Highlights from the last week of China business news.
Eat your heart out, Adam Smith
What was that famous metaphor about the markets, something about an invisible hand? Beijing has a thing or two to say about that. Today the CSRC slashed China’s stamp duty, bringing it down to 0.1% – the same rate it was at last year before it was hiked. If you recall, when they raised the stamp duty last year, it was because the market was too high; the regulator’s move caused a dip. Now, the market is too low – the Shanghai Composite Index on Tuesday was down 50% from its October high – so the regulator reached in and lowered the duty. It works. The SCI jumped nearly 10% in early trading and was around the 3,500 mark at mid-day, AP reported. Early in the week, the regulator also implemented another rule, limiting block trades to prevent a possible flood of shares into an already low market.
China Mobile keeps raking it in
Another nice reporting season for China Mobile, which posted first-quarter profits that were 37% higher than the same period last year. By contrast, China Telecom posted a 0.5% rise in net profits, due to a shrinking fixed-line subscriber base (all those customers are getting mobile phone accounts) although its earnings were shored up by its broadband internet business, which has a growing user base. Look a little closer at China Mobile’s numbers, however, and there is one negative indicator. The cute-sounding ARPU (average revenue per user) number fell by about US$0.40. It’s a key metric for carriers, and it could indicate that China Mobile isn’t working hard enough to get cash out of its users. Oh, one more thing – that long-rumored telecom restructuring (see the current issue of CER) has been lent credence by a CDMA joint venture that could happen between Korea’s SK Telecom and China Telecom. The latter is supposed to run a CDMA network after the restructuring.
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