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Ill-fated room jinxes China Telecom deal

It's all about location. Or when dealing with Chinese clients it had better be from now on. Investment bankers can no longer ride roughshod over their sensitivities about feng shui and karma. It would appear that Merrill Lynch and Morgan Stanley made exactly this mistake while China Telecom was trying to list in November - much to their cost.

Four Seasons: the hotel may wait a long
time before its next booking from a
Chinese issuer

There have been two high-profile failures in China's privatization process: CNOOC in 1999 and China Telecom's 55% downsizing in November. It wasn't poor pricing or misreading the market that caused these fiascos, though, but bankers' not taking account of bad omens.

How, ask some officials at China Telecom, could Morgan Stanley and Merrill Lynch have been so insensitive as to use the Metropolitan Room in the Four Seasons Hotel, New York, for meetings? The same room was used by CNOOC on its doomed tour of the US.

"When China Telecom found out the room they were in, they were a bit annoyed that no thought had been spared, given what had happened in the room before," says a member of the large team involved in the deal.

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