Published: Tuesday, 5 Jul 2011 | 10:49 PM ET
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By: Reuters
Shares in Bank of China and China Construction Bank fell on Wednesday after Singapore state investor Temasek Holdings sold a combined $3.6 billion worth of shares in the two banks in a move to trim exposure to the financial sector.
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Wang Zhao | AFP | Getty Images |
Temasek, which has about $152 billion under management, launched the selldown in the two Chinese banks late on Tuesday. The move comes ahead of its annual review planned later this month and is set to lower its exposure to the financial sector from 37 percent as of the end of March 2010.
The Bank of China [3988.HK 3.73 
-0.13 (-3.37%) 
] stake was sold at HK$3.63 a share, raising HK$18.84 billion ($2.4 billion), while the CCB [0939.HK 6.29 -0.19 (-2.93%) ]stake was sold at HK$6.26 a share, raising HK$9.39 billion, a source familiar with the matter told Reuters.
-0.13 (-3.37%) ] stake was sold at HK$3.63 a share, raising HK$18.84 billion ($2.4 billion), while the CCB [0939.HK 6.29 -0.19 (-2.93%) ]stake was sold at HK$6.26 a share, raising HK$9.39 billion, a source familiar with the matter told Reuters.The large block sales were covered within an hour after going to market and the books were closed in three hours, showing strong appetite from investors for the deal, added the source, declining to be named due to not being authorized to speak to the media.
By mid-morning, Bank of China shares were down 4.2 percent at HK$3.70 while CCB shares fell 2.6 percent to HK$6.31. The benchmark Hong Kong share index[.HSI 22657.74 -90.21 (-0.4%)] was down 0.3 percent.
-90.21 (-0.4%)] was down 0.3 percent.Temasek bought a 10 percent stake in Bank of China in 2005 for $3.1 billion and invested $500 million in the bank through its initial public offering. It invested over $1 billion in CCB's 2005 IPO.
Temasek has been paring exposure to the financial sector after suffering billions of dollars of losses from its investments in Barclays [BARC.L 259.50 --- UNCH ] and Bank of America [BAC 11.00 -0.09 (-0.81%) ] during the financial crisis.
] and Bank of America [BAC 11.00 -0.09 (-0.81%) ] during the financial crisis.The selldown also comes after some analysts have turned cautious about the outlook for Chinese banks. On Tuesday, Moody's issued a warning of a possible ratings downgrade for Chinese banks due to their higher-than-expected exposure to local government debt.
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