The Government plans to dispose of $12 billion worth of its share portfolio in the next three months by issuing more Tracker Fund units. With the disposal, the Government will have placed $48 billion of its share portfolio in the market. This represents one-third of the share portfolio the Government intended to sell, according to Eric Li Ka-cheung, director of Exchange Fund Investment (EFI), which manages the Government portfolio. EFI fund managers also would need to step into the stock market to purchase about $240 million worth of shares to rebalance Tracker Fund so that it matched the Hang Seng Index, Mr Li said. A maximum of 762 million units will be issued under the fund's 'tap facility' from January 1 to March 31, the Hong Kong Monetary Authority said yesterday. The value of disposal will be about $12 billion, based on the Tracker Fund's close yesterday at $15.75 a unit, down 40 cents. However, the selling price of the units will depend on the Fund's market value at the time of the issue. Mr Li said the issue would meet with the strong market demand. He said some investors had already redeemed about $3 billion, or 10 per cent of Tracker Fund units, into shares. 'The size of the Tracker Fund has been contracting due to the redeem activities,' Mr Li said. 'The planned new issue of the Tracker Fund will ensure there are sufficient liquidities of the Fund in the market.' The Tracker Fund is an index fund that tracks the performance of the Hang Seng Index. The fund needed to be rebalanced by the Government's portfolio, because it no longer matched the Hang Seng Index after three constituent stocks were changed last week, according to Mr Li. Dao Heng Bank, SmarTone and Johnson Electric Holdings were added to replace Hongkong & Shanghai Hotels, Hopewell Holdings and Guangdong Investment. 'The amount of the purchase to rebalance the portfolio is small, so I don't think there will be any impact on the stock market,' he said. The EFI would continue to dispose of the portfolio via the Tracker Fund, Mr Li said. The minimum size of purchase under the tap facility is one million units, indicating institutional investors were being targeted. The EFI spokesman said retailers could purchase directly in the stock market. He said the tap facility was more suitable for investors who wanted to purchase large amounts of the Tracker Fund. Fung Chi-kin, vice-chairman of Bank of China Group Securities, one of 30 brokers appointed to sell the new issue, said the market would take up the total amount. 'The stock market is very strong at the moment,' Mr Fung said. 'I don't think there will be any difficulty in selling the $12 billion worth of the Tracker Fund.' The Government intends to hold about $50 billion of its portfolio in the Exchange Fund for long-term investment. That would leave shares worth $150 billion to be disposed of. Last month, the Government disposed of a $33.3 billion tranche of the Government portfolio.