China Unicom Tops Slump as Alibaba Entrance Stokes Competition

December 21, 2013 Leave a comment

Unicom Tops Slump as Alibaba Entrance Stokes Competition

Chinese stocks traded in New York fell the most in a week, led by telecommunications operators, after Alibaba Group Holding Ltd. said it’s seeking to offer phone services.The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. dropped 1.5 percent to 103.94 yesterday. China Unicom (Hong Kong) Ltd. (CHU), the nation’s second-biggest wireless carrier, retreated the most since October and China Mobile Ltd. (CHL), the biggest operator, slumped. China Petroleum and Chemical Corp., Asia’s largest refiner, fell to the lowest in six weeks as China raised gasoline standards.

China’s Ministry of Industry and Information Technology said in May that private companies could submit applications for a two-year trial ending in December 2015 to become mobile virtual network operators. Alibaba, China’s largest e-commerce operator, is applying for a license, according to Florence Shih, a spokeswoman for the company.

“This will definitely increase existing competition in the telecom sector,” Di Zhou, a Santa Fe, New Mexico-based equity analyst at Thornburg Investment Management, said by phone yesterday. “Internet companies like Alibaba and electronics retailers can attract more customers by packaging phone services with their current services and products.”

ETF Slumps

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., tumbled 2.3 percent to $37.59 in New York, the lowest close in a month. The Standard & Poor’s 500 Index slipped less than 0.1 percent as investors assessed data on home sales and jobless claims.

American depositary receipts of China Unicom dropped 2.7 percent to $15.01, the biggest decline in eight weeks. That extended this year’s retreat to 7.9 percent.

China Mobile slipped 1.4 percent to $51.85 and China Telecom Corp., the smallest of the three state-owned wireless carriers, slipped 1.1 percent to $49.70.

Licenses to resell wireless capacity to consumers may be issued as soon as this month, though the government hasn’t released a timeline or specified the rates carriers can charge to lease spectrum, according to the ministry.

China Petroleum (SNP), known as Sinopec, slumped 3.1 percent to a one-month low of $80.97, while PetroChina Co., the country’s biggest oil producer, retreated 1.6 percent to $109.56. Offshore crude explorer Cnooc Ltd. fell 1.7 percent to $183.30.

‘China V’

China will start implementing the “China V” standard for gasoline, an equivalent to the Euro V standard, as part of efforts to reduce vehicle emissions, the Xinhua News Agency reported yesterday, citing the Standardization Administration.

Muddy Waters Research LLC, founded by short-seller Carson Block, offered to pay for an accounting firm to evaluate an independent committee’s investigation into NQ Mobile Inc., according to a letter published yesterday. In an Oct. 24 report, Muddy Waters alleged that NQ Mobile, a Chinese Internet security company, inflated sales.

Beijing-based NQ denied the allegations and said last month its independent special committee retained the law firm Shearman & Sterling LLP to review Muddy Waters’s report.

Independent committees “are not effective ways of investigating possible wrongdoing in companies,” Carson Block, the founder of Muddy Waters, said in an interview with Bloomberg Television yesterday.

ADRs of NQ Mobile climbed 5.2 percent to $11.84, gaining the most this week. The ADRs are still 48 percent below their Oct. 23 level.

Vipshop Holdings Ltd. (VIPS), a Guangzhou-based online clothing retailer, jumped 6.7 percent to $80.69, rising the most since Nov. 12. LightInTheBox Holding Co., a web retailer of lifestyle goods based in Beijing, rallied 5.7 percent to $8.12 in New York, the highest in a month.

The Hang Seng China Enterprises Index in Hong Kong sank 1.7 percent to 10,777.91, the lowest level since Nov. 15. The Shanghai Composite Index slipped 1 percent to 2,127.79, dropping for an eighth day, the longest stretch of declines in six months.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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