Chinese companies’ profit warnings indicate it could be the worst third quarter since 2015 as economic growth slows down
- Forty-three per cent of the 1,309 companies that have issued earnings guidance for the third quarter expect a decline in net profit
- Contemporary Amperex, China’s biggest maker of lithium batteries for new-energy vehicles among companies that has forecast a drop in profit
Traders are braced for a bleak earnings season as Chinese companies release third-quarter results amid increasing pressure on the economy.
Out of the 1,309 mainland-traded companies that have already issued earnings guidance, 43 per cent said net profit for the three-month period ended September probably declined from a year ago, making it the worst third-quarter period since 2015 according to Bloomberg data.
In the last reporting period ended June, 42 per cent of the companies had forecast lower profit compared to a year earlier.
Policymakers are cautious about easing policies to prop up growth, as inflation already accelerated to the maximum annual target set by the government in September.
“The poor macroeconomic environment is mainly to blame for the gloomy earnings outlook,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “It’s not looking optimistic going forward. Inflation is there and that will push up corporate costs. The fallout will probably last until the first half of next year.”