Making All The Right Calls

Most dreams of profiting from the vast China market have died when faced with the tough reality of making money in a place that is by turns bureaucratic, brutal, and corrupt. China Telecom (Hong Kong) Ltd. has been one obvious exception since listing its shares in Hong Kong in October, 1997. The wireless phone company's shares have tripled in the past year and have more than quadrupled since its initial public offering.

To what does the company owe its success? Much of it is the result of the company's close ties to the Chinese government. Before its IPO, the company was part of China Telecom, the country's former monopoly phone company that is still controlled by China's Ministry of Information Industries. Even when the wireless business was spun off as China Telecom (Hong Kong), the parent company retained a 75% equity stake.