverse impact on the Hong Kong economy. However, if the conflict drags on for a long time then there may be impact on our major export markets, meaning our exports to these markets may be affected. However, it will really affect the entire world.

The government and the regulators will continue to monitor the situation very closely. As I said, there is nothing to worry about as far our economic system, our monetary system and our financial system is concerned.

Reporter: (Inaudible)

Financial Secretary: As I said, our assumption has been that there would be a conflict and that the conflict would be a relatively short one. I believe that that is right now the market consensus. We are watching the situation very closely and right now there is really nothing to worry about.

(Please also refer to the Chinese portion of the transcript.)

End/Thursday, March 20, 2003

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