Goldman Sachs has cancelled bearish bets against shares in Industrial and Commercial Bank of China after the bank’s stock price has risen sharply in recent weeks.
Goldman’s Asia unit will exercise call options – which grant issuers the right to buy back a product before final maturity – on structured products linked to ICBC’s Hong Kong-listed shares, according to an exchange filing.
ICBC is China’s largest bank by assets. Its shares have risen 16 per cent so far in 2018, while an index of Hong Kong-listed mainland banks is up 22 per cent in 2018. Strong Chinese economic growth and an easing of investor concerns over asset quality at the country’s banks is supporting shares.
Goldman clients who bought the so-called “bull contracts” on ICBC profit if the bank’s shares rise, while Goldman acts as counterparty, effectively betting that the shares will fall.
The closing of the Goldman Sachs position on Tuesday was mandatory and triggered automatically under the terms of its contracts with investors.