Posted inHong Kong

SSGA makes U-turn decision on blacklisted China stocks in TraHK

Following pressures from Hong Kong officials that the manager can be changed to safeguard the interests of investors.
Road Sign On The Asphalt XXXL

State Street Global Advisors (SSGA) has decided to reverse its decision on Monday to halt stock purchases of sanctioned Chinese companies for its $13bn Hong Kong Tacker Fund (TraHK).

Last night, SSGA issued an announcement that TraHK will resume investments in sanctioned entities that are constituent companies of the Hang Seng Index, effective today.

“As disclosed in the prospectus, TraHK’s investment objective is to provide investment results that closely correspond to the performance of the Hang Seng Index. The manager seeks to achieve this investment objective by investing all, or substantially all, of TraHK’s assets in shares of constituent companies of the Hang Seng Index in substantially the same weightings as they appear in the Hang Seng Index,” the firm said in the statement.

“SSGA will continue to strive to meet the investment objective of TraHK, consistent with the disclosures in the prospectus, which is to provide investment results that closely correspond to the performance of the Hang Seng Index,” it added.

The decision comes after comments from Hong Kong leaders that SSGA can be replaced by another firm to manage the TraHK. Set up by the SAR 21 years ago, the Tracker Fund, which is also Hong Kong’s biggest ETF, was created to dispose of the government’s equity holdings accumulated through market intervention during the Asian financial crisis in 1998.

Carrie Lam, Hong Kong chief executive, told the South China Morning Post on Tuesday that the Hong Kong Monetary Authority (HKMA) has the power to change the manager of the TraHK to safeguard the interests of retail investors and pensioners facing potential losses after the US sanctioned certain Chinese companies.

Joseph Yam, cabinet member and former HKMA chief executive, who introduced the TraHK in 1999, supported Lam’s call of changing the manager, saying that “if the manager can not track the Hang Seng Index, then the manager is no longer fit for duty”, he told the SCMP.

Part of the Mark Allen Group.