Shares in China Construction Bank Corp rose yesterday on speculation the widely expected imminent stake sell-down by Bank of America Corp would mainly take the form of a private placement to prevent a flood of shares in the secondary market. CCB's Hong Kong-listed shares rose 7.37 per cent before closing up 5.05 per cent at HK$4.99. Its Shanghai-listed A shares rose 1.99 per cent to 4.61 yuan (HK$5.24). The rally came on the expiry of the lock-up period for 13.5 billion CCB shares held by Bank of America, which is struggling to shore up its capital as required by Washington. Bank of America might sell all those freed-up shares, which made up about one-third of its 16.73 per cent stake in the mainland lender, sources have said. Analysts said the rally was also a result of institutional investors covering their short positions after rumours the imminent sell-down would be only for a few investors. 'The stock rally was mainly due to the positive news flows, as most shares [to be placed] would go to some powerful names through a private placement,' said Matthew Kwok, the head of research at brokerage Tanrich Financial. Cash-strapped financial giants in the United States and Europe have been exiting their positions in Chinese banks over the past few months, in some cases through private placements to well-known investors. Hopu Investment Management, a private equity firm founded by mainland investment guru Fang Fenglei, was said to have forked out US$700 million to pay for one-third of the 4.3 per cent stake in Bank of China that Royal Bank of Scotland Group sold in January. Central Huijin, an investment arm of China's sovereign wealth fund, had emerged as a potential buyer of Bank of America's CCB shares, although the firm denied any interest in it, Caijing magazine said. Some mainland observers said the bullish sentiment reflected growing confidence in mainland banks' near-term earnings outlook after profitability slipped over the past few months as interest margins fell. 'At least in the A-share market, institutional investors have quietly built up their positions in banks in the past few weeks on hopes of improving macroeconomic conditions in the second half,' said Zhang Zhizhou, an analyst at CEB Monitor, a Beijing-based research company. 'China Construction Bank is on the wish list.' Some investors said it remained unclear if Bank of America would offload part of its CCB stake shortly. 'There have been rumours over the past few days, and nobody has confirmed whether Bank of America will go ahead with the sell-down in due course or we have to wait for a while,' a fund manager at a Japanese asset management firm in Hong Kong said yesterday. 'Until today, I have received at least four calls from different brokers offering to arrange the CCB shares for me. It is so confusing.'