HSBC turns bearish on China's carriers


The recent rally in shares of Chinese carriers isn't justified given their earnings are likely to decline over the next 2-3 years, says HSBC's Tucker Grinnan, cutting shares of all three to Underweight. China Mobile (CHL -1%), China Telecom (CHA -1.5%), and China Unicom (CHU -1.3%) have slipped in response.

Grinnan's downgrade comes shortly after CHL, just given more freedom (along with peers) to set its own prices, announced plans to cut 4G data prices by up to 50%, and to also slash 2G/3G data prices.

Goldman upgraded CHL and downgraded CHA on Monday. China's carriers are expected to benefit from tower-sharing deals that will lower capex, but also have a list of challenges that includes SMS traffic declines, rising phone subsidies, and the pending arrival of MVNO competition.

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  • susannaclare
    , contributor
    Comments (14) | Send Message
     
    I believe CHL has slipped minimally as it just gave out a dividend. From my observation. as a novice investor who loves the market and has been learning by investing, observing and reading for more than ten years, stocks usually go down after handing out a dividend, and especially after a hefty one, as CHL just did. I prefer to give clout to Goldman's upgrade.
    23 May 2014, 09:38 PM Reply Like
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