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Following is the transcript of remarks (English portion) by the Financial Secretary, Mr John C Tsang, at a media session at the Central Government Offices, Main Wing, today (September 17):
Let me first give you an update on the local financial and insurance market.
The Hong Kong Monetary Authority (HKMA) reported that the operation of the foreign exchange market remained normal today. There is no sign of a large scale outflow of capital from Hong Kong. The Hong Kong dollar exchange rate and Interbank interest rates remained stable. If necessary, liquidity will be provided by the HKMA to ensure the orderly operation of the market.
The Hang Seng Index fell by 663 points to close at 17,637 today, with a total turnover of HK$76 billion. Trading in the securities market is orderly despite the volatility today. We have been in touch with brokerages which indicated that client trading and settlement were orderly. On Lehman Brothers, provisional liquidators have been appointed for two of their units in Hong Kong, namely Lehman Brothers Securities Asia Ltd and Lehman Brothers Futures Asia Ltd.
On the insurance side, the Insurance Authority (IA) has exercised statutory powers under the Insurance Companies Ordinance (ICO) to safeguard assets of the insurance subsidiaries of AIG in Hong Kong by requiring them to seek prior approval from the IA on all transactions involving transfer of assets or funds to other related entities within the same group.
The Federal Reserve Board has authorised the Federal Reserve Bank of New York to provide a loan facility of up to US$85 billion to AIG in return for a 79.9% stake in the company. This measure will go some way towards relieving the short-term funding pressure faced by AIG and is a gesture of support by the United States Government for its impending corporate restructuring exercise.
The Insurance Authority will maintain a close dialogue with its counterpart in the United States as details of the restructuring plan unfold and will spare no effort in monitoring the position of the two subsidiaries of AIG operating life insurance business in Hong Kong. In this context, the IA will uphold the regulatory actions already in force and impose new regulatory actions if justifiable by prevailing circumstances.
Ends/Wednesday, September 17, 2008
Issued at HKT 18:52
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