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The $200b question mark

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How to sell $200 billion of stock to an already tremulous market without knocking the stuffing out of it? That is the dilemma faced by the army of investment bankers and senior Hong Kong government officials as they prepare to roadshow what must be the most hyped single-economy fund ever launched.

Having barely hit the ground with the Tracker Fund retail advertising campaign and a global roadshow two weeks away there is already confusion over the short-term impact on share prices and market liquidity.

More worrying is news of sponsoring banks offering leading investors instant exposure to the fund through derivative deals that at the very least smack of a false market in the making.

Uncertainty stems from the fact that the price and number of units to be sold will be decided only at the end of the book building period.

Once completed, the working of the 'tap' mechanism, allowing more stock to be released, remains thoroughly unclear to all but those bankers leading the offering.

The Tracker Fund was designed as a conservative method of beginning the potentially protracted disposal process without destabilising the market. Maximising the return to government coffers was of course paramount.

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