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$2.48 billion Temasek deal signals long-term investment shift

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Temasek, the Singaporean government's sovereign wealth fund, has unloaded $2.48 billion worth of shares of the Bank of China ( BACHY , quote ) and China Construction Bank ( CICHY , quote ).

[caption align="alignright" caption="Bank of China headquarters"] Image courtesy Yoshi Canopus: http://commons.wikimedia.org/wiki/File:Bank_of_China_Headquarters.jpg [/caption]

The sale, which comes just a couple weeks after it bought a $2.3 billion stake in rival Industrial and Commercial Bank of China (ICBC), signals a reshuffling of Temasek's $150 billion portfolio while maintaining its confidence in the potential of Chinese banks , according to experts.

The fund raised about $1.24 billion selling 3.1 billion shares of the Bank of China at HK$3.13 ($0.40) each and another $1.24 billion selling 1.61 billion CCB shares at HK$5.99 ($0.77) each.

"Temasek continues to see the leading Chinese banks as long-term proxies to the growing Chinese economy as well as the country's rising middle-income groups," said Temasek spokesman Jeffrey Fang, according to Reuters.

While the two banks had been weak performers recently, and shares for both were down 3.1% in Hong Kong today, Temasek still holds a 7% stake in CCB and a 1% stake in the Bank of China.

"Temasek's latest sell decision sends a powerful signal to investors," said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia. "To me, it's signaling a longer-term investment reallocation by Temasek."

Indeed, the fund's decision to increase its interests in ICBC came at the right time. The world's most profitable lender is reporting a 14% increase in earnings.

Despite the shifts in investment, Temasek will still control more than $17 billion in Chinese bank shares, according to Fang.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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