Telcos emerge as defensive options after sharp sell-off

Rate hike fears are overdone, analysts say.

Telcos could prove to be valuable anchors in the face of heightened market volatility, according to a report by OCBC Investment Research.

OCBC said that the sharp share price correction in recent sessions is overdone, as telcos provide a defensive business despite increased economic turbulence.

“With the recent global market turmoil, coupled with the devaluation of the CNY against the USD, the odds for a rate hike in Sep seem to have dropped; some market watchers also believe that the quantum of hike has also been reduced. As such, we believe that the current yields have reached pretty attractive levels,” OCBC said.

“Overall mobile market continues to remain stable, [and] the three telcos are optimistic about rising data usage and further improvements in ARPUs. Hence even in an increasingly uncertainty economic environment, we believe that the main mobile business should do relatively well,” OCBC noted.

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