ZTE Stock code: 0763.HK

Last close: HK$33.35

By Castor Pang

Speculation is growing daily regarding rumors of a central government decision concerning its long-awaited telecom industry shakeup on the mainland, with the latest signs pointing to a possible announcement later this month.

The word-of-mouth news has boosted mainland telecom stocks noticeably in recent trading, with ZTE's stock rising from its previous low to HK$35 at one point.

However, ZTE's stock has been highly volatile over the last few days, mainly because the market felt the price had reached an acceptable high, with a double-spike pattern preventing it from moving higher.

If it cannot climb above the HK$35 resistance point in the near future, ZTE's share price is expected to fall again, returning to its volatile state.

As such, investors are advised to sell ZTE shares if the price fails to top the HK$35 mark and consider buying this stock when it slides back to the HK$30 level.

The author is a strategist of Sun Hung Kai Financial Group.

Foxconn International Holdings

Stock code: 2038.HK

Target: HK$14.60

Support: HK$11.38

Last close: HK$12.28

By Lai Wai-shing

Taiwan-based Foxconn International Holdings (FIH) has been upgrading its customer support capabilities at its design center in Taipei and acquiring stakes of other Taiwan-based technology firms while building up its production base for international mobile telephone systems brands and cellphone units.

This stock enjoys a strong connection with benefits from the "three direct links" - direct flights, telecommunications and postal services between the mainland and Taiwan province - they are established.

It has been upgrading the customer support capabilities of its design centers in Taipei, Beijing, Nanjing and Seoul while acquiring stakes of other Taiwan-based tech developers, such as increasing its takes of Chi Mei Communication Systems (a Taiwan-based manufacturer of cell phones) from 56.48 percent to 69.23 percent and buying 14.893 million shares of Taiwan-based Ways Technical Corp Ltd, a firm specializing in plastic- surface-decorating technology for handheld gadgets such as mobile phones and GPS clients.

By focusing on mobile telecom systems R&D and manufacturing in Taiwan as well as on the mainland while financing its acquisition of other Taiwan-based tech interests with earnings from its Hong Kong-listed stocks, Foxconn International has firmly established itself as a business with strong presence on both sides of the Taiwan Straits and Hong Kong.

The author is a senior independent commentator.

A50 China Tracker (Fund)

Code: 2823.HK

Last close: HK$7.23

By Dickie Wong

The values of mainland stocks have returned to relatively reasonable levels after the recent downslide, while the premium problem of A-shares and H-shares has been rectified as well.

Looking ahead, the central government is expected to take macro-adjustment measures characterized by maintaining growth in some industries while reigning in others to prevent economic overheating without sending it into downturn.

Also, the ripple effect of the mainland stock market profits will play a positive role in China's efforts to turn its economy into one driven mainly by domestic demands.

This development would benefit stocks as A50 China Fund, which follows the iShares FTSE/Xinhua A50 China Tracker.

From a technical point of view, this fund has rebounded from a low of HK$15.78 after it reached the previous high of HK$28.90 on October 30 last year and run into resistance at HK$19.38. Investors can guy this stock at HK$18.50 and expect it to rise to HK$20, but should stop loss when it dips below HK$17.50. They should also watch out for risks of premium when the share price exceeds the per unit value of this fund's assets.

The author is a director of Friedmann Pacific Investment Holdings Limited.

Honghua Co Ltd

Stock code: 0196.HK

Last close: HK$3.59

By Patrick Shum

Honghua Co Ltd saw its net profits grow by 41.3 percent to 583 million yuan last year. As the second-largest manufacturer of oil drilling machinery in the world, Honghua enjoys a leading position on this market.

The rising oil price is stoking oil companies' interest in drilling more oil wells, which is no doubt good news for Honghua. It sold 94 oil rigs last year with 19 of them to Russia alone, which bough just one the year before. The company has designed oil rigs for very cold weather like that of Russia and capable of reaching depths up to 9,000 m.

Among its products digitally-controlled drilling rigs commanded a gross profit rate of 33.9 percent while land-based rigs grossed an average of 34.8 percent in 2007, 6.9 percentage points more than in 2006.

Investors may buy this stock at HK$3.50 and look forward to HK$4, but should stop loss below HK$3.

The author is executive director of Karl Thomson Investmetn Consultants Limited.

(HK Edition 05/13/2008 page1)