Social Security Fund Of China Is Selling Chinese Banks Shares22 June, 2011, 0:19. Posted by Zarathustra
Tags: Banks, Social Security Fund
Since I reported that the local government financing vehicles may have as much as 14 trillion Yuan of debts early this month, Chinese banks shares have doing pretty badly. In Hong Kong, Bank of China (3988.HK) has lost 12.06%, China Construction Bank (939.HK) has lost 11.54%, and ICBC (1398.HK) has lost 10% since the report came out.
However, investors were not really bothered by the potential exposure of Chinese banks on these local government debts. In fact, media in Hong Kong seemed to have miss that shocking headline. Since that day, we have been hearing various rumbling on the market that some big strategic investors may be selling off some of their holdings of Chinese banks after the lock-up periods for their holdings end. In fact, this report points out that there may be as much as HK$240 billion worth of Chinese banks shares which the lock-up periods end within these two months.
Today, Bloomberg reports that Bank of America (BAC.N), one of the really early investors of China Construction Bank (939.HK), will be selling its stake of the bank to raise capital. According to the report, Bank of America has some US$21 billion worth of shares of China Construction Bank. It will be selling the shares to meet tougher regulatory requirement. This is not entirely unexpected, of course. In fact, many banks did so back in the financial crisis. Now, they are probably going to repeat again.
The more interesting recent disposal of Chinese bank shares comes from a regulatory filing at the Hong Kong Stock Exchange. We can see one entry today that the Social Security Fund of China has sold 14,598,000 shares of Bank of China on 14 June 2011 at an average price of HK$3.950, and its share holding has changed from 12.01% of shares to 11.99% of H-shares. Curiously, this is the second filing they have with respect of Bank of China. On 4 January 2011, they sold 30,000,000 shares at HK$4.173. At that time, the filing shows that its holding after that sales was changed from 13.03% to 12.99%. Curiously, its share holding has dropped from 12.99% after the sales on 4 Jan 2011 to just 11.99% as of 14 June 2011.
According to the disclosure rule applies to this case, they disclose their disposal only when the percentage of interest cross over a whole percentage point. That means they did not have to disclose their action when its holding changed from 12.99% to 12.98%, for example, but they have to file the notice as its share holding dropped below 12%, crossing one the percentage point.
The filings tell one thing: between 4 January 2011 and 14 June 2011, the Social Security Fund of China has sold 869,679,000 shares of Bank of China H-share, which probably worth some HK$3.5 billion.
Also, on 1 March 2011, The Fund has sold 40,100,000 shares of ICBC. On that day, the share holding of ICBC has changed from 18.04% to 17.99%.
The motive of the Social Security Fund is unclear, and the shares they have sold so far are little. Whatever it is, the message is clear: they are selling, full stop.