INANCIAL Secretary Sir Donald Tsang Yam-kuen yesterday said the
government was prepared to hold for the long term the blue-chip shares
it had acquired through active intervention in order to ensure market
He did not rule out further market intervention in the event of future
speculative attack _ a clear indication that the government might
continue to accumulate shares of blue chips in the coming days.
Silas Chan, director of Champ Pacific Capital, said the government had
acquired an estimated $120 billion worth of blue-chip shares in a
two-week market forage meant to make it costly for currency
speculators who were using stock futures to speculate against the HK
"The whole purpose of going into the market is to restore order. For
that reason, when we unload these stocks it will be an orderly
operation, it will not be an abrupt operation," Sir Donald told
Traders and economists, however, said the government may have no
option but to keep the shares for the long-term because the market
would crash if it attempted to sell the shares in the current
"Obviously, if they will sell all of their shares at one time the
market will crash. Because they took this extraordinary step they have
the responsibility to unwind their positions in a responsible way,"
according to Economist Intelligence Unit (EIU) regional economist
"If they accept that the government has no role in playing the stock
market, then they should take six, 12, or 15 months to slowly sell-off
their shares at a rate that should be predictable and publicised," Mr
"This would allow the market to understand the government has made a
mistake and it's getting out of the business of the manipulating stock
Sir Donald said the government had no intention to hang on to the
"These are blue chips, these are the assets of Hong Kong, they are
for Hong Kong people. We bought them at a rate when the Hang Seng
Index was below 8,000 and it is a very good investment as far as the
exchange fund is concerned. I am quite happy to hold them for a long
while," he said.
Sir Donald said that when the time came to sell, the government would
do so "in an orderly operation".
"The most important thing is whether we are able to maintain
stability in the market and whether we also get the confidence of the
people of Hong Kong and also the local and overseas investors," he
He said it was important Hong Kong maintained stability "when the
financial crisis is so severe in other parts of Asia".
"I think they (speculators) will be deterred by our action this
time," he said, adding that it was hoped the HKMA "will see a lesser
need to intervene" in future.
But Sir Donald warned: "We are vigilant."
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