Stock traders turn to corporate earnings for tonic as Tencent and index members navigate China’s regulatory minefield

Members of the CSI 300 index probably grew their profits by 3.5 per cent last quarter, compared with 32 per cent in the preceding quarter

Tencent is likely to be the focus on Wednesday while AIA, Geely and CNOOC will also report this week

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People walk along a pedestrian walkway near Tencent’s headquarters in Shenzhen on March 20, 2021. Photo: Bloomberg

Published: 8:30am, 17 Aug 2021Updated: 10:25pm, 17 Aug 2021

About one-fifth of blue-chip companies in Hong Kong and mainland China are due to publish their quarterly or interim earnings this week, offering some much-needed clues on corporate health amid a regulatory frenzy.

At least 13 Hang Seng Index members and 55 of CSI 300 constituents will report to their shareholders, based on the timings of previous filings. The most interesting of the lot is on Wednesday when online-gaming giant Tencent Holdings, a target of China’s clampdown on internet platform companies, is set to report.

The signs are not too promising. Members of the CSI 300 index probably grew their profits by 3.5 per cent, compared with a 32 per cent gain in the first three months of 2021, according to data compiled by Bloomberg. The moderation also likely reflects a slowdown in the broader economy as new delta variant Covid-19 infections disrupted activity.

Beijing’s crackdown on the nation’s fastest-growing firms from the technology to after-school tutoring sectors could force companies to temper or hold off their spending and expansion plans until there is more clarity on the ground. That is concerning investors, who experienced one of the fiercest tech sector sell-offs in recent years, including a US$1.2 trillion wipeout in July.

The 736 companies in the MSCI China Index, including offshore-listed Big Tech, probably generated 24 per cent more profits in the three months to June 30, versus 38 per cent in the preceding quarter, according to data compiled by China International Capital Corp (CICC).

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