Stock Market Predicting iPhone Deals In China

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Feng Li / Getty Images

An iPhone 4 advertisement in Beijing, China

It’s not easy finding any stocks with upward momentum today – not on a day when the Chicago Board of Trade Volatility index (known as the “VIX”) is up 19 points.

Traders routinely point to the VIX as the best barometer of investors’ anxiety toward the financial markets (it’s known in Wall Street trading pits as the “fear gauge”). No doubt, there is plenty of that today, as Congress and the White House still can’t come to an agreement on a debt limit deal.

But Apple (AAPL) is bucking the trend, as it crested the $400 per-share barrier earlier today. A few more trading sessions like that and Apple will overtake Exxon Mobile (XOM) as the biggest company on Earth – it’s only a stone’s throw away from doing so.

So what’s up with Apple? While technology stocks fared well relative to the rest of the stock market, Apple’s jump from $390 per share at 10 a.m. this morning to $400 per-share at 1 p.m. may have something to do with China.

Specifically, rumors are running rampant over three Chinese telecom heavyweights – China Mobile (CHL), China Telecom (CHA), and China Unicom (CHU) — that are all ready to strike deals to sell the new iPhone 5 in China this fall. The Chinese business media and analysis outlet Caixin lit the fuse, reporting in a research note that China Unicom and China Telecom could start selling iPhones as early as this quarter, with China Mobile – the largest of the three telecom firms – following soon after.

Here are a few takeaways for investors on the iPhone/China reports:

  • Apple has been selling the iPhone 4 in China since April 28, 2011, mainly through retail outlets and Apple’s four company stores operating in China. China Unicom also sold the iPhone 4 in its appliance centers (it reportedly had 20,000 on hand to sell).
  • The “iPhone in China” telecom rumors are nothing new. China Mobile has been a particular topic of conversation on Apple investment boards for several months now. But the Caixin analysis may have amped up the speculation and helped send Apple’s stock north of $400.
  • China Mobile would be the biggest fish in Apple’s net. The telecom firm held 611 million subscribers through May 2011. Beijing’s Ministry of Industry and Information Technology notes that there are about 910 million mobile technology users in China, through May 2011.

The capper on the jug? Apple’s chief operating officer Tim Cook was spotted by Chinese reporters in China Mobile’s headquarters, further fueling rumors of a deal between the two technology giants.

For now, the rumors are just that – rumors. The only Chinese telecom allowed by Apple to sell the iPhone is China Unicom – and that’s only through the company’s retail outlets.

But if Caixin is right, expect Apple’s stock to rise much higher than $400 per share. If that happens, watch out Exxon Mobile – Apple could be the new king of the hill. Even if it had to go to China to do it.

Brian O’Connell is a Doylestown, Pennsylvania-based freelance writer with 15 years experience covering business news and trends, particularly in the financial, health care and career management sectors. A former Wall Street bond trader and author of 14 books, O’Connell has written for dozens of national business publications, including The Wall Street Journal, CNBC, The, Yahoo! Finance and CBS Marketwatch.