Big banks sell off China Mobile shares

Some of the world’s biggest banks have sold several billion of China Mobile shares today, only weeks after Vodafone sold its entire stake in the company, causing speculation on the sudden flurry of stock sales.

Goldman Sachs, Morgan Stanley and UBS sold roughly $2 billion in shares of China’s largest telecommunications operation, which amounts to around a one percent stake in the company. This follows Vodafone’s sale of its 3.2 percent stake, worth $6.5 billion, earlier this month.

The banks’ decision is reported to be a direct result of Vodafone’s block sale, which failed to clear the market initially, forcing a number of clean-up trades over the following days.

While the banks were too cautious to comment, it was revealed that the stock went at a rate below its placement price of HK$79.20. 

The shares were sold at a discount of between 2.4 and 3.4 percent, higher than similar sales of other companies’ stocks in the region recently, which prompts concerns over why so many companies are ditching their China Mobile shares with a discount.

However, some believe the discount was not big enough and should have been closer to 4.88 percent, as not many investors were keen on the shares.

The total percentage of the sale is very small, but the state-owned China Mobile Communications company, the parent of China Mobile, has a 74 percent stake. This means that 26 percent of the firm is in outside hands, with close to 5 percent of it being sold off over the last month – a significant proportion.

It’s not clear what is prompting the sales as the Chinese market is generally seen as strong. It raises questions about the viability of China Mobile in the long-run and if other shareholders may be spooked into selling up as well.