Tracker Fund may replace State Street as manager to forestall risks to Hong Kong’s pensioners amid rising US-China tension

A seven-member supervisory committee chaired by George Hongchoy Kwok-lung may soon name the winner of a tender to review the Track Fund’s management

Hang Seng Investment Management is at the top of a shortlist to replace State Street that includes CSOP Asset Management and other Hong Kong-based asset managers

Reading Time:3 minutes

People queue outside a Hong Kong bank to get application forms for the new Tracker Fund of Hong Kong (TraHK) at the launch of the initial public offering in October 1999. Photo: AFP

Published: 7:00am, 28 Mar 2022Updated: 6:56pm, 29 Mar 2022

Hong Kong’s Tracker Fund (TraHK) is poised to appoint a manager to replace State Street Global Advisors, a move aimed at mitigating the risk of letting the city’s largest exchange-traded fund (ETF) become a bone of contention in rising US-China tension.

A seven-member supervisory committee chaired by George Hongchoy Kwok-lung may soon name the winner of the tender to manage TraHK, said two people familiar with the plan. The new mandate may be subject to regular reviews, and its duration would have to be approved by the Hong Kong Monetary Authority (HKMA) and the city’s Securities and Futures Commission (SFC), they said.

Hang Seng Investment Management is at the top of a shortlist of contenders to replace State Street that includes CSOP Asset Management and other Hong Kong-based asset managers, they said, declining to be named for discussing a matter that has not been publicly announced.

The plan would end State Street’s open-ended mandate in one of the city’s most popular investment funds, more than a year after it flip-flopped over its compliance with Donald Trump’s November 2020 ban on American ownership in Chinese state-owned companies. An initial decision in January 2021 to divest the stocks from TraHK’s portfolio quickly drew a round of rebukes by Hong Kong officials.

George Hongchoy Kwok-lung, Executive Director of The Link Reit, and chairman of the Tracker Fund’s supervisory committee, during an interview in Kwun Tong on 27 February 2014. Photo: Edmond So.

During the waning weeks of his presidency, Trump signed an executive order to ban US investments in Chinese state-owned companies for what he deemed “ties to the Chinese military.”