The Chief Executive, Mr Tung Chee Hwa, met the visiting Vice-President of the European Commission, Sir Leon Brittan, today (Saturday).

"I am pleased to have an opportunity to brief Sir Leon on the latest developments in Hong Kong since we last met in Brussels last October," the Chief Executive said.

"We have also exchanged views on the impact of the Asian financial turmoil on Hong Kong and the region, as well as on the need for adequate banking supervision and information disclosure on international financial activities," Mr Tung said.

"Hong Kong has a robust exchange rate regime, sound financial systems and a well-supervised banking sector capable of weathering external shocks," he said.

"We possess strong economic fundamentals, with a high saving rate, large fiscal surplus, substantial foreign exchange reserves and a remarkable productivity capacity. These positive attributes enable our markets to make prompt and effective adjustments," he added.

"We are undergoing a period of asset price adjustments in the wake of the extensive currency alignment in East Asia. This will help uphold our competitiveness in the world market," Mr Tung said.

Mr Tung told Sir Leon that Hong Kong's economic outlook remained bright. This was underpinned in particular by sustained economic growth and further reform and opening up in the Mainland of China.

Sir Leon briefed the Chief Executive on latest dialogues between China and the European Union. In response, Mr Tung said that he hoped the China-European Union relation would continue to be on the march.

Mr Tung also told Sir Leon that the 1998-99 Budget announced last Wednesday aimed to retain international confidence in Hong Kong and uphold fiscal prudence.

Mr Tung said that "The Budget provided for substantial infrastructural developments which would enhance our long term competitiveness. These developments would also give rise to a lot of business opportunities to overseas investors."

The European Union is Hong Kong's largest investor and third largest trading partner.

Mr Tung thanked Sir Leon for his support in travel convenience matters for Hong Kong travellers, and looked forward to his continued support in presenting Hong Kong's case to member states of the European Union.