Shares in the Hong Kong firm surge to a year high in market 'over-reaction' Stanley Ho Hung-sun's privately controlled gaming flagship in Macau has spent about HK$500 million to raise its stake in Shun Tak Holdings to 13 per cent, sparking speculation it may inject its casino operation into the Hong Kong-listed company. Yesterday, shares of Shun Tak soared to a 52-week high to $2.425, up 16.78 per cent from Thursday, with $142.19 million worth of shares changing hands. According to the stock exchange, Sociedade de Turismo e Diversoes de Macau (STDM) bought 253 million shares of Shun Tak Holdings at $1.97 a share from Shun Tak Shipping, a substantial shareholder of the Hong Kong-listed company. The purchase increased STDM's stake in Shun Tak to 13.6 per cent from 0.5 per cent, increasing the Hong Kong firm's exposure to Mr Ho's Macau gaming business. STDM's principal business is gambling, which it operates through its 80 per cent-held subsidiary Sociedade de Jogos de Macau (SJM). SJM holds one of the three Macau gaming licences and runs 11 casinos there. The move follows a Hong Kong Exchanges and Clearing decision in March to allow casino listings. Dao Heng Securities analyst Eric Yuen said the significant change in shareholding would boost speculation that more restructuring would follow, including the possibility of STDM injecting its casino operation into Shun Tak. 'But the direct impact is that the ties between Shun Tak and STDM will be strengthened,' he said. It was a positive strategy as Shun Tak had declared its intention to expand into travel-related business in Macau and the Pearl River Delta, he said. But analysts said it also indicated the Ho family's intention to tighten its control of Shun Tak through a cross-holding ownership structure. In November, Shun Tak increased its stake in STDM to 11 per cent from 5 per cent through a share-swap deal. Mr Ho and his associates own more than 50 per cent of Shun Tak while Mr Ho also has a 30 per cent stake in STDM. Daiwa Securities equity research director Jonas Kan said the deal would turn Shun Tak into a Macau concept stock. 'It's not surprising to see more co-operation between the two companies,' he said. Mr Yuen said with Shun Tak shares up almost 17 per cent the market had over-reacted to the news.