SINGAPORE (March 24): Hong Kong's stock market is well regulated and is not becoming a stock "casino", the CEO of the stock exchange operator said on Friday after shares in China Huishan Dairy Holdings plunged 85%.

It was not immediately clear what triggered the slide in Huishan Dairy's stock, which wiped US$4 billion from its market value before trading was halted.

"First of all, Hong Kong capital market is not a stock casino and let's put the record straight on that," Hong Kong Exchanges and Clearing Ltd (HKEX) Chief Executive Charles Li said in response to a question at the Foreign Correspondents' Club.

He was asked how the HKEX was looking to keep a balance between attracting Chinese money and maintaining a well functioning market. Li did not specifically mention Huishan Dairy, but was asked about it by a journalist at the event.

Barron's Asia quoted Huishan Dairy's Chairman Yang Kai as saying the decline was the result of a short seller attack. The firm has previously come under attack from US based short-seller Muddy Waters.

HKEX's Li said the market had seen an increase in different types of new investors from China, but warned against too much regulation by the bourse.

"When the market starts to lose its way, then we will come in," he added.

Hong Kong has tightened listing and takeover requirements, and stepped up enforcement after instances of erratic price movements sparked fear of manipulation in the market.

"We all need to relax. This is a great market. You don't want (the) regulator to solve all your problems," Li said.