Stocks slump as Vodafone bags Hutch

Not long after England-based Vodafone agreed to pay Hutchison Telecom $11.1 billion for a 67 percent stake in Hutchison Essar, India's fourth- largest mobile-phone company, Hong Kong stocks slumped the most in more than two months.

Hutchison Telecom was down 15 percent at HK$16.28 on Tuesday, after resuming trading in Hong Kong. Analysts claim that the decline was predictable, as investors took profits after the wrapping up of the stake sale amid doubts over how the company will use the cash from the deal.

The Indian operations of Hutchison Telecom were seen as the crown jewel of the company, amounting to about 80 percent of its enterprise value. Analysts feel that with the Indian operations sold, Hutchison is left only with scattered telecom holdings in markets like Israel, Indonesia, Thailand and Vietnam.

Meanwhile, Hang Seng Index's second-best performer over the past year , China Mobile Ltd., slid on conjecture that Vodafone Group Plc will sell its stake to help finance a bid for Hutchison Essar Ltd. Ben Padovan, a spokesman for Vodafone categorically said that Vodafone has no plans to cut its holding in China Mobile.

The stock slid HK$2.80, or 3.7 percent, to HK$72.40, marking its lowest level since Jan. 31. Vodafone had increased its China Mobile stake to 3.3 percent in June 2002.

Rumors apart, there is no reason though for Vodafone to unload its stake in China Mobile to settle the Hutch purchase. China is the mobile-phone market with the biggest growth in the world. Buying assets in emerging markets has become a priority for Vodafone as it struggles with a dramatic slowdown and saturated markets in Western Europe.

Meanwhile, 78-year billionaire Li Ka-shing, popularly known as ‘Superman’ is laughing his way to the bank. He cemented his status as a master of market timing with this US$11billion deal.