Baidu: Focus On Mobile Search Market Share, Not SEC Posturing
The recent SEC announcement that it had banned the Big Four accounting firms' Chinese joint ventures from auditing US listed stocks sent chills through Chinese ADRs. From Baidu (BIDU) to Ctrip.com (CTRP), investors fled the stocks to the tune of losses in the 6% range. With limited political will and possibly years of appeals and reviews, investors should focus more on the prospects of the individual stocks instead of unlikely SEC sanctions.
In the case of Baidu, high-speed mobile networks are replacing the previously spotty Internet connections in China. One of the prime reasons that Chinese people prefer the larger screen size phones, or phablets, is the lack of good Internet access at home or even a reliable PC. All of this adds up to a huge pressure to obtain market share in the mobile sector with China Mobile (CHL) ramping up implementation of a 4G LTE network providing its customer base of 750 million subscribers access to the fastest Internet speeds around.
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