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Foreign investors share dumping has little impact on Chinese banks
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20:57, April 29, 2009

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The Industrial and Commercial Bank of China, the world's biggest lender by market value, edged up 2.49 percent in Shanghai and 4.61 percent on the Hong Kong Exchange Wednesday, indicating that Tuesday's dumping of shares by foreign stakeholders had little impact on investor confidence.

Allianz Group sold 3.22 billion ICBC Hong Kong-listed shares and American Express sold 638 million ICBC Hong Kong-listed shares Tuesday, as soon as a lock-up period expired.

The ICBC A shares edged up 0.5 percent in Shanghai and H shares up 2.48 percent on the Hong Kong Exchange the same day.

Analysts said the investors had to sell their holdings to shore up capital amid the financial crisis and it had nothing to do with a lack of confidence on Chinese bank sector.

Professor Guo Tianyong, of the Central University of Finance and Economics (CUFE), said many financial institutions were suffering from the financial crisis and some had to sell shares to relieve liquidity pressure.

A number of foreign institutions have sold their holdings in Chinese banks this year.

Bank of America sold part of its stake in China Construction Bank (CCB) on Jan. 7 and Royal Bank of Scotland Group (RBS) dumped all of its Bank of China (BOC) assets on Jan. 14.

On the other side, some investors indicated they would hold their stakes in Chinese banks.

Goldman Sachs Group Inc., which owns 4.93 percent of ICBC's outstanding shares, has agreed to hold on to 80 percent of that stake until at least April 28, 2010. It could sell the remaining stake anytime after April 28 this year.

Michael Evans, vice chairman of Goldman and chairman of Goldman's Asian operations, said they prolonged the lock-up period because Goldman had confidence in ICBC and China's economy and they hoped to maintain long-term strategic cooperation with ICBC.

HSBC, holding a 20-percent stake in Bank of Communications, has established close cooperation with its Chinese partner. HSBC has reiterated it would not cut its stake in Bank of Communications, which was locked until August last year.

Temasek Holdings and Asian Development Bank (ADB) said they would not drop shares in BOC in the first half. Bank of America promised to hold its stake in CCB for 120 days after selling other CCB shares on Jan. 7.

Analysts say Allianz and American Express cut their holdings in ICBC through private sales to a select group of investors, which would not affect China's banking sector.

ICBC declined to identify the buyers of the shares.

Source: Xinhua



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