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prachi Patwardhan made post

Why has the Chinese central bank, PBOC trimmed its stake in HDFC?

Answer
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4 weeks ago


The Chinese central bank, PBOC, trimmed its stake in HDFC following a major furore after India had raised concerns over the Chinese central bank raising its stake in HDFC. As of the end of March, PBOC had held 1.75 crore shares in HDFC representing 1.01% stake in HDFC, but that has apparently been divested in the June quarter, post the objections raised.

However, the stock exchange only discloses holdings above 1%, so it is not clear whether PBOC has fully divested its stake or just reduced it below 1% to circumvent the rule. Some experts also feel that it could be a normal treasury activity for the central bank. China did not want to take any chances considering the deteriorating relations post the LAC standoff.

In the last few months, SEBI has increased scrutiny of foreign portfolio investors or FPIs from neighbouring countries. For FPI and FDI flows from China and neighbouring countries, the Indian government had mandated that case-by-case approval would be required. During the quarter, LIC and INVESCO Oppenheimer had upped their stakes in HDFC.