Alibaba, Tencent beat forecasts with strong results, a harbinger of China’s improving corporate earnings as economic growth takes root
- Alibaba Group Holding, one of the world’s largest e-commerce platforms, reported a 10 per cent jump in net profit, its biggest annual growth since 2021
- Net profit at Tencent Holdings, the world’s largest games publisher, jumped by 62 per cent, comfortably beating the consensus forecast compiled by Bloomberg
Two of China’s largest technology companies beat their earnings forecasts, as Chinese consumers spent more online on retail goods and games, a harbinger of improving corporate profits in the nation’s post-pandemic economy.
Strong financial results by the two companies – with more than 300,000 staff between them – are the touchstones of the growth in corporate earnings and economy that global investors are looking for, as they debate whether China’s post-pandemic recovery was a flash in the pan.
That is a relief for investors, helping them recover from the 4-per cent average decline in first-quarter net income among the 5,000 companies listed on the stock exchanges of Beijing, Shanghai and Shenzhen, according to UBS. Earnings had fallen earlier because consumers had refrained from spending amid a property slump.
“From a macro perspective, recent property sales and new starts have yet to hit bottom, while overall earnings remained pressured amid subdued demand in the first quarter,” said Meng Lei, a strategist at UBS in Shanghai. “Looking ahead, earnings are set to pick up as property activity stabilises and inflation recovery fuels household income and consumer spending growth.”