China Mobile and China Netcom, both mainland Chinese companies and listed on the Hong Kong Stock Exchange (a.k.a "red chips"), are reportedly delaying plans for a domestic IPO until 2008, according to sources. Both telecommunications operators had planned US$300 million to US$400 million IPOs, but are being held up by a delay in regulations for domestic listings of overseas incorporated companies. The regulations were expected to be introduced during Q3. A source cited in coverage by MarketWatch comments, "The rules were supposed to come out in July, but the Hong Kong government didn't want red chips to 'return' to the A-share market so soon. So they've been delayed to take care of the Hong Kong market." The source says the amounts to be raised will ultimately depend on market conditions. ADRs of China Mobile gained 3.4% to $84.96 on Friday. China Netcom climbed 4.8% to $60.41. In Monday trading in Hong Kong, China Mobile shares lost 1.3% to HK$128.60, while China Netcom rose 3.1% to HK$23.50.
Sources: Bloomberg, MarketWatch
Commentary: The Secret to Choosing Chinese Stocks • Earnings Quality Issues for NYSE China Listings • China Mobile Q2 Net Up 29% on Rural Growth
Stocks/ETFs to watch: CHL, CN-OLD. ETFs: FXI, PGJ, GXC, FNI, EEB, ADRE
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