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

Must Read

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

Apple Store In India: More Of Disappointment Than Excitement?

Apple has started making moves to strengthen its presence in India. With the launch of Apple online...

The Advantages of Java Logging

If you're a fan of Java logging, you already know that there are three main types, Log4j, Log4j2, and SLF4j. They all...

Jio Postpaid Plus Plan Offers Free Netflix And Amazon Prime To Give Airtel and Vi Run For Their Money?

The just launched Jio Postpaid Plus plan is making heads turned. Just when you think Mukesh Ambani led...

TikTok Oracle Deal: China is Not Happy

Beijing is not at all happy with how the TikTok-Oracle deal panned out! In an editorial, Global Times, the...

TikTok Oracle Deal: Confusion, Contradictions and Quest for Control

Another day Another verbal volley. TikTok Oracle deal saga continues. The tug-of-war with the back and forth statements surrounding...

5 Common IT Infrastructure Management Issues You Must Resolve Today!

Your IT infrastructure supports your entire operation, but there are many struggles departments have difficulty identifying and overcoming. One of the biggest...

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