Financial News
Author: Zhai Ziqian
2021-01-12 08:24
Last update date: 2021-01-12 08:25
US President Trump signed an executive order in November last year prohibiting Americans or companies from investing in companies that are partly owned or controlled by the Chinese military. The executive order will take effect today (11th).
The "investment ban" came into effect on January 11, US time. Many US-funded companies are affected, except for a number of established US-funded investment banks including Morgan Stanley, Motorola, Goldman Sachs, etc., and even Tracker Fund (2800) State Street Global Investment Management's parent company, State Street Corporation, is also subject to the "investment ban", which has led to the need to make certain adjustments in accordance with the guidelines.
Tracker Fund announced that it will no longer make any new investments in sanctioned entities starting from January 11 or a later date that is effective for sanctioned entities.
(Profile picture)
Tracker Fund announced that it will no longer make any new investments in sanctioned entities starting from January 11 or a later date that is effective for sanctioned entities.
This means that Tracker Funds cannot track the Hang Seng Index to continue to buy shares of China Mobile (0941) and China Unicom (0762).
The announcement further pointed out that under the influence of administrative orders, Tracker Funds will no longer be suitable for investment by Americans.
State Street Global Investment Management spokesperson pointed out that according to the content of the announcement, it means that the newly issued fund units of Tracker Fund will no longer invest in companies prohibited by US administrative orders.
State Street: Expected to increase tracking error
The spokesperson reiterated that according to the announcement and the Trust Deed of the Tracker Fund, if it is not feasible for the Tracker Fund to follow the Hang Seng Index constituent stocks and weights, the manager will use his professional skills, management ability and judgment to continue to make every effort to achieve the investment goal. Monitor and try to minimize tracking errors.
The spokesperson emphasized that the aforementioned impact is expected to lead to increased tracking errors, which means that the return of the Tracker Fund may be different from the return of the Hang Seng Index.
According to data from the Tracker Fund, as of January 8, 2021, the number of issued fund units was 3.754 billion, which has been reduced for 3 consecutive days. Compared with the 3.909 billion fund units that closed on January 5, it has decreased by approximately 4%, reflecting the continued net outflow of funds from the Tracker Fund.
In addition, the list of new shares announced by the Tracker Fund yesterday after the market closed did not include China Mobile and China Unicom, but 45,700 shares of CNOOC under sanctions were added (0883).
Deviation from index compilation, non-US funds will abandon Tracker
Honggao Securities Investment Manager Liang Jiewen said that under the influence of the ban, the Tracker Fund has been unable to fully track the performance of the Hang Seng Index. Although US investors cannot buy related assets, if non-US investors want to buy the tracking Hang Seng Index You can choose to buy and sell other ETFs that are not subject to the US ban and can still follow the Hang Seng Index. "Trainer Funds is offending non-US investors."
He believes that even non-US funds will slowly flow away from the Tracker Fund and shift to other unaffected ETF products, and he expects that the number of issued fund units of the Tracker Fund will continue to decrease.
Honggao Securities Investment Manager Liang Jiewen said that as the Tracker Fund no longer invests in related stocks subject to the US ban, the tracking deviation between the product and the Hang Seng Index will increase over time.
(Photo by Zhang Haowei)
Liang Jiewen added that as the Tracker Fund no longer invests in related stocks subject to the US ban, the tracking deviation between the product and the Hang Seng Index will increase over time.
He believes that this time the Tracker Fund is similar to BlackRock's approach, except that it deviates from the Hang Seng Index for a short time. "In fact, it is a gambling that Biden will be on the market next week (the situation turns for the better). He may be well informed and know that the ban has a chance to be lifted.
Too many possibilities fund managers: have time to observe
Pang Baolin, Managing Director of Dongji Fund Management, believes that the adjustment of Tracker Fund will have little short-term impact. For Tracker Fund holders, it may be a good thing not to invest in related telecommunications stocks in the short term. Related stocks have always recorded a certain rebound. .
After a few months or a quarter, the impact of the ban on the Tracker Fund has become more obvious, with a certain impact on its tracking deviation and even its dividend yield.
However, he believes that if the Tracker Fund has not been able to invest in relevant stocks for a period of time, and investors or funds need this type of high-interest and cheaper shares, they can buy additional shares.
Pang Baolin, managing director of Dongji Fund Management, said frankly that, due to the fact that there are too many possibilities for current developments, US President Trump is about to leave office, and there may be changes after Biden comes on the court.
(Photo by Yu Bingfeng)
Pang Baolin said frankly that due to the many possibilities of current developments, US President Trump is about to leave office, and there may be changes after Biden comes on the court.
In addition, he pointed out that State Street, the manager of the Tracker Fund, may set up a non-US-registered company to continue to operate the Tracker Fund, or launch the "Tracker Fund 2.0". He believes that investors do not need to rush to make adjustments.
Otherwise, once more "slingshots" appear in the United States, companies that have moved quickly by index compilation companies such as MSCI or FTSE Russell may have to make adjustments at that time, making the situation more confusing.
Use Box Management to briefly respond to the risk of "only sell, not buy"
Based on the experience of fund managers, Pang Baolin estimates that fund managers may use "Box Management".
Since the Tracker Fund may not be able to buy shares in China Mobile for a period of time in the future, it may not sell shares in China Mobile as usual during this period of time, so as to avoid a "buy no return" situation when its stock price rises or its weight increases in the future .
Lida Asset Management Fund Manager Huang Yaozong also pointed out that there are many possibilities for the development of the current event, and it is difficult to make any predictions.
However, he agrees that funds will continue to flow from Tracker Funds in the short term, and it is expected that the number of issued fund units will further decrease. In the long run, it depends on the investment principles and attitudes of individual fund managers.
On Friday, BlackRock has taken the lead in announcing that based on the fact that the group is a US-incorporated company, the US "investment ban" applies to its funds, so its iShares core CSI 300 ETF (2846) and iShares core Hang Seng Index ETF (3115), starting today, will not make new investments in any sanctioned entities.
As of January 8 this year, China Mobile's weight in the Hang Seng Index reached 2.27%; China Unicom accounted for 0.24% of the index weight.
China Mobile Tracker Fund
