Hewlett Paccard is watching and learning from IBM earnings management model!
Meanwhile, the Federal Resrve Board and the US Treasury are watching the "Hong-Kong Model" with interest! -g-
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Monday October 11, 12:02 pm Eastern Time
FOCUS-HK outlines government share sell-off
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By Kathleen Kearney
HONG KONG, Oct 11 (Reuters) - The Hong Kong government said on Monday it would launch a public offering on October 25 to sell part of its HK$205.6 billion ($26.5 billion) blue chip share portfolio but failed to say how much.
The new fund, called the Tracker Fund of Hong Kong (TraHK), will comprise shares from all 33 constituents of the blue chip Hang Seng Index (^HSI - news), bought in 1998 when the government intervened in the market to fend off a speculative attack.
The Exchange Fund Investment Ltd (EFIL), custodians of the government's massive holdings, are working on ways of disposing eventually of all but five percent of the portfolio.
''Given the sheer size of the portfolio awaiting disposal and the need to minimise adverse market impact, the task given to the EFIl is a very challenging one,'' Financial Secretary Donald Tsang said at the fund's launch ceremony.
Market analysts expect the initial launch of TraHK, the first index-linked fund to be listed in Hong Kong, to be valued at between US$1-2 billion.
It would be offered to retail investors in Hong Kong through the IPO and to global institutional investors via a bookbuilding exercise. The offering will close on November 4 for retail investors and on November 5 for institutions ahead of the fund being listed on November 12.
The price of the fund will be set on November 8, government adviser Goldman Sachs said at a news briefing.
Only the maximum price of the units, will be given in the prospectus to be issued on October 25, as well as the size of the issue and incentives for investors who hold units long term.
GOVERNMENT DETERMINED TO SELL PORTFOLIO
The government said it was determined to sell the blue chip shares it purchased for HK$118.13 billion during a controversial foray into the stock and futures markets in August 1998.
''The government is committed, committed, to disposing of the rest (of its share portfolio) in an orderly manner,'' Tsang said.
The government said it had a ''tap mechanism'' to enable it to issue more units of the fund, but did not say how the mechanism would work.
The paper value of the government's shares acquired during the intervention has risen by 64.64 percent to HK$194.49 billion as of Monday's close. If the shareholding held previously by the government's Land Fund is included, the total portfolio is valued at HK$205.63 billion.
Market analysts expect the government may have a tough job marketing the issue.
''This is not going to be an easy one to fly,'' Howard Gorges, director of South China Securities told Reuters. ''I think this first sale is going to be something of an experiment to see how it goes, how it needs to be modified in the future.''
Analysts had mixed views on the timing of the fund's launch.
The economy, dragged down by two years of economic downturn, has bottomed out but the upturn is not strong. The government is looking for just 0.5 percent growth for the year.
And several other large issues have been timed to coincide with the improving economic and market outlook, analysts said. That could mean competition.
($1 equals 7.768 Hong Kong Dollar)
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