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INVESTMENT BANKING | Tony Chua, Singapore
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Temasek still keen on China despite $3.6bn shares sale

China accounts for 20% of the Singapore state investor’s portfolio despite sale of shares in two Chinese banks.

Singapore state investor Temasek Holdings said on Thursday it remains bullish on China, even though it sold $3.6 billion worth of shares in two Chinese banks just a day earlier.

"We have faith in the policies of the Chinese government in the long term and we are bullish on China in the long term," Nagi Hamiyeh, managing director for investments, told reporters at a briefing on Temasek's performance for the financial year ended March 2011.

The state investor also said that about 20 percent of its S$193 billion ($157 billion) portfolio is invested in China.

Temasek's decision to reduce its stakes in Bank of China and China Construction Bank (CCB) came just a day after ratings agency Moody's warned of a possible downgrade of Chinese lenders due to their higher-than-expected exposure to local government debt.

Wong Kok Hoi, chief investment officer at APS Asset Management, said Temasek's decision to reduce its stakes was probably due to asset rebalancing, given the firm's still large exposure to Chinese financials.

"The interest spread is huge in China. It's mandated. The banks can take a hit from non-performing loans... (but) as long as the Chinese economy is growing strongly at 7-8 percent, the banks will continue to do well," Wong said.

View the full story in Reuters..

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