China-led stock transactions will be watched by SEBI

Market regulator SEBI will be closely monitoring share transactions by Chinese companies and banks, especially in times when stock valuations are at historical lows, sources said.

This is after People’s Bank of China’s (PBC) move to hike its stake in HDFC to 1.01 per cent, during the March quarter, from 0.8 per cent earlier.

A report suggested the Finance Ministry was ruffled as regulators had not raised flags when PBC was buying shares over the past few weeks. PBC now holds 1.74 crore HDFC shares. HDFC said PBC earlier held a 0.8 per cent stake. Shareholding below 1 per cent in not disclosed by exchanges publicly. It is not clear when PBC’s stake reached 0.8 per cent.

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People’s Bank of China now holds 1.1% of HDFC

Transactions by Chinese institutions have come under global scrutiny as assets currently may not be reflecting their intrinsic value due to the coronavirus-led slowdown. There are fears over China buying assets cheap or at low valuations, market experts told BusinessLine. The US, Japan and Australia have issued restrictions against Chinese companies buying assets currently. Media reports suggest Japan is ready to pay its corporations to move out of China.

Shankar Sharma, Co-founder and Vice-Chairman, First Global, says PBC’s move should be taken seriously. “Even the US is considering restricting investments and listing by Chinese companies, then why not India,” Sharma said.

Deven Choksey, founder, MD, KR Choksey Investment Advisors, is of the view that China’s move to acquire key assets cheap requires thinking on asset protection norms.