The $15 Billion Chinese Bank Bet That Wasn't -- WSJ

By Caitlin McCabe

It was the kind of filing that, if true, appeared to show a massive change in sentiment: An arm of Swiss-based Pictet Group was taking a $15 billion stake in China Construction Bank.

There was one big problem: The filing was incorrect. The error raises the prospect of a so-called fat-finger incident, which occurs when trading information is input incorrectly.

An Oct. 4 filing in Hong Kong showed that Pictet Asset Management Hong Kong had increased its stake in China Construction Bank to 20,013,587,000 shares, up from 13,587,000 previously. That took Pictet's stake to 8.32%, from 0.01%.

Look closely, and the new share count is the previous number with "200" appended to the front.

An amendment to that filing was issued on Tuesday-putting the firm's exposure up only slightly to 33,587,000 shares, still around 0.01%.

"This new disclosure is to correct the one made [previously], as the quantity disclosed was not correct (an issue on our side)," Pictet wrote in the subsequent filing.

In some cases, fat-finger incidents have been costly. Citigroup, for example, agreed to pay $78 million to regulators this year after a trader sent European stock indexes into free fall by punching in an order incorrectly.

The gargantuan non-existent shareholding disclosure doesn't seem to have moved CCB's shares, which traded inline with the market in recent days.

Pictet's filing snafu comes at an interesting time for Chinese markets, with stocks there surging sharply on optimism about the country's proposed stimulus measures. Some of those gains unwound on Tuesday, with the Hang Seng falling the most since 2008.

CCB's gains have been more modest, with its Hong Kong-listed shares gaining 6.5% in September, the month when stimulus measures were unveiled. Its shares are up 25% this year.

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(END) Dow Jones Newswires

October 08, 2024 07:58 ET (11:58 GMT)

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