Shares of China Construction Bank Corp fell as much as 10.46 per cent on Tuesday amid concerns that Bank of America may sell its stake in the mainland lender.
On Monday Bank of America exercised a call option to acquire 19.58 billion H shares from China SAFE investments for $54.8 billion. Market speculators widely believe that the US lender will also sell the 19.2 billion shares of CCB H which they acquired in 2005, for which the lock-up period expired last month.
Potential disposal of old stake in shares would help Bank of America realise US$6.8 billion. It is also likely that the impact of share disposal would not be significant as it is believed that Bank of America will likely sell the shares through displacement rather than the open market.
Broker downgrades depress property stocks
JP Morgan downgraded five developers and cut share-price estimates on two leading players which resulted in lower property stocks on Tuesday. The brokerage expects residential prices to fall 35 per cent by June and office rents to drop by 40 to 50 per cent by the end of next year from the third quarter and retail rents to decline 15 per cent. JP Morgan expects earnings by most developers to fall by 13 to 17 per cent.
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