Temasek raises stake in Chinese bank ICBC

S'pore investment firm makes buy after stock rout drives down lender's valuations

SHANGHAI • Temasek Holdings, the biggest foreign investor in Chinese banks, has raised its stake in the Industrial and Commercial Bank of China (ICBC) to 10 per cent of the company's Hong Kong-listed shares after a stock market rout drove the world's largest bank to record-low valuations.

The Singapore investment company spent HK$141 million (S$26 million) to buy 30 million ICBC H shares at an average HK$4.696 apiece, according to a Hong Kong stock exchange filing yesterday.

Temasek raised its stake from 9.97 per cent of ICBC's H shares.

The Singapore investment company spent HK$141 million (S$26 million) to buy 30 million ICBC H shares at an average HK$4.696 apiece, according to a Hong Kong stock exchange filing yesterday. Temasek raised its stake from 9.97 per cent of ICBC's H shares.

"Temasek is confident in the long-term prospects for the Chinese economy," spokesman Jeffrey Fang said in an e-mail. "We actively seek opportunities to broaden and rebalance our exposure to the Chinese economy," he added.

Temasek's expression of confidence comes at a time when concerns are mounting that banks' sour credit will surge.

Chinese President Xi Jinping is attempting to revive the economy as a stock slump erased US$5 trillion (S$7 trillion) in market value. ICBC is trading at 0.8 times the forecast book value for this year - below the level seen during the global financial crisis - compared with an average of 1.3 times for the biggest global banks.

ICBC shares have dropped about 30 per cent in Hong Kong since June 12, after rallying 37 per cent over the previous 12 months.

The Beijing-based lender may report zero profit growth for this year on rising bad-loan charges and margin contraction, the weakest since data became available in 2001, according to analysts' estimate in a Bloomberg survey.

Temasek has been boosting its holdings of ICBC shares over the past four years. The firm bought 3.55 billion shares at HK$5.05 apiece from Goldman Sachs Group in April 2012, and disclosed the purchase of more shares the following month.

In May 2013, Temasek bought 280 million more shares from Goldman Sachs at HK$5.50 a share, and in October last year, raised the holding at an average HK$4.935 apiece. ICBC closed at HK$4.55 in Hong Kong yesterday.

Temasek increased its exposure to China to 27 per cent of its portfolio in the year ended March 31, from 25 per cent in the previous year, and broadened its investments from earlier ones in banks to include insurance, consumer and technology companies.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 24, 2015, with the headline 'Temasek raises stake in Chinese bank ICBC'. Print Edition | Subscribe