A woman looks at a large electronic display showing the Hang Seng Index yesterday in Central, Hong Kong. AFP

HONG KONG: Investors yesterday sold down the H-shares of Industrial and Commercial Bank of China (ICBC) and other mainland banks following US investment bank Goldman Sachs' decision to offload some HK$14.8 billion worth of ICBC shares via a public placement.

Their fall came amid a general market downtrend following recent strong gains, with the benchmark Hang Seng Index losing 2.64 percent, or 499.51 points, to close at 18,389.08. Yesterday's breather came after a hefty 25 percent gain last month.

ICBC, the world's largest lender by market value, skidded 4.11 percent, or HK$0.21, to close at HK$4.9 at the Hong Kong bourse yesterday.

Like ICBC, other mainland banks slumped, too, with China Construction Bank shedding 1.93 percent, or HK$0.1, to close at HK$5.09, while the country's third-largest lender Bank of China finished down 2.01 percent, or HK$0.07, at HK$3.42.

The weakness of mainland banks dragged down the Hang Seng China Enterprises Index, which tracks top mainland companies, as it slid 2.7 percent to 10,637.66.

Despite the general market downtrend, total turnover amounted to HK$101.9 billion, slightly higher than HK$100.3 billion on Monday.

Analysts said the overhang on mainland banks of the share sale of foreign strategic investors would be almost over after Goldman Sachs sold a large chunk of ICBC shares.

Paul Lee, a banking analyst at Taifook Securities, said the sharp fall of the Hang Seng Index took a heavy toll on ICBC's share price.

He noted, however, that selling pressure on Hong Kong-listed mainland banks will ease in the short term, as foreign strategic investors have already offloaded their stakes in mainland banks after the lock-up period ended.

"Most of the worries of investors on this front have already cleared up," Lee said, "Shares in mainland banks will likely follow the general market performance in the near future."

Goldman offered for sale 3.03 billion shares in ICBC at HK$4.88 per share, which was around 4.5 percent below the stock's closing price of HK$5.11 on Monday. The shares that Goldman sold represented almost 20 percent of its 4.93 percent stake in the top mainland lender.

Early in March, the fifth-largest US bank promised not to sell 80 percent of its shares in ICBC at any time before April 28, 2010, under the new lock-up agreement.

The announcement boosted ICBC shares to leap almost 15 percent, making its largest one-day gain in five months.

ICBC's earnings increased 36 percent to 110.84 billion yuan in 2008. The bank's net interest margin jumped to 2.95 percent from 2.8 percent in 2007, while the non-performing loan ratio fell to 2.29 percent from 2.74 percent.

Sun Hung Kai Financial Group strategist Castor Pang said valuation of ICBC shares now relies more on its internal operations, as Goldman's sell-off has relieved its short-term pressure.

"The loan growth in mainland banks will be the key factor for their future shares performance," Pang said.

He said the share price of mainland banks may be boosted, if their loan-growth expands at a healthy pace.

Early in April, Allianz Group and American Express sold a combined HK$14.88 billion worth of shares in ICBC, representing almost half of their stakes.

(HK Edition 06/03/2009 page16)