Bear Stearns

CCB soars on Bear Stearns report

PUBLISHED : Friday, 28 September, 2007, 12:00am
UPDATED : Friday, 28 September, 2007, 12:00am


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China Construction Bank's A shares, which gained 32.6 per cent in their trading debut on Tuesday, gained a further 8.6 per cent to 9.30 yuan yesterday.

The stock was boosted by news that the bank may acquire a stake in Bear Stearns, along with other potential investors such as Warren Buffett, the world's second-richest man.

The H shares of the bank, the country's third-largest lender, gained 0.14 per cent to HK$7.11 yesterday.

It was the fifth-most active stock with 460 million shares changing hands.

Bear Stearns, the United States' sixth-largest securities firm, was in talks with several investors, including CCB and Citic Group, interested in buying a 20 per cent stake in the firm, the New York Times reported yesterday, citing an unidentified source.

Hu Changmiao, a Beijing-based spokesman for China Construction Bank, said the bank did not comment on market speculation. 'It was already rumoured last year. We have no knowledge on this issue.'

CCB was rumoured last year to have spent up to US$4 billion to buy part of Bear Stearns. The mainland bank denied the report.

Bear Stearns has a market capitalisation of US$14.28 billion. The bank last week reported a 61 per cent decline in third-quarter profits amid the tightening credit market, which renewed speculation that it could be a takeover candidate.

Mr Buffett is said to have taken a large stake in Bear Stearns a month ago, when the bank's share price plunged to its record low of US$100.

Now that the shares have risen to Wednesday's close of US$123, some market watchers question whether Mr Buffett will remain interested.

Mainland banks have embarked on a buying spree abroad.

Recently, China Development Bank, one of the policy banks, acquired a 7 per cent stake in British-based Barclays Bank.

However, many such deals face regulatory hurdles due to increasing protectionism from foreign governments.

'They may encounter a lot of rejections by foreign institutions,' said Peter Wong Tung-shun, executive director of HSBC. 'It's all international politics, which can be worked out at the end.'