Government takes biggest HKEx stake

Administration buys say in exchange's role

The Hong Kong government has emerged as the biggest shareholder in the city's stock exchange - a sign it wants to increase cross-border securities trading and cement ties with the surging mainland markets.

The government yesterday revealed it held a 5.88 per cent stake in Hong Kong Exchanges and Clearing, operator of Asia's third-largest stock market. Based on HKEx's record high closing share price of HK$158 yesterday, the holding is worth HK$9.9 billion.

Financial Secretary John Tsang Chun-wah said the stake, acquired gradually over the past few years through the Exchange Fund, would help maintain Hong Kong as an international financial centre.

The government yesterday bought HKEx shares worth HK$2.4 billion, at an average price of HK$155.4 per share, to take its stake past 5 per cent.

'This acquisition enables the government, over the longer term, to contribute as a shareholder to the promotion of HKEx's strategic development,' Mr Tsang said.

The government is attempting to cement Hong Kong's position as the investment window to the mainland - the world's fastest-growing major economy - by developing closer links with the Shanghai and Shenzhen bourses, which are owned by the Chinese government. Its holding could pave the way for future share swaps. The government had not previously disclosed its holdings in the exchange, over which the government already had influence since it appointed six of HKEx's 13 directors.