Asia Goes Red - Buying Opportunity?

Martin Luther Day is supposed to be a day of honor for King's accomplishments in the civil rights movement for blacks. Ironically, markets around the world are RED with indices such as BSE down as much as 10% .

• Shanghai (two days): -12%
• Japan's Nikkei 225 (two days): - 10.2%
• Hang Seng (two days): -13.7%
  
• DJIA futures: Down 650 points
• U.K. FTSE 100 (two days): -8.6%
• German DAX 30 (two days): -12.4%

I see this as a perfect buying opportunity for beaten down stocks with strong fundamentals. One of the stocks that I am keeping an eye on is CHL - China Mobile.

First some facts:

• CHINA Population 1,321,851,888 (July 2007 est.)
• USA Population: 301,139,947 (July 2007 est.)
• 1 in 3 Americans own a cell phone
• "China Mobile added 68.1 million users in 2007 for a total of 369.3 million, while Unicom said on Jan. 18 it added 1.36 million subscribers last month for a total of 160.3 million" -Bloomberg
• Expected 2008 China GDP = 9%
• Expected 2008 US GDP = 1.2%
  
• CHL - China Mobile has a P/E of 30
• T - AT&T has a P/E of 19.
  

In the past 5 years, although China has boomed, much of the population is still in a state of poverty. The majority of the population in China are peasants but as the country continues to develop, the first thing these peasants will purchase is not a television, not clothes, not an ipod, but a cell phone. Unlike United States, where we were stuck with land lines for decades, China will be skipping that generation as it will be less costly to shoot up a satellite for better coverage than build towers throughout the vast and rural lands of China.

I see CHL going low as $60 within the next few weeks but perceive the downside risk as minimal and its upside and outlook for the next few years outweighing the risk. As such, Jan'09 $90 call options years forward with a hedge on Feb '08 $65 puts look attractive here.