Players in China Telecom re-org: foreign investment banks

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I planned to write more about China telecom re-org (revamp, reform) after the recent announcement. Now the CFA test is over, I have more time to think about this.

A few days ago I read this interesting Chinese article which describes some foreign investment banks actions after the re-org news (Appendix). Let me try to explain in simple words. The China telecom re-org is widely anticipated to happen this year, the conventional wisdom is the decesion will be made after August Beijing Olympics. Those investment banks created many warrants (European options) in HKSE with expiration date in August, thinking the annoucement of re-org will make the China Mobile, China Unicom, China Telecom and China NetCom stocks trades in Hongkong have a big swing. They can make money from that.