Tracker Fund manager's days may be numbered

Business | Kevin Xu 18 May 2021

The Hong Kong Monetary Authority yesterday said that if the supervisory committee of the Tracker Fund of Hong Kong (2800) decides to change the fund manager, it will carefully evaluate different candidates.

This came after a local media report that the de facto central bank has appointed independent third parties to audit TraHK and is considering whether to change the fund manager.

Hang Seng Investment Management and CSOP Asset Management are interested in becoming the fund manager of TraHK, the report said.

State Street Global Advisors Asia, the manager of the Tracker Fund of Hong Kong, said in January that it will not make any new investment in companies banned under an executive order by former US President Donald Trump. But two days later, SSGA made a U-turn and said TraHK would resume investments in US-sanctioned firms.

The Tracker Fund is designed to track the Hang Seng Index, which includes three US-blacklisted firms: telecom giants China Mobile (0941) and China Unicom - whose subsidiary is China Unicom (Hong Kong) (0762) - as well as major oil producer CNOOC (0883).

After the Asian Financial Crisis erupted in July 1997 in Thailand and spread to neighboring nations, both the Hong Kong dollar as well as the local stock market came under heavy speculative attack by international predators in 1998.

The SAR government purchased Hong Kong stocks on a large scale to fend off the speculators, and Tracker Fund was set up to dispose of the government's equity holdings accumulated in the two-week intervention.

In 1999, the government disposed of the shares it acquired in the stock market operation in 1998 in the form of a unit trust scheme called the Tracker Fund of Hong Kong. The fund was offered to the public at a price of HK$12.88 in 1999, and yesterday its shares closed at HK$28.38, a rise of around 120 percent since its listing.

SSGA has been the fund manager of TraHK since 1999. The trustee is State Street Bank and Trust Company.

The supervisory committee supervises the trustee and manager in relation to the management and administration of TraHK.

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