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. She said that the Government could also have been buying HSBC shares through DL Brokerage and the Bank of China group in the cash market. Bank of China has dominated market turnover recently, with brokers divided on whether it is representing private mainland or government money. Beijing officials have denied that China has spent any of its own funds in Hong Kong. HSBC finished 1.84 per cent higher at $138 amid reports that the Government had approached a number of firms including Swire Pacific and Jardine Matheson to try to unload its 8.9 per cent stake in the bank group. Ms Hui said that if the Government was keen to sell a stake in the bank, then it was in its interest to maintain the bank's share price. 'They may not be able to ramp up the share price but at least they could hold it at present levels otherwise it would be too difficult to unload,' she said. Indosuez WI Carr Securities research head Simon Maughan said there was renewed interest from foreign fund managers in Hong Kong blue chips. 'They are expressing interest in names that they are familiar with that have had their share price smashed,' he said. KEY FIGURES Close: 7,504.39 (+ 130.88) Turnover $3 bln Volume: 1.99 bln shares Day's high: 7,518.88 Day's low: 7,348.18 Advanced: 215 Declined: 218 Unchanged: 528 September futures: 7,560 (+ 165) October futures: 7,270 (+ 130)
