China Investment Corp's stake in Morgan Stanley can't be good news for Hong Kong

This is big news: China Investment Corporation (CIC), the newly formed investment vehicle of China, the so-called "sovereign wealth fund" or "state-run" fund, will acquire 9.9% in Morgan Stanley. Despite disappointing results owing to subprime mortgage write down, the stock price of MS was up more than 4%. Good news for the US stock market but Mr. Market, it is NOT good news for Hong Kong! Why? Just think:

• Our Central Government has been encouraging overseas investment as part of its policy of "going abroad". But the direction is to go outside of China and not towards our small island, Hong Kong. So far, the real lovers on stage are only overseas Financials:
• CIC's (pre-incorp) investment in Blackstone
• Citic's investment in Bear Stearns
• Ping An's investment in Fortis
• Now CIC's investment in MS
• The list of Financials may go on and Mr. Market, you must do your homework to study the implications before rejoicing in Hong Kong. Don't be emotional as your broker should have warned you. The focus of China's overseas investments seem to be financials in US, Europe... and not companies in Hong Kong. Does this mean HSBC may be a candidate? May be but I would say unlikely or very unlikely. Firstly, HSBC is not in "distress" (not yet?) but the main reason is that somebody in HSBC has, though not unconfusingly, mentioned that they want to list shares in Shanghai. So that should take HSBC out of CIC's list of overseas investment ASAP. If you are coming to SH, why should I buy you in HK?
• Someone has predicted (Credit Suisse??) that CIC may also invest in Hutchison Whampoa, Cathay Pacific, PCCW Ltd and the Hong Kong Exchange & Clearing Ltd. Ha, ha,...none of such predictions has become true, yet. One thing is clear: the HK government's claim to merge Hong Kong Exchange and the Shanghai/Shenzhen Exchange is fallen through! Anyone repeating the fantasy would appear to be stubborn, self-serving or ignoring the differences between the systems in Mainland China and Hong Kong.
• Mr. Market, to broaden your perspective, you should note carefully the words of our officials in CIC. They have mentioned a long list of potential countries such as Singapore, Taiwan, and even Japan. Recently, they also mention "stabilizing the financial markets" as part of the investment objectives of CIC. But don't cry, Hong Kong is still within the range. You won't or can't exclude Hong Kong when you have put Macau and Taiwan on the list.
• In case you do not know, the other fantasy, namely, the "direct through-train" scheme whereby Mainlanders may directly buy shares in Hong Kong is already halted. But I always expect good news hopefully before Christmas but when it really comes, I am sure you will be the last one to learn the news and you would no longer have enough bullets to chase the soaring prices in our stock market. We are all witnessing a Black December for stocks worldwide and God bless us all!

Mr. Market, here is my Christmas gift to you: Look overseas, adopt an international perspective, think global and please don't turn your head away from developed markets like US, EU and Japan. Our dear CIC has always been watching and are taking actions there.