Temasek puts US$2.4b shares on the block

PUBLISHED : Thursday, 03 May, 2012, 12:00am
UPDATED : Thursday, 03 May, 2012, 12:00am


Temasek appears to be taking short-term profits by selling US$2.4 billion worth of shares in Bank of China and China Construction Bank.

The Singaporean sovereign wealth fund is selling 1.6 billion CCB shares at HK$5.99 to HK$6.10 each, a discount of 1. to 2.8 per cent to the stock's close of HK$6.16 yesterday, to raise as much as US$1.2 billion, according to term sheets obtained by the South China Morning Post.

Temasek is also selling US$1.2 billion worth of BOC shares at HK$3.13 to HK$3.18 each, a discount of 2.5 to 4 per cent to yesterday's close of HK$3.26.

Morgan Stanley and Bank of America Merrill Lynch are the bookrunners in both deals.

A banking analyst, who preferred not to be named, said Temasek was engaging in purely speculative profit taking.

The 1.6 billion CCB shares Temasek is selling are about half the 3.17 billion shares it bought in November last year at HK$5.50 each. The sale would net the fund hundreds of millions of dollars in profit.

The Singaporean fund is no stranger to short-term buying and selling of stakes in mainland banks.

In July last year, it sold 1.5 billion CCB shares at HK$6.26 each. Less than two months later, it bought 4.4 billion shares at HK$4.94 each - a 21 per cent discount to its previous selling price - raising its stake to 8.1 per cent.

Temasek bought the shares the same day Bank of America sold 13.1 billion to raise capital.

'There is no excuse for Temasek,' the analyst said. 'The American banks had to sell their stakes in mainland banks in order to raise their capital ratios, but Temasek does not have this burden.

'Institutional investors have been investing short term in mainland banks. They just buy low and sell high.'

Traders said the sales by Temasek would increase near-term price volatility and that the share prices would fall in a 'knee-jerk reaction'.

But they did not expect the longer-term performance of the stocks, which is determined by the banks' performance, to be affected.

Jeffrey Fang, a spokesman for Temasek in Singapore, said the fund was 'rebalancing' its position after buying a US$2.3 billion stake in Industrial and Commercial Bank of China, the country's biggest lender, last month.

It bought 3.55 billion ICBC shares from Goldman Sachs at HK$5.05 each, a 3.07 per cent discount to its closing price of HK$5.21 on April 13.

Fang said the US$2.4 billion worth of shares Temasek was selling was similar to the size of the ICBC stake it bought.

He said the rebalancing would in part prepare Temasek for other opportunities on the mainland and elsewhere and that the fund continued to have 'confidence in China'.


The gains in the shares of Bank of China and China Construction Bank so far this year