Thursday 13th September 2007

Dear Reader,

Government plans Food Adjustment Mechanism (13-Sep-07) has learned of HK Government plans to address public concerns over food prices with a Food Adjustment Mechanism or FAM, setting prices annually in line with inflation. It also plans to buy shares in the two major supermarket chains to encourage the development of Islamic supermarkets and possible future mergers between the chains.

MTRC: Time to vote (11-Sep-07)
We analyse the MTRC circular on the so-called "Rail Merger". We reaffirm our advice to independent shareholders to vote AGAINST the transaction. VOTE NOW - and don't assume that others will stop the deal for you. The Government will spare no effort trying to push this through.

Intervention returns (10-Sep-07)
We look at the HK Government's surprise disclosure of 5.9% of HKEx, where it might go next, and how it quietly scrapped a 5% benchmark on the Exchange Fund weighting in HK stocks, leaving it as the 2nd-biggest investor after the mainland Government. With about HK$1 trillion of surplus liquid assets, whatever happened to Donald Tsang's "big market, small government"? We call on the Government to return its surplus capital to the people with a 10-year program of deliberate budgeted deficits.

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David M Webb