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To: ms.smartest.person who wrote (1906)	9/3/2001 10:54:32 PM
From: ms.smartest.person	Respond to of 2248

Market Wrap: Mobile and Unicom Take Index Down, PCCW Hits Yet Another Low Sep 03, 2001 - 19:33:54 HKT QuamResearch The HSI dropped 187.84 points or 1.7% to 10,902.64 on turnover of HK$4.935 billion largely due to massive declines in heavyweights China Mobile and China Unicom. The drops were due to rumors over the "calling-party-pays" (CPP) plans, soon to be implemented even without the effect of the rumors, as well as disappointing subscriber growth numbers. Red chips and H-shares fell 2.7% and 2.03% respectively. Properties: Properties ended down slightly after having regained most of the losses seen during the day. The rebound came as the government prepared to make an announcement on the fate of the Home Ownership Scheme. Sure enough, after the market close, the government issued a statement saying that it will suspend all HOS sales until June of next year when it will resume the program but on a vastly lower scale. Sales will be limited to 9,000 flats per year through fiscal 2005/06. The current limits are 20,000 flats per year. The property stocks tomorrow should see some very large movement. Cheung Kong (1) closed 50 cents down at $71.50, Henderson (12) 50 cents down at $35.10, and SHKP (16) 50 cents up at $68.25. Banks / Financials: HSBC (5) and Hang Seng Bank (11) both fell 50 cents to $90.75 and $87.25 respectively. BEA (23) dropped 10 cents to $17.75. Comm. & Industrial: The big story for the day is the huge drops in China Mobile (941), down $1.75 or 7.2% to $22.60, and Unicom (762), down 80 cents or 8.2% to $8.95. Mobile's decline was on turnover of $728.5 million -- hardly a small figure, but neither is it terribly large for this counter. Mobile's drop was on reports that it will implement CPP billing in Beijing and Shanghai starting Oct. 1. The rumor also said Mobile will require subscribers to have usage of 2,008 minutes if they want to switch to the CPP scheme. However, Quam's news team spoke with a Mobile spokesman who denied the story, saying "the report about a CPP plan is inaccurate." Nevertheless, today's stock movement serves as a warning of potential market reaction when the CPP scheme is eventually implemented. Mobile's drop was also tied to poor subscriber growth numbers over at China Unicom. Unicom's latest figures show 20.884 million mobile phone subscribers as of July 20, up 3.4% from a month earlier. The figure is actually not bad -- that's close to 50% growth annualized! However, the percentage of pre-paid (and lower ARPU) subscribers is increasing. As of the end of June, Mobile had 20.199 million subscribers -- 75% post-paid and 25% pre-paid, but that masks the mounting reliance on pre-paid subscribers for growth. As of July 20, Unicom recorded 8.112 million new mobile phone subscribers this year -- 42% were pre-paid. PCCW (8) dropped another 5 cents or 3% to $1.63. Just another 64 cents to go before we can call it a penny stock, in HK dollar terms. Hutchison (13) fell 25 cents to $66.25. Ex-HSI constituent First Pacific (142) reported rather disappointing interim results, with forex losses a key component, and closed down 16 cents, 12.2%, to $1.15. The conglomerate posted an interim loss of US$12.1 million versus a net profit of US$50.4 million a year earlier. The loss came on the back of a 27.7% decline in revenue to US$904.5 million. The company also scrapped the interim dividend versus 0.13 US cent (1 HK cent) per share last year. Forex losses amounted to US$32.5 million. However, there were some interesting points in the company's announcement. First Pacific said that PLDT's profit rose 152% to US$22 million and that revenues had surged in wireless services such as text messaging. Text messaging seems to have become such a vital component of a mobile phone operation's success that we wonder what the implication is for 3G -- perhaps that 3G will be more quickly adopted by consumers than is currently expected. H-Shares / Red Chips: The H-shares index declined with much of the blame due to Sinopec (386) and Huaneng (902). Sinopec, which takes up 19% of the H-share index, fell 5 cents or 4.4% to $1.09. Huaneng, at 6% of the index, fell 22.5 cents or 5.2% to $4.075. PetroChina (857), however, rose 1.3%, 2 cents, to $1.61. For the red chips, there were four main culprits. Legend (992), which owns 16% of the red chip index, fell 12.5 cents or 3.4% to $3.575. China Resources (291), with an 11% weighting, dropped 25 cents or 2.7% to $8.85. China Travel (308) and China EB (165) both fell 7.7% to $1.33 and $4.20 respectively. quamnet.com