China Cinda Asset Management Co.’s shares plunged to a record low after the bad-loan manager said it was bidding for Hong Kong lender Nanyang Commercial Bank Ltd., an acquisition that may cost almost $9 billion.
Shares in Cinda tumbled as much as 11 percent Thursday to HK$2.57, the lowest since it began trading in December 2013. The stock dropped 6.6 percent as of 10:50 a.m. local time, compared with a 2.5 percent gain in the benchmark Hang Seng Index.
Only Cinda submitted a binding offer by an Aug. 25 deadline, seller BOC Hong Kong Holdings Ltd. told Hong Kong’s stock exchange on Wednesday night. The Chinese company would be making the biggest purchase of a Hong Kong bank in at least a decade just when stock turmoil in Asia and around the world has been hammering company valuations.
“There’s concern that Cinda is buying the bank at too expensive valuations,” said Edmond Law, a Hong Kong-based analyst at UOB Kay Hian. “We are not in a bull market any more,” he said, adding that a Hong Kong bank priced at two times book value was “very expensive.”
BOC Hong Kong didn’t give any details of the bid. Cinda will pay near the reserve price of HK$68 billion ($8.8 billion), a person familiar with the matter said on Wednesday, asking not to be identified because the discussions are confidential.
— With assistance by Alfred Liu, and Jun Luo