Selena Li

HONG KONG (Reuters), Hong Kong Monetary Authority, (HKMA), has taken the decision of replacing State Street Two sources tell Reuters Corp (NYSE 🙂 is now State Street Global Advisors as the Manager of the HK$111 Billion Tracker Fund of Hong Kong ($14.2Billion), according to two sources.

Sources with direct knowledge said that the decision to manage the fund which tracks the benchmark is likely to be made in the next few weeks.

HKMA, SSGA and HKMA declined to comment on TraHK’s mandate change. This was reported first by Caixin.

Following a review of the central bank, the HKMA made its decision. It comes a year following a Uturn by SSGA over an investment decision that was linked to U.S. Sanctions on Chinese Firms.

The SSGA announced in January 2021 it would cease buying shares of China Mobile (NYSE ) and China Unicom (NYSE ), which are large Hang Seng constituents. It cited a decision to stop investing in securities of U.S. sanctioned agencies.

Three days later, however, SSGA announced that it would continue investing in stock stocks not available to U.S. investors as per an executive order issued by President Donald Trump.

The TraHK initial decision to cease investing in prohibited securities sparked some investor anger.

TraHK is a popular choice for Hong Kong retail investors as well as pension funds. It was established by the Hong Kong government in 1998 to sell shares that it bought during Asia’s financial crisis.

According to anonymous sources, two potential contenders for SSGA have emerged, one being Hang Seng Investment Managers. This is Hang Seng Bank’s investment arm.

Sources said that CSOP Asset Management is the joint venture of China Southern’s largest hedge fund OP Investment and Hong Kong’s China Southern, making it the second candidate for the highest ETF position in Hong Kong.

Hang Seng Investment Managers declined to comment, as did CSOP Asset Management.

Since its 1999 listing, SSGA was paid a 0.05% annual Management Fee from TraHK. This amount was approximately HK$60 Million in income for 2020 and 2019, according to the annual report.