China's PICC Tumbles as Sovereign Fund Plans to Take Profits for First Time
Tang Shihua
DATE:  Jul 10 2020
/ SOURCE:  Yicai
China's PICC Tumbles as Sovereign Fund Plans to Take Profits for First Time China's PICC Tumbles as Sovereign Fund Plans to Take Profits for First Time

(Yicai Global) July 10 -- Shares of the People's Insurance Company of China slumped after a Chinese sovereign wealth fund, which is also the second-largest shareholder of the insurer, said it will unload some of its equity in the latter for the first time amid buoyant pricing.

The price of PICC's Shanghai-listed equity [SHA:601319] slid 6.6 percent to CNY7.71 (USD1.10) in the morning. Its Hong Kong-listed shares [HKG:01339] fell 6.3 percent to HKD2.80 (US 36 cents).

In the next six months, the National Council for Social Security Fund will sell up to 884 million shares, or about a 2 percent stake in PICC, the Beijing-based target company said in a statement on the same day. That would result in a return of CNY5 billion (USD713.8 million), based on yesterday's closing price.

The insurer has benefited from the mainland's recent stock price rally as its Shanghai-listed shares have jumped 28 percent this month by yesterday's market close.

By the end of June, the NSSF had a 16.5 percent stake in the insurer. More than 90 percent of those assets trade in Shanghai. The fund purchased the equity in June 2011, spending CNY10 billion for 3.9 billion shares, resulting in a price of CNY2.57 apiece.

The NSSF, managed by the central government, invests in diverse financial instruments, including bank deposits, government bonds, stocks, and corporate bonds.

Editor: Emmi Laine

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Keywords:   Share Reduction Plan,Insurance,PICC,NSSF