China Unicom (Hong Kong) Ltd. (CHU) surged to a nine-month high, leading Chinese telecommunications companies higher in U.S. trading on speculation a joint venture will help the three biggest carriers reduce costs.
The nation’s second-largest mobile-phone company rallied 5.1 percent to the highest since October in New York. China Mobile Ltd. (941) gained 3 percent to trade at the widest premium over the Hong Kong-listed shares in two months. China Telecom Corp. climbed 3.7 percent. The Bloomberg China-US Equity Index rose 1.8 percent to 107.78 in a second consecutive gain.
China Unicom said in a July 11 statement that it is forming a joint venture with the other two providers to develop mobile phone towers. By sharing infrastructure costs, the carriers will be able to cut capital expenditures by as much as 15 percent, according to analysts at Morgan Stanley. China Unicom’s stake in the company, called China Communications Facilities Services Corp., would be 30.1 percent, according to the statement. China Mobile would own 40 percent, and China Telecom 29.9 percent.
“The idea of building mobile towers together and sharing the costs is positive to all the three,” Di Zhou, a Santa Fe, New Mexico-based equity analyst at Thornburg Investment Management Inc., said by phone yesterday. “In reality, it may take a longer period of time than people are expecting to see real impacts on their financials.”
The joint venture will save the three carriers as much as 40 billion yuan ($6.5 billion) in combined annual capital spending, according to Standard Chartered Plc. The two smaller companies will benefit more than China Mobile for the long term, analysts said in a note yesterday.
China Unicom surged to $16.61. China Telecom climbed to $52.49, the highest closing level in two months.
China Mobile, the world’s biggest mobile-phone company by users, increased to $51.20. The company’s American Depositary Receipts, each representing five shares, traded 1 percent above the Hong Kong stock, the highest premium since May 19.
Bona Film Group Ltd. (BONA), a Beijing-based film producer and distributor, surged 8 percent to $6.62, jumping the most in four months. Trading volume was 2.8 times the daily average for the past three months.
The Beijing-based company rallied after two major shareholders increased their holdings. The Chinese conglomerate Fosun International Ltd. (656), which had previously owned 7.5 percent of the stock, agreed to purchase an additional 13.3 percent, Bona said in a statement. Yu Dong, the film producer’s chairman and chief executive officer, agreed to acquire a 19.3 percent stake from 21st Century Fox Inc., giving him a total of 32.3 percent of the outstanding shares.
Noah Holdings Ltd. (NOAH), a wealth management company based in Shanghai, gained 6.8 percent to $14.67, rising the most in two months.
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., added 1.3 percent to $38.40. The Standard & Poor’s 500 Index rose 0.5 percent as Citigroup Inc. rallied on better-than-forecast earnings and Internet shares rebounded.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong climbed 0.8 percent to 10,457.77. The Shanghai Composite Index increased 1 percent to a four-week high of 2,066.65.
To contact the reporter on this story: Belinda Cao in New York at email@example.com
To contact the editors responsible for this story: Nikolaj Gammeltoft at firstname.lastname@example.org Richard Richtmyer