The Hong Kong share market rose 1.77 per cent yesterday on signs the Government was covering some of its short September index futures positions ahead of next week's expiry.
The Hang Seng Index finished 130.88 points higher at 7,504.39 on a turnover of $3 billion.
Most attention was focused on the futures market, where the September contract jumped 165 points, widening the premium to the cash market to 55.61 points.
Jardine Fleming, which had acted as a government broker in the past, was seen as an active buyer, raising suspicions that the Hong Kong Monetary Authority was again in the market.
Brokers said that the Government could be buying out some short September futures positions rather than rolling them into next month's contract ahead of the Tuesday expiry.
'It's very expensive to carry it forward,' one broker said. 'They appear to be cashing out.' One broker estimated that with the wide gap between the September and October contracts, it would cost the Government $1 billion to maintain its hedge in the futures market based on a holding of 50,000 September contracts.
Celestial Asia Securities director Josephine Hui Suet-ming said foreign banks might try to hold the cash market above the 7,000-point level so that the Government did not profit from its short position in the September contract.