MARKET TALK: CCB, BOC Subject To High Holding Overhang-UBS

Date: 2007/12/03 15:04

MARKET TALK: CCB, BOC Subject To High Holding Overhang-UBS

0704 GMT [Dow Jones] UBS calculates that since 2002, foreign institutions have invested total of US$18 billion in 10 listed H/A-share banks (most H-shares), current market value of US$97 billion accounts for significant 79% of free float market cap; except for ICBC (1398.HK), most lock-ups will expire by end-2008.

Says while most holdings are strategic, "the risk of overhang is real" due to estimated subprime-related losses of US$285 billion for listed global banks, many of which are investors in China banks; significantly lower valuation of developed market financial institutions which could lead to some existing investors looking for better value elsewhere.

Among H-shares, UBS considers stocks with more overhang risk in 2008 are CCB (0939.HK), Bank of China (3988.HK; while stocks with less or no overhang are CMB (0939.HK), China Life (2628.HK), ICBC, BoCom (3328.HK), Ping An (2318.HK), CMB (3968.HK).(RLI)