As Goldman trims forecasts, all eyes on HSBC, Alibaba, HKEX to rebuff market sceptics in big week for earnings season

HSBC, Alibaba, NetEase and Hong Kong Exchanges are due to issue their 2021 report cards and outlook for 2022 amid signs of earnings deceleration

Stocks have wavered despite policy easing signs as regulatory headwinds remain elevated with latest hit on Meituan and peers

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Vistors taking photo of a replica of the famous Wall Street bull on the Bund in Shanghai. Photo: AFP

Published: 7:30am, 21 Feb 2022Updated: 9:34am, 21 Feb 2022

Goldman Sachs started the new year by extolling the appeal of Chinese stocks, after the MSCI China Index lost 22 per cent in 2021. The US bank has since cut its target index returns for 2022, trimmed corporate earnings and lowered growth forecasts.

In Hong Kong, analysts have also dialled back blue-chip earnings by as much as 15 per cent over the past eight months, according to Bloomberg data. The 19 per cent average growth from seven Hang Seng Index members so far has trailed consensus by 2.7 per cent.

This week will thus take on some significance as investors look to leaders including HSBC Holdings, Alibaba Group Holding, NetEase and Hong Kong Exchanges & Clearing to rebugg market bears as more quarterly report cards from index members roll in.

“Most Chinese companies will announce FY21 earnings in late March, and profit alerts suggest likely moderation of earnings growth momentum” in the fourth quarter of 2021, Goldman said in a February 19 report to clients.

Earnings deceleration among MSCI China constituents.

Chinese stocks in mainland and offshore markets have wavered this year, even with price-earnings multiples near historic lows, for a good reason. Meituan’s 15 per cent plunge on Friday showed just why investors will struggle to adequately price regulatory risk premium, despite other favourable signs like policy easing and credit expansion.