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SCMP Reporter

IN a few weeks, Richard Haw's term as chairman of the Hong Kong Investment Funds Association (HKIFA) will come to an end, meaning a new chairman must be selected at the HKIFA general meeting in September.

      The atmosphere is likely to be extremely tense.

   ''It's almost like the death of Chairman Mao or even Deng Xiaoping,'' said one manager.

   ''Maybe they will be able to keep it together and find an acceptable interim candidate, maybe they won't.''    The body was formed in the early 1980s at the instigation of Fidelity in order to fight a Government tax proposal.

    It is presently split almost in two by the issue of commission rebates, which the Securities and Futures Commission (SFC) has proposed banning.

  On one side of the divide lie Jardine Fleming, Schroders and other rebate takers.

  On the other lie Fidelity and the other refusers.

  Siding with Fidelity are important players including HSBC Asset Management, which, although silent on the matter, is believed to be in favour of banning rebates.

    HSBC Asset Management's stance may be linked to its parent's shift of domicile to Britain, where registered funds are banned from taking rebates.

  Yet the 12 member executive council, which is almost evenly split on the rebate row, must put aside its differences and agree on a new leader to take the body forward.

   Finding an acceptable candidate will strain the conciliatory powers of members, who have been at each others throats since the SFC proposed the rebate ban.

   In the past, the system has been small ''d'' for democratic.

   The unspoken method has been that every other year one of the big three, Jardine Fleming, Wardley (now HSBC Asset Management) or Schroders, has run it.

  But that arrangement has likely reached the end of its life in the present battle.

    A compromise candidate must be found - and fast.

     Mr Haw is relieved to be handing over the responsibility.

     ''It is a job with not much upside and plenty of downside,'' he said.

     ''The usual problem is getting someone to do it.

   ''You have to hit them over the head until they agree.''      Mr Haw has fought a battle with the media and with members of the HKIFA to keep the row out of the headlines.

    He faced criticism from some members for urging the HKIFA not to respond to a Business Post poll on rebates.

  ''It just played into your [the media's] hands,'' said one fund manager.

   ''It took a difficult issue and blew it up.''      Another disagreed: ''The Business Post survey did not go into anything like the depth which the HKIFA survey did. The public were far better served by it [the HKIFA survey],'' he said.

     Business Post had planned to undertake a survey on cash rebates, but the HKIFA intervened with its own.

    Another fund manager was infuriated by the HKIFA's handling of the issue from start to finish.

  It was obvious from day one that the SFC intended to ban rebates, the manager said.

  He felt the HKIFA had made fund managers look ''like a bunch of dinosaurs'' by allowing a yes/no debate on rebates to rage and suggested another line should have been taken.

  Even when the HKIFA tried to seek common ground, by releasing a press announcement on the HKIFA survey with reference to the 91 per cent support for more regulation of soft dollar commissions, it attracted flak.

    ''I thought the handling was good under the circumstances apart from that,'' said a source, who believed the treatment in the press release amounted to a distortion.

    Mr Haw himself knew that criticism was inevitable.

   ''It is like Republicans and Loyalists in Northern Ireland - there is no middle ground,'' he said.

  The important thing, he said, was that the organisation did not shake itself to pieces over a single issue.

   ''It is pretty rough sledging right now,'' he admitted, ''but the ties that bind are stronger than the things pushing us apart.

   ''Ninety-nine per cent of fund managers agree on most things.''   Mr Haw wants to see the HKIFA expand rapidly. The body is on the verge of forging important new links with new players and, according to market participants, there are at least four potential members waiting in the wings.

    Mr Haw would also like to see the HKIFA grow beyond its narrow role of representing unit trust and mutual funds firms and expand to place more emphasis on pension funds.

    Jardine Fleming's Alan Smith also pointed out that the Hay-Davidson Report on the stock exchange, compiled in the wake of the 1987 crash and subsequent scandal, said there should be more self-regulation.

  Mr Haw agreed that he would like the HKIFA to take on some regulatory roles.

   ''If the HKIFA keeps growing, then it could take on some regulatory power,'' he said, ''but members are paying for the SFC through the levy anyway.

   ''The SFC doesn't seem to be in a hurry to hand over power, although it has given some power to the stock exchange.

  ''We could start with easy things like advertising and build up from there,'' Mr Haw suggested.

  Fund managers are staying tight-lipped on the succession.

   Andrew Lo, of Peregrine's Invesco Asia, was named by two fund managers as a possible choice.

   He has stayed out of the rebate row, he is a Hong Kong Chinese and is deputy chairman of the HKIFA, one manager said.

  ''Don't jump to conclusions,'' cautioned another.

   ''The press has made predictions on this before and been totally wrong.''   Mr Haw cannot comment, but he did have some advice for his successor.

   ''The main thing is the continuity of the organisation. He has to make efforts to keep an eye on both sides,'' said Mr Haw.

  And do not forget to dodge the bullets, he might have added.



HKIFA in leadership test