China’s Central Bank Acquires 1% Stake In HDFC: Beginning of The Dirty Money Entering India?

Must Read

Elon Musk Added Over $100 Billion To His Net Worth In Just 1 Year, Leaves Jeff Bezos Behind

Jeff Bezos may the world's richest person in the world but it's Elon Musk who has been...

iPhone 12 Plagued With Serious Problems: Should You Buy It, Still?

A serious problem with Apple iPhone 12, identified recently, is good enough to give a second thought...

Elon Musk Overtakes Bill Gates And Becomes the 2nd Richest Person in the World

It's been a good week for Elon Musk and his electrical vehicle business Tesla. Earlier this week,...

With the outbreak of the deadly COVID-19 came the rapid economic downturn which has led to many stocks plummeting to record lows. Recently it has been found out that, taking note of this situation, People’s Bank of China (PBoC) has used this opportunity to swoop in and buy 1.75 crore shares in HDFC Ltd. – one of the largest housing finance lenders in India.

According to the exchange data, 1.01% of the shareholding or 1,74,92,909 crore shares were bought by the Chinese Central Bank PBOC (People’s Bank of China) between January and March which is coincidentally also the time wherein the Coronavirus outbreak seemed to ramp up its pace.

HDFC’s share was observed to have fallen by a whopping 32% in the first week of February from its 52-week high of Rs 2,499.65 on January 14, 2020. It was during this same period when Sensex which is India’s benchmark equity index crashed 25%. On April 10, HDFC shares closed at Rs 1,701.95.

Advertisements

The CEO and Vice Chairman of HDFC Kei Mistry in a statement said that China’s PBOC had been accumulating HDFC Ltd shares for over a year. They previously owned 0.8 per cent of the shares as of March 2019 but the news was recently declared as their stake has now hit the 1 per cent regulatory threshold.

Amid the stock market crash in major economies due to the outbreak, China has been buying stakes across major financial institutions in Asia. This is troublesome as it could well be the beginning of China’s dirty money getting funnelled into our country.

People’s Bank of China, on the other hand, is responsible for carrying out all the monetary policy and regulation of financial institutions in mainland China. Interestingly, valued at $3.21 Trillion, PBoC has had the largest financial asset holdings of any central bank in the world since July 2017.

China’s Dirty Money

China, since as early as the year 2000, has been issuing huge loans to small countries that aren’t exactly popular destinations for foreign investments such as Pakistan, Bangladesh, Myanmar, Sri Lanka and more.

After these countries used these Chinese loans to build key infrastructure properties such as ports, railways and highways, they often found themselves in a ‘debt trap’ unable to pay back the loan in time. This is when China swoops in and takes control of these infrastructure properties while also keeping them open for these countries to use. While for the countries that were on the receiving end of these loans it seemed like a win-win situation, for China it was all part of a grand scheme of the Belt and Road Initiative which sought to help them dominate global trade routes.

Advertisements

The global outbreak of Coronavirus is so devastating that all major economies, including the USA, are going through an unprecedented crisis. After making many small economies fall for its debt trap, China set its eyes on flourishing markets including India. For decades China has been accumulating the treasury securities of the US and now owns 5% of the total US debt amounting to $22 trillion.

With the latest move in India, China is replicate the same strategy to strengthen its presence and dominance in the Asia market.

It is quite understandable how the prospect of loaning huge sums of money with fewer strings attached for shorter time periods easily helped them rope in less democratic smaller countries easily. However, the same wouldn’t have worked for developing countries such as India, therefore they waited until the economy was weakened by the outbreak of the COVID-19 and then decided to make hefty investments such as the current one.

This also begs the question if the outbreak of the deadly coronavirus pandemic which spread from the Wuhan province of China was used as a biological weapon to deliberately destabilise the world economy. What are your thoughts on this issue?

Let us know in the comments down below.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Backed By First-Time Shoppers, Flipkart And Amazon Dominated Festive Online Sales in India

It seems like Flipkart and Amazon squeezed the most out of the month-long festive season in India...

Amazon Gets Slapped With Penalty As GOI Prepares To Tighten The Noose On Ecommerce Players!

In a recent move, the Indian Government slapped Amazon on its wrist for not mentioning the country of origin detail for products...

Facebook’s Past Comes Back To Bite As South Korea Fines Them For 2018 Scandal

The social media behemoth Facebook Inc. (NASDAQ:FB) has once again proved they are the true arch-nemesis of modern-day user-privacy!

Amazon Future Group Dispute Deepens As Singapore Court Turns Down Future Group Plea

The dispute between Amazon and Future Retail is, apparently, far from over anything soon as the Singapore International Arbitration Centre (SIAC) has...

Google Pay Fee On Instant Transfer: An Indication Of Google’s Aggressive Monetisation Strategy?

Google has decided to levy fee on instant payment, starting from the US market. A few days back, Google...

Twitter Account Verification Is Back, But Has it Lost Its Mojo?

Twitterati queue up! As the Twitter account verification process which is responsible for awarding blue badges prepares to...

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter,...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one...

More Articles Like This