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Foreign Investors Less Optimistic About China's Mobile Market
Having 120 million handset users, China has been eyed as world largest mobile market. But the scale has been improperly exaggerated according to Asian Wall Street Journal.
Last week the stock index hit a record low since October 1999 by a drop of 28 percent for China Mobile, which claims 59m handset users and operates networks all over the country. Almost at the same time one of its major rival China Unicom was also down by 23 percent. Surely it has something to do with the just published mid-year report, but according to the said Journal it is the basic knowledge of China's huge income disparity that has scared investors away.
China's huge market potential is undeniable. But the Journal says it is embarrassing to see rich people bought their mobile phones quite long ago while new users can not afford too much money and time on handsets.
Investors are practically losing their confidence with China's mobile market, since they withdrew US$27.6 from the stock market within a week. They further doubted the prospect of the market. This may turned out unnecessary considering China Mobile's profit and user growth in the first half of this year, but investors could still find out what is going wrong---China Mobile got US$19 from every share of stock, or 35 percent down over last year's US$29, according to its mid-year report.
Manager of "BDA China", a Beijing based telecom consulting company, says another reason for dropped stock besides lowered mobile fee is that new users are mostly from low income provinces. With government's policy of tax cut there will be more low-income mobile users, and this may lead to marginal profit shrinking and price war. Broker for BNP has received orders last week to sell out stocks on hand, that means people no longer believe in the myth of mobile growth.
An expert with CMG First State Investments, who manages an investment over US$140 million, holds that despite a decline of average stock shares a cut of rent charge on Internet facilities will bring China Mobile substantial profits, not to say a ballooning monthly traffic time used by long-term subcribers.
However, most investors do not forecast a sound prospect. An analysist with a securities company in Hong Kong notes that there is no sign to indicate any easing of pressure imposed by shares sales in big quantities. He said there is no market if there are no selling and purchasing parts and the outstanding problem for the time now is that there doesn't exist purchasers for these shares sold in big quantities.
By PD Online staff member Li Heng
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