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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

stability.

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

dollar.

"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

newsmen.

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

situation.

"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

David O'Rear.

"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

O'Rear said.

"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

markets."

Sir Donald said the government had no intention to hang on to the

shares "forever".

"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

said.

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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