STOCKWATCH: China Mobile lower on institutional selling/tariff concerns

HONG KONG (AFX-ASIA) - China Mobile (Hong Kong) turned weaker in afternoon trade as institutional investors sold stocks on concerns that the tariff rate cuts in its new six-tier pricing scheme will trigger a price war in China's mobile phone market, dealers said. They said the losses posted by China Mobile dragged down the overall market, sending the Hang Seng Index into negative territory, while the government budget announced by Financial Secretary Donald Tsang showed little impact on the market. At 3:22 pm, China Mobile fell 1.20 hkd or 3.12 pct to 37.20 on volume of 16.28 mln shares, while the Hang Seng Index was down 119.25 points at 14,201.80 on turnover of 6.11 bln hkd. Kenneth Tang, assistant sales manager with Vickers Ballas, said selling orders on China Mobile were coming in from major institutional investors, such as Goldman Sachs and Credit Suisse First Boston. "There are still short positions on China Mobile.... Concerns about its profitability after the tariff cuts remain in place," Tangsaid. "And worse, the market is more afraid (now) that the price cuts would spark a price war which would further squeeze China Mobile's profitability," Tang said. However, another cell phone operator, China Unicom, was relatively stable this afternoon, dealers said, adding a price war is expected to have more impact on China Mobile than China Unicom since China Unicom offers lower rates. China Unicom rose 0.10 to 11.15. Tang said as long as China Mobile remains weak, it is unlikely for the Hang Seng Index to show any strong performance.

Related stock : (NIL)