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March 22, 2022

State Street’s SSGA to be replaced as manager of $14bn Hong Kong ETF

Hong Kong Monetary Authority (HKMA) is moving to replace State Street Global Advisors (SSGA) as manager of the $14.2bn (HK$111 bn) Tracker Fund of Hong Kong (TraHK), reported Reuters citing two sources with knowledge of the development. 

TraHK was set up in 1998 by the Hong Kong government to shed shares it had acquired during the Asian financial crisis.

The fund tracks the benchmark Hang Seng index and is said to be the top exchange traded fund (ETF) in the country.

The HKMA’s move follows a review by the de-facto central bank over an investment stance taken by SSGA in connection with US sanctions on Chinese companies.

In January last year, the firm decided to stop investing in securities of US sanctioned companies and said it would stop buying shares in China Mobile and China Unicom, two of the large constituents of Hang Seng index.

However, following an executive order by then US President Donald Trump, it resumed investing in stocks denied to US investors after a span of three days.

Some investors, however, were agitated by TraHK’s initial move and pushed for a replacement by a new manager who could buy the stocks.

According to sources, HKMA is expected to announce the decision regarding the management of the fund in the coming weeks.

HKMA and SSGA did not comment on the news, which was first reported by Chinese media outlet Caixin.

Two local asset managers, namely, CSOP Asset Management, Hang Seng Investment Managers, are said to be potential contenders to replace SSGA. 

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