Xiaomi, ZTE and Chinese 5G stocks rally as Shenzhen becomes first mainland city to be covered by high-speed telecom network
- Shenzhen’s entrance into the 5G era unleashes buying of stocks including Xiaomi, ZTE and China Tower
- Traders boost 5G stocks as they expect the roll-out of the high-speed telecom network to be accelerated across the country
Xiaomi, China’s biggest smartphone maker, jumped 5.6 per cent to HK$16.20 on Monday, capping the biggest gain in almost six weeks. ZTE added 4 per cent to HK$23.30 and its Shenzhen-traded stock rallied 4.9 per cent to 40.25 yuan. China Tower also rose in Hong Kong.
Fuelling the buying interest in the 5G sector was the comment made by Shenzhen mayor Chen Rugui at a press conference on Monday morning that the city now has access to the pure 5G networks. That was interpreted by traders as a sign that Shenzhen has officially entered the 5G era and construction of the new networks will be accelerated in rest of the country.
A gauge tracking 5G-related stocks trading on the mainland's exchanges climbed 1.9 per cent on Monday, according to data provider Shanghai DZH.
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“The upward tech cycle brought by 5G will probably last for between two and three years,” said Chen Ping, a fund manager at HSBC Jintrust Fund Management in Shanghai. “For the TMT [telecom media and technology] sector, you can make money from earnings growth and even from valuation expansion. In the long run, technology is the sector that can beat the broader market.”
China Mobile had 70.2 million 5G users by the end of June and the number of subscribers will probably exceed 100 million this year, according to Pacific Securities. The mobile-phone carrier has already set up 188,000 5G base stations in over 50 cities and will build another 350,000 this year, the brokerage said.
China Mobile rose by as much as 1.3 per cent before closing little changed at HK$58.60 and China Tower, which builds telecom towers, gained 1.4 per cent to HK$1.47.