STOCKWATCH: China Mobile, China Unicom higher on technical rebound

HONG KONG (AFX-ASIA) - China Mobile and China Unicom shares rebounded sharply this morning after their heavy losses Friday, dealers said. They said investors had been over-pessimistic about their earnings prospects, following the release of China Mobile's new tariff scheme.At 10:58 am, China Mobile was up 0.40 hkd or 1.11 pct at 36.30 hkd on trade of 31.84 mln shares, and China Unicom was 0.25 hkd or 2.47 pct higher at 10.35.The Hang Seng Index was down 45.58 points at 13,920.85.Bertrand Chui, an analyst with Worldsec Securities, said investors had over-reacted to China Mobile's new tariff scheme, which was seen as reflecting pessimism over the growth of its post-paid subscribers.In response to China Mobile's new tariff system, China Unicom is reported to be introducing a similar price cutting scheme in the near future."It may not be seen as a price cutting measure... a lot of the telecoms companies are introducing a charge system with different layers to attract diffe rent customers," he said."The company is reacting to market changes, and it should not be interpreted negatively," he said.Chui said China Mobile and China Unicom will continue to grow steadily, as the mobile phone business on the mainland is still in its infancy, with a penetration rate of below 7.0 pct."The fixed telephone network is not well-constructed in China... mobile phone will become more popular," he said.He said China Mobile and China Unicom will obtain new technology for their cell phone network, although market competition will become strong because of the opening up to foreign participants."Market competition will bring in new technology... in any case, China Mohile and China Unicom will continue to enjoy several regulatory protections from the government," he said.He said his house has an "overweight" rating for both China Mobile and China Unicom.

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