China SAFE Buys 50mn Shares of ICBC, CCB, BoC

China SAFE Investments Ltd., a wholly-owned subsidiary of the nation's sovereign wealth fund China Investment Corp., acquired shares of the nation's listed Big Four state-owned commercial lenders via the trading system of the Shanghai Stock Exchange recently.

According to notices it filed on October 9, it bought 30.07 million shares of Industrial and Commercial Bank of China (ICBC, SHSE: 601398, and SEHK: 1398), 16.14million shares of China Construction Bank (CCB, SHSE: 601939, and SEHK: 0939) and 5.13 million shares of Bank of China (BoC, SEHK: 3988 and SHSE: 601988) this time. The three deals each cost it about CNY 148.5 million, CNY 93.6 million and CNY 20.5 million and helps lift the stake it controls in the three banks up by 0.01 percent, 0.01 percent and 0.0021 percent.

It is a strategic move the state-owned investor takes to stabilize share prices of the three banks, said Wu Yonggang, an analyst with Guotai and Junan Securities Co., Ltd. The lockup periods of 246.92 billion shares of ICBC, the biggest commercial lender in China, are scheduled to expire this month. Of the total, 236.01 billion ones are controlled by Chinese investors China SAFE and the Ministry of Finance (MoF) and the remainder are held by foreign investors.

In detail, 118 million shares owned by the MoF are going to become tradable on October 20 and the other 118 million shares held by China SAFE are going to become tradable on October 27. In order to maintain the controlling shareholder status, China SAFE and the MoF are unlikely to sell the shares.

However, there is great possibility for foreign shareholders of the bank to sell the shares. Hurt by the global financial crisis, they are in urgent need to cash in investments now. Industry observers forecast that their sales will put little impact on the bank but is likely to cause the latter's share price to fluctuate on the secondary market.

Liu Jiazhang, an analyst with China Minzu Securities Co., Ltd., agrees with Wu. In his opinion, it is also a symbolic move. Via the deals, China SAFE wants to tell investors that it would buy more into the three banks. China SAFE added in the notices that it would continue buying shares of the three in the coming 12 months.

(USD 1 = CNY 6.83)

Source: www.cnstock.com (October 12, 2009)

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