China’s Big Telcos go from ‘value destroyers’ to world beaters as Beijing’s grand tech plan triggers rare stock re-rating
- China Mobile, China Telecom and China Unicom are fetching a premium over benchmark index’s average valuation amid Beijing’s tech drive
- Stock gains this year in Shanghai and Hong Kong have outpaced returns by peers like AT&T and Vodafone in the US and Europe
China’s three telecom operators, perennial value destroyers in stock markets, are no longer market laggards. Tailwinds from Beijing’s digitalisation plan and efforts to bolster global leadership in technology are giving Big Telcos a rare re-rating.
China Telecom has risen 52 per cent this year in Shanghai trading, while China Mobile advanced 28 per cent, outpacing the 7.7 per cent gain in the Shanghai Composite Index. In Hong Kong, China Unicom appreciated 35 per cent, while the Hang Seng Index rose 2.1 per cent.
The telco trio has trounced global peers. AT&T, the biggest phone operator in the US, has gained 2.2 per cent, while European giant Vodafone has climbed 19 per cent in London.
Such outperformance is rare. Chinese state-owned enterprises (SOEs) are often shunned by markets as value destroyers, with inefficient operations and boring outlooks to boot. Yet, investors are now willing to pay at least 34 per cent above the benchmark average to own the stocks, according to Bloomberg data.
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