After BOC sale, Temasek offloads 280m CCB shares
Maria Chan and Wong Ka-chun
Temasek Holdings, the investment arm of the Singapore government, yesterday began offloading HK$1.985 billion worth of China Construction Bank Corp shares, its second sale of mainland banking stocks in three days.
Temasek-owned Fullerton Asia Financial Holdings yesterday hired Morgan Stanley to arrange the sale of 280 million CCB shares at HK$7.09 each, a 4.96 per cent discount to the bank's closing price of HK$7.46.
'Some investors may be cautious on financial stocks due to renewed worries about the subprime crisis,' said Wong Kwok-wai, an analyst at BOCI Research.
In its latest subprime-driven move, HSBC Holdings announced on Monday a US$35 billion bailout of its two structured investment vehicles, rekindling market concerns that the subprime mortgage crisis might drag on.
Last month, Bank of China said it had made an extra 2.4 billion yuan in reserves against possible losses in the third quarter for its subprime-backed assets in the United States.
Meanwhile, CCB said it had increased its provision for subprime-related investment at the end of the third quarter to 336 million yuan from 139 million yuan in the first half, of the year.
Mr Wong said Temasek also might want to take profit simply as CCB's share price had surged about 50 per cent this year.
Temasek held 13.5 billion shares or 6.04 per cent of CCB's Hong Kong-listed shares at the end of June. It could book a more than HK$1.5 billion gain based on its average cost of about HK$1.42 when it bought into the bank in 2004 and at its initial public offering in 2005.
As a strategic investor, most of the CCB shares held by Temasek had a lock-up period but it was allowed to sell up to 4.95 billion shares after August 29.
On Monday, Temasek sold about HK$4.4 billion worth of BOC shares.
Ben Kwong Man-bun, the chief operating officer of KGI Asia, said Temasek might have taken profit and was reviewing its investment portfolio after valuations of certain investments expanded substantially.
While CCB shares might face some selling pressure after Temasek's placement, Mr Kwong said the adjustment would be in line with the placement price.
The amount Temasek Holdings will pocket from the share sale, in HK$: $1.99b