Investment strategy under review
The Government will complete its review of appropriate investment strategies for the Exchange Fund and the Land Fund by the end of the first quarter or early in the second quarter, according to a Hong Kong Monetary Authority spokesman.
The review was aimed at synchronising the strategies of the $211.4 billion Land Fund and $735 billion Exchange Fund, which were merged last November.
The merger of the two funds was proposed in last year's Budget to cut costs and increase efficiency.
The Exchange Fund had no investments in local stocks before the controversial decision to intervene in the markets last August.
The Land Fund, on the other hand, adopts a more aggressive investment approach and has always invested in the local stock market.
This approach generally brings the Land Fund higher returns during bull markets but makes it more susceptible to losses.
The review will also focus on the size of the Government's shareholdings and will help determine the fate of the $158 billion portfolio purchased by the government during the intervention.
Financial Secretary Donald Tsang Yam-kuen has said if the review decides the Government's shareholdings should be less than the present portfolio, then it would unload some of the shares.
The portfolio is now managed by Exchange Fund Investment (EFI), which is expected to have a board meeting on Friday.
It is understood the meeting will discuss the choice of three investment banks to form a financial advisory panel to help execute the disposal of part or all of the Government's portfolio.
EFI sent letters to a number of international houses and large local brokerages asking for proposals for the disposal.
Many large investment banks have shown interest in providing services to EFI.
