Wednesday, November 16, 2011

BofA Divests China Construction Bank Stake to Boost Capital, Not Declining Confidence in China

Bank of America's latest move to further divest its shares in the Chinese bank is more to lock in investment gains and take profits than a signal of loss confidence and an impending hard landing in the Chinese economy.

Where else can and should investors take their capital to if not China, India and smaller Asian economies?
Certainly not USA and Europe?

Quote :

Chief Executive Officer Brian T. Moynihan, 52, is selling assets to replenish Bank of America's capital and meet regulatory requirements for risk buffers after faulty mortgages led to about $40 billion of expenses. The lender joins Goldman Sachs Group Inc. in paring stakes in China's two biggest banks by tapping the stocks' biggest one-month rally in four years.
“We view this announcement positively for CCB as it removes a significant overhang from its shares,” Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in a research report. “This is especially true as the market was aware that BofA was seeking to improve its struggling capital adequacy ratios.”

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