Singapore investment vehicle Temasek cut its losses in Bank of America and ran in the first quarter, dumping a 3 percent stake, for which it took a $3 billion hair cut. Having watched its relatively high-risk investment in Merrill Lynch turn to dust, the Singapore state agency turned to firmer ground: China.

Temasek was among the investors to gobble up a stake in China Construction Bank that Bank of America sold earlier this week as it further drew in its horns from the global recovery story. Sources say the move fits with Temasek’s focus on global companies that aim to grow in Asia, noting that Bank of America is losing whatever global allure it may have bought along with Merrill’s bad assets. Getting a “gentleman’s C” in the stress test doesn’t inspire much confidence either.

However bad things get for Bank of America, it’s hard to dispel the ghosts of China’s policy banking bedrock. Though they will tell you they have been shedding dud assets from their balance sheets for years, nobody is under any illusions about either transparency or solvency of the People’s banking system. That’s not to say such investments won’t pay off. After all, as the axiom goes, no risk, no gain.

Deals of the Day:

* British bank Barclays is in talks to sell its asset management business, Barclays Global Investors, a source familiar with the matter said.

* Miner Rio Tinto remains committed to a planned $19.5 billion tie-up with Chinese metals firm Chinalco, it said, responding to talk that the deal may be revised to let more shareholders take part in a rights issue.

* German cement maker HeidelbergCement may sell up to a 14 percent stake in Indonesian unit PT Indocement Tunggal Prakarsa, worth around $270 million, to help pay down debt, sources familiar with the deal said.

* Taiwan’s KGI Securities will pay T$29 billion ($880 million) for the brokerage arm of Taishin Financial, in the latest consolidation of the island’s fragmented and competitive financial sector.

(PHOTO: Temasek Holdings Chief Executive Ho Ching listens to a question during a news conference in Singapore February 6, 2009. REUTERS/Vivek Prakash)