Fund managers yesterday criticised some of the methods proposed for the sale of the Government's $158 billion share portfolio and said Tuesday's announcement that disposal plans were afoot could discourage foreigners from investing in the short term. Exchange Fund Investment (EFI), the investment company set up to manage shares bought by the Government during the August market intervention and stocks formerly held by the Land Fund, said it would appoint an investment advisers panel early next year to help it sell the shares using one or more of four possible methods. These include a share placement, public auction, turning the portfolio into a unit trust fund and issuing convertible bonds. United States-based Templeton Franklin Investment Services (Asia) marketing & sales director Stewart Aldcroft said EFI's announcement about potential sale methods had given the wrong message to overseas investors. 'Although the Government has said it intends to hold the shares for a long time, EFI's announcement will make overseas investors consider the Government is likely to sell the stocks at any time in the near future,' he said. 'Under this selling pressure, international investors would not like to come to the Hong Kong market.' He said the Government should say clearly it will not sell the shares for at least three to five years to remove uncertainties in the market. He said the method of turning the portfolio into unit trust funds would be difficult to manage, as such funds allow investors to freely buy in and sell out at any time. 'The best way to dispose of the shares would be private placements to pension fund providers when the proposed Mandatory Provident Fund [MPF] is launched,' he said. 'The MPF scheme will collect about $20 billion of contributions each year, which would allow pension fund managers to have new money to absorb the government portfolio,' he said. British fund manager Newton Distributors Asia managing director Connie Fung Man-yu also considered the unit trust fund method undesirable. 'EFI would need to trade the government share portfolio actively in a bid to achieve a good performance for the unit trust fund,' she said. 'That goes against EFI's wish to be a passive investor.' Credit Suisse First Boston vice-chairman Alan Smith wants the Government to combine the four possible selling methods.