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  1. #1

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    State Street / US Sanctions / 2800 Tracker

    Saw this over the weekend:

    As of January 8, 2021, State Street Global Advisors has divested, or is seeking to divest, from holdings in such Sanctioned Securities in any investment account or pooled vehicle we manage, including ETFs other than the Tracker Fund of Hong Kong (TraHK), in accordance with the Executive Order and published guidance.

    With respect to such investment accounts or pooled vehicles that track an index, we intend to continue to track such index, as revised by the index providers to be compliant with the Executive Order’s requirements
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    Today:


    In light of the Executive Order, TraHK will not make any new investments in a sanctioned entity with effect from 11 January 2021 or such later date which is the effective date applicable to a sanctioned entity, which is consistent with guidance and/or licences published by OFAC.
    and

    If there is any significant deviation between the TraHK’s portfolio and the composition and weighting of the Index, the Manager will adjust the TraHK’s portfolio when it considers appropriate, after considering transaction costs and the impact, if any, on the market. It may not always be efficient to replicate identically the share composition of the Hang Seng Index.

    In addition, laws and regulations may require or restrict the Manager from effecting certain adjustments. In accordance with the trust deed of TraHK, where replication of the composition and weighting of the Hang Seng Index is impracticable, the Manager, using its professional skill, care and judgement, will continue to strive to meet the Investment Objective to the best of its ability, taking into account all relevant market circumstances.

    The Manager will monitor and seek to minimize the tracking error, however, there can be no assurance of identical replication at any time of the performance of the Hang Seng Index. Investors should note that in light of the above implications, it is expected to result in greater tracking error, which means that the return of TraHK is likely to have a bigger deviation from the return of the Hang Seng Index.
    Link: https://www.trahk.com.hk/eng/downloa...ng.pdf?noembed
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  2. #2

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    From an article in the FT

    The move by JPMorgan, Morgan Stanley and Goldman Sachs follows a decision by MSCI on Friday to drop Chinese state-owned telecoms companies China Mobile, China Telecom and China Unicom from their closely followed stock benchmarks in order to avoid potential legal penalties stemming from the executive order, which is set to go into effect on January 11.

    Hong Kong Exchanges and Clearing said the decision to delist 500 structured products was a “direct result” of the US sanctions, adding that it would continue to monitor developments.

  3. #3

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    And yet China mobile up over 8% so far today.


  4. #4

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    Quote Originally Posted by Sage:
    And yet China mobile up over 8% so far today.
    It has certainly done well over the last 12 months compared to global benchmarks, right? But sure, if you're a frequent trader... good for you.
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  5. #5

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    There was a news in AA stocks this morning about 2800.hk dropping stocks that have "ties to the Chinese military"... anyone knows which stocks they're referring to? Or is one of those "too sensitive to say it" situations?


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    Quote Originally Posted by alexdown:
    There was a news in AA stocks this morning about 2800.hk dropping stocks that have "ties to the Chinese military"... anyone knows which stocks they're referring to? Or is one of those "too sensitive to say it" situations?
    The list is public... Don't have time to look it up but a few searches on the US Treasury site or Google will help you find it.

  7. #7

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    https://www.scmp.com/business/compan...estment-stocks

    The more than 184,000 Hong Kong retail investors that bought the fund at HK$11.5 per share at its initial public offering in 1999 will have more than doubled their money as of Monday, when the fund closed at HK$28.12.
    “Tracker Fund may not be able to continue to have the same strong performance as the Hang Seng Index because of the sanctions,” said Gordon Tsui, the chairman of industry body Hong Kong Securities Association.
    reminds me of what Buffett said about growing an inefficient enterprise. I suppose the bright side is a cheap introduction to cheap index ethical investing if you take a different perspective.

  8. #8

    Or they could just remove State Street as the manager/trustee of the Tracker fund and replace them with a non-US company.

    AsianXpat0 and Hkemail888 like this.

  9. #9

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    Quote Originally Posted by traineeinvestor:
    Or they could just remove State Street as the manager/trustee of the Tracker fund and replace them with a non-US company.
    I am sure CSOP is waiting for the call.

  10. #10

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    This is a probable disaster

    Give it to a shit asset manager who will double fees and mess up the rebalancing (probably more transaction fees too) or leave it with an incumbent who can't buy half of the index


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