People’s Bank of China (PBOC), the country’s central bank, has cut its stake in mortgage lender Housing Development Finance Corp. Ltd. in the quarter ended June 30, according to shareholding data filed by HDFC with the stock exchanges.
The Chinese central bank, which had held a 1.1% stake in the Indian lender at the end of the March, reduced its holding to less than 1% during the April to June quarter, a period which coincided with heightened border tensions between the two countries. Separately, in April, the Centre had also imposed curbs on investments from China to ward off the possibility of takeovers of vulnerable Indian companies during the pandemic.
“We were expecting a backlash after the stand-off in Ladakh,” said Ambareesh Baliga, an independent equity analyst. “It appears PBOC has reduced the stake in HDFC to stay away from public attention,” he added.
Under the threshold
As per the latest quarterly shareholding data filed by HDFC, PBOC is not listed as a shareholder since as per Indian regulatory norms companies only need to show holdings of 1% or more. In the previous filing, PBOC was shown holding 1,74,92,909 shares amounting to 1.1% stake.
People familiar with the shareholding data confirmed that PBOC’s holding had fallen just below 1%. A HDFC spokesperson declined to comment.
“Had they wanted to exit, they could have exited completely. But they [may have] preferred to retain the stake, which is below 1%, so that it will not be reported in the list of shareholders,” Mr. Baliga added.
Plans on hold
“The trade and investment relations between India and China have reached a new low and even Indian companies which were to get investments from Chinese auto companies have put their plans on hold or shelved it. And those which had invested in China are looking to shift base,” Mr. Baliga said.
“The move by PBOC is in this context,” he added.
Other foreign investors in HDFC include the Government of Singapore with 3.14% stake and Vanguard Total International Stock Index Fund with a 1.66% stake.
Shares of HDFC came under selling pressure on Friday, declining 2.9% to close at ₹1,886.25 on the BSE.