by Zhang Shidong at scmp.com
Stocks traders are likely to look past robust second-quarter earnings of mainland Chinese companies because of the low base from last year when Shanghai was placed under a two-month lockdown.
The companies on the CSI 300 Index will probably register an 18 per cent year-on-year profit increase for the three months to June, the fastest pace in years, according to Bloomberg data. Earnings fell 1.2 per cent in the same period in 2022, when China’s biggest metropolis was under lockdown in April and May to contain the spread of Covid-19.
“Second-quarter earnings may not tell us too much about the real story of the recovery in corporate earnings, as the number is an [anomaly] due to a very low base last year,” said Dai Ming, a fund manager at Huichen Asset Management. “Even if it’s an impressive number, that may not give too much of a boost to the market.”
The lack of conviction about the earnings strength may inflict another blow to investors desperate for catalysts to turn around sentiment in China’s 82 trillion yuan (US$11.3 trillion) onshore market. The CSI 300 gauge has been trading close to a three-week low after breaching a key moving average that is a barometer of market sentiment, with investors showing their disappointment with Beijing’s piecemeal stimulus measures.read more