GROWING speculation about Chinese interest and the recent stock market surge have triggered sharp rises in second and third-line stocks and warrants. This has prompted the Stock Exchange of Hongkong to ask many of these companies to issue statements explaining the increases. Not surprisingly, the standard line has been there is no reason for the price movement. In light of last week's market surge, there have been 12 announcements of this nature in the past five trading days. Mr Eugene Law, senior manager with DBS Securities, said a combination of speculative Chinese interest in a particular company and renewed investor attention in second and third-line stocks have caused the rapid climbs of many stocks. Mr Herbert Hui, executive director and head of the listing division with the exchange, said the announcements are part of a concerted effort to make sure share price movements are made obvious. ''We are keen to make sure shareholders, as a rule, get wind of what is happening with a particular company,'' he said. ''I don't want to inundate the market with these announcements, but if you are an investor, you will appreciate knowing why a stock is going up when nothing is happening.'' Mr Hui said the exchange decides to ask a company to issue a statement after looking at the day's trading, the overall environment of the market and whether the company has released recent information. ''The main thing is to strike the right balance between the stock market wanting to keep investors informed and making sure the businesses who help make Hongkong vibrant are not inconvenienced by having to do so,'' he said. Tung Wing Steel, for example, issued a statement yesterday that it was unaware of any reason for movement in price. The stock climbed 85 cents to $4.55. On Tuesday, Applied International issued a similar statement after its stock jumped to $3.75 from $2.425 in a week. Brokers said investors finally were reacting to news that the company's earnings per share could jump more than 100 per cent on the strength of growing sales of security systems in the US. On the same day, the following companies also issued statements: Hoi Sing, after seeing its stock jump to 97 cents from 86 cents in a day. Hansom Holdings, the subject of a 88-cent-a-share takeover offer, after its stock jumped more than 14 per cent to $1.50 during the same period. Keng Fong, following a 11 per cent jump to 51 cents over two trading days. Paragon Holdings, which has been the heaviest traded stock over the past two days, after its stock jumped nearly 25 per cent to 7.1 cents
