Editorial | All eyes are now on Joe Biden to fix Donald Trump’s Tracker Fund fiasco
- Outgoing US president’s misguided attempt to rattle international investors – including those in Hong Kong – have been defeated for now
The Tracker Fund was formed out of a government intervention. Now, it may have been saved by another government intervention. Chief Executive Carrie Lam Cheng Yuet-ngor has shown backbone in standing up to American pressure to protect local investors.
The city’s first and most popular exchange-traded fund (ETF) has been caught in the crossfire between the United States and China. Even in the last days of his presidency, Donald Trump’s erratic stance against China has caused havoc with the international investment community, including Wall Street.
His last-ditch efforts to target Chinese commercial interests include an executive order banning Americans from buying new investments in companies allegedly linked to the Chinese military, and they have to divest existing holdings by November.
This initially forced State Street Global Advisors Asia, a unit of the Boston-based company that manages the HK$105.3 billion (US$13.5 billion) ETF, to announce it would stop buying shares in China Mobile and China Unicom, two constituents of the Hang Seng Index with a combined weighting of 3.45 per cent on the benchmark. China Telecom, the third Chinese telecoms firm sanctioned, is not an index constituent.
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That, of course, would have defeated the very purpose of the ETF, which is to track the local index closely. Now, Lam has intervened, declaring that if State Street can’t perform its primary duty, the fund will have to find someone else who can. She is supported by Joseph Yam Chi-kwong, a member of her Executive Council.