TECK SHARES SLIDE AFTER CHINESE FUND CUTS STAKE.

SHARES FALL 7%

Shares of Teck Resources

Ltd. slid almost seven per cent Tuesday after it announced a Chinese sovereign wealth fund has nearly halved its stake in the Canadian miner, a decision that comes amid signals Beijing wants state-owned enterprises to invest more at home.

Teck said one of the subsidiaries of China Investment Corp. had sold, in a private transaction, 42 million Class B subordinate voting shares of Teck, worth about 7.36 per cent of the outstanding Class B shares. CIC still indirectly holds about 10.4 per cent of the outstanding Class B shares, Teck said. The Vancouver-based company’s stock fell 6.68 per cent Tuesday — the most among large miners — closing at $29.47 on the Toronto Stock Exchange.

Teck said it was informed by CIC that the fund’s transaction was “in the ordinary course of its portfolio adjustment” and that it plans on holding onto its remaining shares as a long-term investor.

“Prior to their purchase of our shares in July 2009, CIC told us they intended to be a long-term partner focused on financial returns,” said Teck president and chief executive Don Lindsay in a release. “They have fully lived up to that commitment and, in addition, have been helpful in building important relationships with customers and others in China. We understand CIC’s reasons for monetizing a portion of its shareholding and are pleased that CIC intends to remain a significant financial investor in Teck.”

Beijing said last month it is eyeing policies “to encourage Chinese enterprises that invest overseas to spend more in their own country.” Moreover, Ding Xuedong, CIC’s former chairman and chief executive, had hinted at such a move in the fund’s 2016 annual report.

“Given the falling returns and aggregating investment risks, a rational response and sustainable approach for CIC would be to diversify away from the public market’s stocks and bonds and grow our alternative investments,” wrote Xuedong at the time.

But Ju Weimin, executive vice-president of CIC, also offered reassurances in a Teck release Tuesday.

“We have full confidence in the management of Teck,” he said. “The fundamentals of the company are sound. We are supportive of the strategic direction of Teck and look forward to ongoing close cooperation in future.”

Teck said in July 2009 that it had sold 101.3 million Class B shares to CIC’s affiliate for proceeds of approximately $1.86 billion in 2017 dollars, or about $18.36 per share. Class B Teck shares were trading up about 8.8 per cent for the year on Tuesday, but are still down from $61.79 at the end of 2010, according to data from Bloomberg.