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Buy M for madness till the music stops

Hong Kong investors' addiction to the fast buck has often landed them in trouble. The latest preoccupation, the M share, entails feverish punting in listed stocks that are themselves punting on neighbouring territory Macau's gambling industry. As a clever few rapidly enrich themselves at the expense of the gullible masses, the inevitable result looms. Chris Leahy reports.

FROM THE PEOPLE that brought you the red chip, H share and Snoopy doll crazes, comes Hong Kong's latest mania: Macau concept stocks, already dubbed M shares. Prices of what were originally mainly penny stocks have recorded extraordinary gains as Hong Kong's punters, blindly following the smarter and nimbler hedge fund and inside money, have piled into the latest craze to sweep the territory.

Exploiting Macau's recent explosive economic growth, Hong Kong's fast-footed businessmen have wasted no time in dusting off their moribund shell companies and reintroducing them to an eager public as the latest way to invest in China's tiny gambling enclave.

In the past few months, barely a day has passed without an announcement from an obscure listed company in Hong Kong of a deal associated with an investment in Macau, however tenuous.

Investments in cruise ships, gambling lending syndicates, minority stakes in casinos and residential property developments have all helped companies with such diverse core businesses as electrical products, media, consumer goods and even floating restaurants boost their flagging share prices. The trick has even proved handy in resuscitating several defunct dotcom companies.

Fabrice Jacob, managing director of fund manager MYM Capital, is convinced that a crazy speculative bubble has developed.