Chillin' out till it needs to be funded
In an apparent bid to reduce its excessive exposure to Financial institutions, Temasek committed early trades worth $3.6 bln in Hongkong to exit $2.4 bln worth of its stake in Bank of China and another $1.2 bln worth of its stake in China Construction Bank. Temasek has also apparently not been happy with its liquidity position in the past couple of years and there have been discussions about its new decision making member(s)/ committees. Together with GIC, Temasek is Singapore’s larger investment funds as one of the first professionally managed ETFs
Its stakes in India include ICICI Bank and Bharti Airtel/Singtel CCB will also face another such block deal later when BofA finds a buyer for its remaining stake in the bank. Chinese banks or the Big 4 have been facing increasing RRRs since last year to nearly 21% now and local government loans are expected to pressure them further in the year as they turn bad and the banks help the Chinese government out in tunneling that exposure without fiscal damage to China. Among other measures, a likely one could be the direct issue of higher yielding longer maturity bonds of equal/ comparable denomination near the loans due dates as hey are unlikely to be paid.
China’s own SWFs and Pension Funds had been trimming their large Huijin holdings in the Big 4 banks till recently and CIC investing in US retail lifestyle stocks including McDonald’s and Coke. As per details from DJ Marketwatch, the $133 bln Temasek still holds 15.41 billion shares of CCB or 6.16% and 5.35 bln shares in BOC or just above 2%. The shares were acquired in the first IPOs of the banks 5 years ago. Temasek has plans to expand aggressively in China presumably in line with the new 5 year plan objectives for China. It has also signed a condition in the term sheet not allowing it any further transactions in the two listed banks for the next 90 days