China United Network Communications Ltd. rose the most in more than months in Shanghai trading after a government official signaled further reorganization is in store for the nation’s state-run telecommunications industry.
The stock climbed as much as the 10 percent limit in Shanghai and as much as 7.2 percent in Hong Kong. China Telecom Corp. climbed as much as 4.1 percent, while industry leader China Mobile Ltd. was little changed.
During a news briefing on Thursday by China’s Ministry of Industry and Information Technology, chief engineer Zhang Feng said the government is considering how to deepen reforms in the telecommunications industry, responding to a question about the prospects of mergers and acquisitions in the sector. China Unicom and Telecom shares began rallying soon after.
Telecommunications is one of the key industries China is pushing to reform in its broader pursuit of overhauling its entire portfolio of state-owned enterprises. Last month, the nation’s three major carriers agreed to pool their network assets into a new company as part of a revamp.
"The news about telecommunications reform had an impact over some stocks and the telecommunication sector," said Li Daxiao, an analyst at Yingda Security Co. in Shenzhen. "It’s likely to influence the stock market as the reform is under the overall plan of China’s SOE reform."
Li also pointed to Thursday’s general bullish markets as contributing to the rally in the shares. The benchmark Shanghai Composite Index rose toward a bull market on Thursday.
Officials at the three mobile-phone carriers weren’t immediately available to comment.
— With assistance by Haixing Jin, Tian Ying, and Nick Wadhams