The Hong Kong Government has come in for criticism from many investors for reducing liquidity in the stock market by purchasing about $120 billion of stock last August.
It is a criticism which is likely to become prominent again as the authorities deliberate which of a range of investment banks they will appoint to advise on disposal of the portfolio. Their plans to sell the shares again certainly imply that they think the criticism has some validity.
But while there may be good reasons for criticising the intervention in the market, this is not one of them.
The essence of the argument the critics present is that all shares may be tradeable but some are more tradeable than others. Certain shares, for instance, may never see the light of day. They are the core holdings of controlling shareholders, which will be passed from one generation to another. For all intents and purposes they do not form part of the 'float' which is actually traded in the market.
Others may go from one shareholder to another in as little as a matter of hours and these are definitely part of the tradeable float.
Depending on exactly how you define it, this free float of the market may be as little as 30 per cent of total market capitalisation.