What’s new: U.S. investment company State Street Global Advisors Asia Ltd., which runs Hong Kong’s largest exchange-traded fund (ETF), said on Wednesday that it would resume investing the ETF’s money in companies blacklisted by the U.S. for alleged links to the Chinese military, after a mere two-day suspension.
The fund manager gave no reasons for the reversal.
What’s the response: State Street’s moves may set an example for other market participants, but its overnight rethink has largely perplexed others considering how to respond to U.S. sanctions, multiple industry insiders told Caixin.
The change has caused unnecessary disorder in the market, though without substantial impact on the ETF’s own investors, a spokesperson for the Hong Kong Monetary Authority said.
What’s the background: With some HK$100 billion ($13 billion) in assets under management, the ETF follows the benchmark Hang Seng Index, which includes now banned in the U.S. telecom giants China Mobile Ltd. and China Unicom (Hong Kong) Ltd., and oil producer CNOOC Ltd. The three companies together account for 3.79% of the index’s total weight.
Related: Hong Kong’s Largest ETF Suspends Investment in Chinese Firms on U.S. Blacklist
Contact reporter Luo Meihan (meihanluo@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)
