Following is the transcript of remarks by the Chief Executive, Mr Tung Chee Hwa, at the Dorchester Hotel, London, today (Thursday):

Question: Can you tell us, what have you got to say to reassure the markets?

Mr Tung: First of all, there is tremendous determination on the part of the Hong Kong Government to maintain the linked exchange rate. We have every confidence this can be done and will be done. The fundamentals in Hong Kong are very good. We have very conservative management of our fiscal policy, we are running a huge budget surplus, we have a fiscal reserve of over 50 billion US dollars, foreign exchange reserves over 85 billion US dollars, one of the largest anywhere in the world. The fundamentals are very good. We are determined to maintain the exchange rate mechanism and to do this we have signalled to the market our determination, the interest rate has gone up and as a result of that there is a short-term repercussion on the stock market, and this is to be expected.

On the stock market side, all our major companies have very good performance, the growth in profits is all double-digit, and the fundamentals again are very good, basically because the Hong Kong economy is good. And there is some short-term impact on the stock but we are quite sure the market will find the right level and we are very confident of our future.