China’s telecommunication stocks surge on speculation they will benefit from an expansion in cloud computing and potential development of artificial intelligence software.
(Bloomberg) — China’s telecommunication stocks surge on speculation they will benefit from an expansion in cloud computing and potential development of artificial intelligence software.
China Telecom Corp. and China Mobile Limited are on track to close Wednesday at record highs in Shanghai trading, while China United Network Telecommunications Co. rose the 10% limit, advancing 30% since the start of the year.
The normally staid telecom companies are in the spotlight, with analysts growing upbeat about their forays into artificial intelligence and expansion into cloud computing infrastructure. STAR Market Daily reported last month that China Telecom has the capability to develop AI chatbot services, while traders had earlier jumped on the stocks of tech firms including Baidu Inc. on similar bets.
“The expansion in cloud business at telecom providers may allow for revaluation, and could bring more flexibility for market capitalization,” Shengang Securities analysts including Cao Xute wrote in a note. The firms already have data centers and sales staff, which will help them lower costs, they added.
“Valuation with Chinese Characteristics,” a slogan rolled out late last year by market regulators, has been interpreted to mean more upside room in the depressed valuation of state-owned giants. China Mobile trades at around 13 times forward earnings in Shanghai, while the figure stands at 20 times for China Unicom, both up significantly from November, when the phrase was coined.
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