The WTO said that the intervention meant that Hang Seng Index (HSI) companies, whose shares were bought by the government, may have been granted an unfair advantage because they may be able to raise capital more cheaply than firms which did not benefit from the support.

"It is worth noting that, however carefully done, intervention can work to the advantage of some market participants. Thus, for example, by maintaining the price of their shares above levels that might otherwise have prevailed, HSI-listed companies may be provided with an advantage vis-a-vis non-listed companies in the cost of acquiring capital through new share issues," the WTO said. It also said there was a potential conflict of interest after Hong Kong's monetary regulatory body, theHong Kong Monetary Authority (HKMA) bought a nine per cent stake in HSBC Holdings. The Hong Kong government had emphasised to the WTO that it did not plan to interfere with the management and operation of any of the firms and had established Exchange Fund Investments Ltd (EFIL) to manage the shares at arms-length, WTO said. But a third of EFIL's board came from the government, it noted.

However, the WTO's four-yearly analysis of Hong Kong gave a broadly positive assessment of the Special Administrative Region's (SAR) trade policies, the report said.