Temasek Sells Down ICBC Stake

(Beijing) — Singaporean sovereign wealth fund Temasek has been selling down its stake in leading Chinese bank ICBC, as the sector remains depressed over concerns about big volumes of bad loans.

Temasek recently sold 600 million shares of Industrial and Commercial Bank of China Ltd. (ICBC), raising about HK$3 billion ($386 million), based on an average selling price of HK$5.023 per share, according to a Friday filing with the Hong Kong stock exchange.

Following the sale, Temasek now holds 8.43% of ICBC’s Hong Kong-listed H-shares, down from a previous 9.12%, according to the filing. Based on ICBC’s total market capitalization, which also includes its Shanghai-listed A-shares, Temasek now holds about 2% of the lender’s total shares.

A Temasek spokesman wasn’t immediately available for comment.

The Singaporean sovereign wealth fund acquired its ICBC stake in several stages, reaching 10% of the bank’s Hong Kong-listed shares as of September 2015. The stock has been a relative laggard, similar to many other Chinese banks, rising just 9% over the last five years, on concerns about a looming bad debt crisis. By comparison, the broader Hang Seng Index rose 30% over the same period.

Chinese banks embarked on a massive government-directed lending spree in the aftermath of the global financial crisis, as part of Beijing’s massive stimulus plan to support the economy at that time. But now many of those loans have turned sour, forcing the banks to work with Beijing to keep the problem from spiraling out of control.

Big institutional investors remain bearish on the sector, with around 70% still holding a negative view, research house Jefferies wrote in a report last week, citing its own survey of around 90 such investors. It said 20% of the investors it surveyed were neutral, while only 10% were positive.

“Though investors acknowledge the macroeconomic data points are showing some signs of recovery, they doubt the sustainability of such recovery and still worry about banks’ fundamentals, particularly the asset quality,” wrote Jefferies analyst Victor Wang. “Further, investors are generally very confused and worried about the impact from tightened financial regulations, hence, appear unwilling to revisit their current investment case/underweight position for China banks.”

ICBC’s Hong Kong-listed shares were up 0.8% midway through the Monday trading day, while its Shanghai-listed shares were up 0.6%.

Contact reporter Yang Ge (geyang@caixin.com)