THE activities of the giant mainland iron and steel-making enterprise, Shougang Corp, is attracting the attention of investors, brokers and regulators. It was disclosed at the weekend that the group had made an offer for Chevalier Development. This has only served to underline Shougang's status as the most acquisitive mainland corporate entity active in the Hongkong stock market. In a little over six months the group has gained effective control of three listed companies representing $2.64 billion of issued stock market capitalisation. The three companies include re-bar firm Tung Wing Steel, formerly part of the Allied Group, in which Shougang took a 51 per cent stake in a deal involving Cheung Kong chairman Li Ka-shing and $239 million. Eastern Century, a metal ore trader, fell victim in a deal giving Shougang 25.12 per cent of the company for $164.2 million. Another former Allied company, Santai Manufacturing, was taken over earlier this month in a $314 million deal giving Shougang control of 68 per cent of Santai. Now it is apparent Shougang has offered to buy a stake in Chevalier in conjunction with a placement. There are further rumours that suggest investors should not be surprised if Shougang takes a stake in either Cheung Kong or Hutchison Whampoa, and the steel maker is increasingly being hotly tipped as the winner in the Overseas Trust Bank takeover race. Some investors are deeply unhappy about Shougang's activities and the way rumours about its takeover targets get out early, causing major trading shifts in the potential takeover targets. Shougang, China's third largest steel maker, recorded a net profit of 3.2 billion yuan (about HK$4.34 billion) in 1991. Profits have risen at an annual rate of 20 per cent over the past 12 years. It operates in 17 countries and recently bought Hierro Peru mining for US$120 million, in that country's largest ever privatisation. Shougang's activities are not the only example of second-and third-line listed companies in Hongkong being snapped up by mainland interests. Laws Property succumbed to a 67 per cent takeover by China National Non-ferrous Metals Industry Corp not long after its listing on the exchange. There will obviously be further cases of these types of takeovers. Who knows? The southern region of the People's Liberation Army might inject its Hongkong investment properties into a third-lined company and this might be followed up with the injection of the hotel chain it is intent on developing in the southern provinces. The opportunities appear limitless as old families in Hongkong cash in their chips and are replaced by new mainland interests. This is only natural as Hongkong approaches 1997. But it appears to make a mockery of the process by which nine mainland enterprises are being forced into the corsets of Hongkong accounting standards just to list locally. However, these listings are part of another process by which the mainland is internationalising domestic corporate activities, capital market development and accounting standards. Meanwhile, it would appear that any mainland enterprise willing to bet its chips can join the table irrespective of what the regulators might think.