China’s central bank People’s Bank of China (PBOC) has acquired 1.01 per cent equity stake in India’s largest financier Housing Development Finance Corporation (HDFC). PBOC has bought close to 1.75 crore shares in HDFC during the March quarter, according to the information submitted by HDFC to the Bombay Stock Exchange (BSE). However, according to HDFC CEO Keki Mistry, PBOC already owned 0.8 per cent earlier, while the disclosure has been made now because the ownership has hit the 1 per cent regulatory threshold, he told CNBC-TV18. Businesses are required to disclose shareholding of over 1 per cent at the end every quarter.
The increase in stake comes amid HDFC’s falling share price. It declined 41 per cent between February first week and March last week from a 52-week high of Rs 2,500 to a 52-week low of Rs 1,473. HDFC shares last traded at Rs 1,701.95 on the BSE. “The stock is fairly priced now after the correction. It may be right to raise stake in HDFC,” a Bloomberg news report cited Chokkalingam G, founder of Equinomics Research & Advisory Pvt. in Mumbai.
PBOC had earlier acquired stakes in foreign companies. For instance, in 2014 it bought stakes in multiple Italian firms such as insurance firm Generalli, car company Ford, oil and gas firm Eni etc. during the Eurozone debt crisis. In 2007, the bank had acquired a stake in the UK’s third-largest gas producer BG Group.
Meanwhile, growth in India’s bank credit declined to a more than a 50-year low in FY20 even as it grew just 6.1 per cent in the last fiscal, according to the Reserve Bank of India data. The fall in growth rate could have even steeper if almost 39 per cent of the annual bank credit was not disbursed in a fortnight of March 2020. The growth rate till March 13 was 3.8 per cent.