Shares in Bank of China gained for the fourth consecutive day on Friday morning in Hong Kong, amid speculations that an investment in Deutsche Bank will lead to more overseas investment by the state-owned bank.
The stock rose to a high of 3.630 Hong Kong dollars (£0.37), up HK$0.030, or 0.83%, from Thursday, during morning trading on the Hong Kong stock exchange. In Shanghai, the bank is up more than 2% from Thursday.
According to German business weekly WirtschaftsWoche, Chinese investors, including BOC, are in talks with Deutsche Bank over a possible investment. Sina and other Chinese media reported the news on Friday. The news stoked expectations for an expansion of overseas investment by BOC, prompting investors to buy shares.
The reports said a new investor is considering acquiring a stake of up to 10% in the German bank, which has been in negotiations with U.S. regulators to settle allegations over inappropriate sales of financial products. The size of the settlement payment is expected to grow from the levels negotiated so far.
“With cash to spend and amid growing expectations for the Yuan’s further depreciation against the dollar, Chinese companies are speeding up efforts to buy foreign companies, so it makes sense for the [reported] investment to actually take place,” said an industry official in Hong Kong. But, he added, how much of an impact overseas investment would have on the bank’s bottom line is unclear because its major operations are in China.”