HK Inc.

The HK Governement announced that it now owns 5.88% of the HK Exchange (#388)making it the single largest shareholder. This drew criticism of market intervention.

Of course, in Singapore, the Government is majority owner (through GIC and Temasek) of almost all mbig listed companies. Somehow, Singapore has escaped criticism. Of course, HK does not complain to being held to higher standards.

Some complain that tighter integration of the HK and Mainland markets would expose HK to the risk of "policy" driving the market (i.e. vis-a-vis China). Maybe they have forgotten to take a look at the make up of the HK market. Over 50% of the market capitalisation is from mainland stocks, over 60% of the daily turnover are in Mainland stocks, and over 90% of the funds raised are for Mainland enterprises. Like it or not, HK is a proxy market for the Mainland.

Foreign investors are not allowed to invest directly in the Mainland. They do it either through the Qualified Foreign Institutional Investors (QFII) scheme or through the HK market. The quota for QFII is US$10 billion shared among 50 institutions (less than 1 day's turnover on the HKEx). No wonder the HK market is so active.

The HK Government already appoints 6 of the 13 directors of the HKEx including the Chairman and the CEO who is an ex-offico member of the Board. Also, investors need to get the approval of the Financial Secretary to own more than 5% of the shares.

Market Indices
Hong Kong Hang Seng 23982.61 - 0.28%
Japan Nikkei 16122.16 - 0.83%
Shanghai Composite 5277.18 - 2.20%
Singapore STI 3488.97 + 0.66%
South Korea Composite 1884.90 - 0.21%
Taiwan Weighted 9018.08 + 0.01%

*Intraday trading