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Chinese central bank cuts stake in HDFC amid border tensions
Photo Credit: VCCircle

The People’s Bank of China has cut its stake in Housing Development Finance Corp, just months after raising its holding in India’s biggest mortgage lender.

China’s central bank had increased its stake in HDFC to 1.01% from 0.8% during the January-March quarter but its holding has now fallen below the 1% mark, stock-exchange filings show.

The PBOC held about 17.5 million shares in HDFC at the end of March. However, the shareholding data filed by HDFC for the April-June quarter doesn’t list the PBOC as a shareholder.

To be sure, companies typically do not mention shareholders with a stake of less than 1% in their stock-exchange filings. So, it is possible that the PBOC still retains a stake in HDFC.

The development comes at a time when relationships between India and China have touched a new low after a border clash last month left 20 Indian soldiers dead. In response, India has tightened scrutiny of Chinese investments, banned 59 popular Chinese apps and moved to curb of Chinese power equipment.

Shares of Mumbai-based HDFC fell 2.9% on the BSE to close at Rs 1,886.25 apiece. The benchmark BSE Sensex fell 0.4%.

HDFC’s shares have touched a high of Rs 2,499.65 and low of Rs 1,473.10 in the past 52 weeks.

Interestingly, PBOC had raised its stake in HDFC when the stock fell nearly 40% in a span of one month from the peaks in mid-February this year as the COVID-19 pandemic led to lockdowns, disrupted businesses and economies, and rattled world financial markets.

It now appears the Chinese central bank may have earned a neat profit given the 20-30% recovery in HDFC’s stock from the lows in March.
 

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