China Stocks End Mixed
BEIJING -- China stocks ended mixed Friday, with the Hang Seng edging up 0.1% to 16,460, while the Shanghai Composite declined 0.7% to 1730.
On Thursday in New York, some of the biggest China wireless names suffered a brutal sell-off, courtesy of new regulations from lead mobile operator China Mobile (CHL). Tom Online (TOMO) lost 9.8% of its value to close at $17; Kongzhong (KONG) fell 8.5% to $7.50; Linktone (LTON) dropped 5% to $5.36; and Hurray (HRAY) was down 7% to $5.33.
The early read on policy changes was, to say the least, bearish.
The mobile sector had been nervously awaiting the news since late May, when rumors first surfaced that China Mobile planned to revamp some of its terms with local wireless services outfits (which provide short message service, multimedia messaging service and Internet portals over cell phones).Based on initial reports after China Mobile's Thursday meeting with wireless companies, the regulations look likely to take an uncomfortably big bite out of wireless players' revenues, especially in the third quarter. Under the new regime, wireless players must extend their free trial subscriptions and start sending customers monthly fee reminders. Also, China Mobile will implement a much-feared double confirmation policy, according to Bin Liu, an analyst at telecom research firm BDA. Double confirmation requires subscribers to confirm twice when they sign up for new services, effective July 10. Investment banking analysts did not mention the double confirmation change in notes that discussed the other policy shifts -- which in themselves will pose a substantial revenue drag. But BDA's Liu said China Mobile sent a circular to provincial operators on July 4 outlining the new confirmation policy in addition to the other two changes. Double confirmation "is the most severe change and will have the biggest impact on SP [service provider] revenue," he said.
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