THE pattern of dealings in Guoco Group shares and warrants ahead of the announcement of its successful bid to buy the Government-owned Overseas Trust Bank (OTB) leaves many securities industry observers with a number of unanswered questions. This piece needs to be read in conjunction with the turnover and price movement graphics for the last two months for Guoco Group's shares and 1994 warrants. These appear on the front page of Business Post. It is not often that Monitor analyses the week-by-week share dealings of a stock ahead of some critical development that catapulted the companies involved on to the front pages of the next day's business press and their share prices into orbit. The last time such an analysis was done was for the period of trading ahead of the $8.7 billion CITIC Pacific-Cheung Kong bid for Miramar Hotel and Investment. In Hong Kong we have got so used to observing well-timed dealing ahead of major corporate announcements that most are allowed to go by unremarked. But every so often there is a spate of heavy trading that is so obviously a case for scrutiny that it makes Hong Kong look tin-pot. The dealing in Miramar was such a case, and this was the subject of comment on June 11. Since then there has been no formal statement about it from any authority in Hong Kong. As in so many similar cases, it appears to have passed unnoticed. Now follows the extremely well-timed trading in Guoco ahead of the Government's announcement that the group had won the battle to buy OTB. These were negotiations that involved the Government, two well-known merchant banks, Guoco and, presumably, a fleet of lawyers. The average daily turnover of Guoco ordinary shares in the first week of May was 331,000. In that week the shares fell 30 cents to $19.70. In the second week of May, average daily turnover more than doubled to 862,000 shares and the stock price climbed to $20.60. During the third week of May average daily turnover slipped to 644,000, and the stock slipped to $20.40. Boring trading like this went on for the next six weeks. The average daily turnover during this period - until the week beginning July 12 - was between 231,000 and one million shares. Trading was at its heaviest in the weeks when the stock lost ground. The average daily turnover in Guoco in the first week of July, to July 9, was 643,000 shares, 200,000 more than that averaged the previous week, from June 28 to July 2. Over this two-week period the stock rose by 40 cents to $20.10, having hit a low of $19.30. On the following Monday, July 12, trading leapt into life with 3.45 million shares changing hands and the stock leaping to $20.80. The next day 2.26 million shares were traded and the stock slipped to $20.40. Over the whole of this week, July 12 to July 16, the average daily turnover was 1.6 million shares, the highest level for two months. In the week following the announcement of the OTB purchase, from July 26 to July 30, the daily average rose to 3.89 million shares. From August 2 to August 6, it was down to 1.32 million a day. Trading in the warrant is equally interesting. In the three weeks from June 15 to July 2, trading stood below 100,000 warrants a day. During the week July 12 to July 16, the daily average climbed to 1.04 million. On July 20 a number of very lucky investors got into the warrant in a big way, taking trading to 4.46 million that day. On July 21 the volume stood at 1.65 million. Then trading slipped away so that the daily average for the week stood at only 1.51 million. This is a very long way to arrive at a few very simple questions. Who was trading Guoco ordinary shares on July 12? Who was trading Guoco 1994 warrants on July 12 and July 20? If we should find out who was trading, we then need to be assured by the parties identified that this was really well-timed trading and nothing to do with obtaining information not available to other investors.