China's central bank trims holding in HDFC to below 1%

The Chinese authority hasn’t entirely sold its stake but just trimmed it below 1 per cent. Stock exchange shareholding disclosure captures names of public shareholders who own more than 1 per cent stake. 

People’s Bank of China (PBOC) has sold a part or its entire stake in HDFC, according to the June quarter shareholding disclosure made by India’s largest mortgage company. 

The development comes following a furore in April when it emerged that China’s central bank had upped its holdings in the Mumbai-based financial services behemoth, taking advantage of the market meltdown. 

The Chinese authority hasn’t entirely sold its stake but just trimmed it below 1 per cent. Stock exchange shareholding disclosure captures names of public shareholders who own more than 1 per cent stake. 

“They are an equity investor like any other institutional investor. They had invested in some point and their holding crossed 1 per cent during the March quarter when the disclosure was made. In April or May, they have reduced a little bit and now they are less than 1 per cent. I don’t know exactly how much. It is a normal thing, the controversy (which was created) was unnecessary,” Keki Mistry, vice-chairman and chief executive of HDFC, told Business Standard. 

During the quarter ended March 2020, PBOC held 17.5 million shares, or 1.01 per cent stake, in HDFC, valued at Rs 3,300 crore at the current market rate. Whatever maybe the stake sale quantum, PBOC would have made a neat profit on the investment in matter of months.

During the March quarter, shares of HDFC had plunged more than 40 per cent. From March lows of Rs 1,473, the stock had rebounded 30 per cent in April. After a chopping June quarter, shares of HDFC are currently trading 30 per cent higher compared to their 2020 lows. 

PBOC buying and selling price can’t be ascertained. 

Market players said the Chinese central bank could have trimmed the exposure to avoid public glare. While the investment quantity was small, it had sparked a debate on whether Chinese investment firms were taking advantage of the fall in the domestic markets -- triggered by the Covid-19 pandemic -- to lap up shares of Indian companies. 

The Securities and Exchange Board of India (Sebi) had even increased scrutiny of foreign portfolio investors (FPIs) from neighbouring countries. 

Currently, Life Insurance Corporation is the biggest shareholder in HDFC. The State-owned lender increased its stake by 72 basis points (bps) to 5.39 per cent during the June quarter. Invesco Oppenheimer, the second-biggest shareholder, also increased its stake in HDFC by 21 bps to 3.54 per cent. 

Meanwhile, the government of Singapore trimmed its take by 9 bps to 3.14 per cent. Vanguard and Government Pension Fund also pruned their holdings.