IN recent weeks, experts have been busily pontificating about how the Tracker Fund would receive a poor response. Fund managers and analysts trotted out all manner of arguments to buttress their predictions of a lack of interest in the Government's great share sell-off. Some pointed out that the Hang Seng Index, on which the fund is based, is outdated and includes some stocks of little long-term value. Others noted how local investors have never previously shown much interest in funds of this type. But such supposed experts seem to know rather less about the SAR than they do about spreadsheets. Even before the long queues for application forms a week ago, it should have been clear to anyone even slightly in touch with what Hong Kong people were talking about that the fund would attract the enthusiastic response it did. The pundits have been left with egg on their faces, after retail and institutional investors submitted applications for at least three times the original indicative offer size of $10 billion worth of units. When the final figures are released later this week, the true level of over-subscription may turn out to be even higher. Although officials have so far refrained from publicly rubbing salt into their critics' wounds, they will be privately chortling at having so spectacularly proved them wrong. Not for the first time, an unelected Government has demonstrated a remarkably populist touch. Indeed last week was a particularly good one for the administration, which also had its critics on the run on a second front. With opinion polls showing up to 70 per cent public support for the agreement to build a theme park on Lantau, even the Democratic Party had to be cautious in attacking it. The fact that Hong Kong negotiators are generally recognised to have struck a good deal with Disney only made it even more difficult for the party to pick away at its details. The irony is that behind both of last week's government PR triumphs lie genuine causes for concern. The problem over Disney is not the terms of the agreement, which may well have been the best available. Rather it is that officials have justified funding something that should have been left to the private sector by calling it 'infrastructure'. And a government which can delude itself that even a theme park falls into this category is capable of using the same excuse to intervene in all manner of other projects in future. On the Tracker Fund there is even more serious cause for concern since the Government is, in effect, encouraging the public to invest in this. While it has been careful to stress that this does not amount to any sort of guarantee this is not how the issue is likely to be seen if the Hang Seng Index crashes again. The administration would come under strong pressure to stop the value of such officially encouraged investments being wiped out and find it hard to resist intervening in the stock market to this end. So far, last year's share-buying spree has always been portrayed as an exceptional event. Financial Secretary Donald Tsang Yam-kuen has even said it is something he hopes never to see happen again in his lifetime. But the real danger with the Tracker Fund is that it could lead to a situation where the Government might find it politically almost impossible to allow the Hang Seng Index to rise and fall purely through the effect of market forces - so that far from being a one-off event, official share-buying sprees would become a regular feature of an increasingly interventionist government. But such concerns cannot displace the reality that the administration has succeeded in striking a chord with the public over both Disney and the Tracker Fund. Just as with its scare stories about an influx of 1.67 million mainland migrants, which generated public backing for a reinterpretation of the Basic Law, the Government has proved remarkably adept at beating the populist drum. Its actions may well have worrying implications for the future, perhaps even marking the end of the laissez-faire policies that have served Hong Kong so well for so long. Nonetheless there is no denying that recent issues have seen the administration repeatedly triumph over its critics.
