Hong Kong Exchanges & Clearing Ltd had its biggest gain in seven years after the city's government increased its stake in the bourse to 5.88 percent.
The exchange's shares surged HK$32.10 (US$4.13), or 20 percent, to close at HK$190.10 in Hong Kong, the biggest gain since June 28, 2000. The stock reached a high of HK$197 earlier yesterday after the share purchase, which was announced in a statement posted on the government's Web site on Friday.
"The main objective is that, from a long-term perspective, the government as a shareholder may play a positive role in the stock exchange's development," John Tsang Chun-wah (曾俊華), the city's financial secretary, said after a conference in Hong Kong yesterday.
Hong Kong is raising its stake following a decision last year to form closer ties with regional financial organizations, such as stock exchanges in China, Tsang said. The latest increase will improve cooperation between the governments and among exchanges, he added.
The government didn't specify the number of shares it bought or the amount of the additional investment. the Chinese-language Ming Pao daily reported on Saturday that the government spent HK$2.4 billion (US$308 million) buying 15.7 million shares in Hong Kong Exchanges.
Hong Kong has been raising its stake in the exchange since last September, when its shares traded at about HK$50, the newspaper said. A larger government-held stake could pave the way for a merger with the Shanghai Securities Exchange, owned by the central government in China, Ming Pao said, citing unidentified officials.
"The action of purchasing a stake beyond 5 percent is a manifestation of the government supporting Hong Kong Exchanges to maintain its leading position in Asia," said Lei Wang, co-manager of more than US$14 billion at Thornburg International Value Fund in Santa Fe, New Mexico. "It also cements the government's leading role in the company's strategic positioning in the future."
Tsang declined to say if Hong Kong's government will further raise its stake in the city's bourse, citing the market sensitivity of such comments. The government didn't buy the shares to intervene in the market, he added.
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