Enzio's Clock

Background

1. Why the government has increased its stake in the Hong Kong's Stock Exchange

Last Friday, the Hong Kong government increased its stake in the Hong Kong Stock Exchange to 5.88%. Reasons put forth:

• Hong Kong wants to fortify her position as China's key stock market window to the outside world by deepening ties with the mainland exchanges in Shenzhen and in Shanghai - with a view one day to swapping shares.
• The Exchange wants to protect itself from hostile takeovers of the sort more recently seen in London. Nobody is allowed to hold over five percent of the HKEx shares unless they have received government approval.

2. How to earn off this and further trounce the Google share

1. Always check with your financial adviser before doing anything!

2. Buy HKEx, which is the Hong Kong Stock Exchange. You will find it under "388:HK". Here is why:

• HKEx is trouncing Google. If you compare it to Google, a dream company, note that HKEx has out-performend Google (GOOG) over 60x since this June: while Google has climbed one percent, HKEx has rocketed 60%;
• Higher turnover means higher HKEx profits. We have pointed out that China is opening her capital accounts and allowing mainland investors to buy Hong Kong shares. Of course, HKEx will benefit from the boost to our market turnover. This also applies to the increased trading of derivatives on the Hong Kong Exchange: they, too, require share purchases and sales, and
• Share swaps with Shanghai and Shenzhen Exchanges later. This is the most exciting bit of news. Imagine owning shares in the stock markets of arguably the world's fastest growing large economy!