With the frenzy surrounding US tariffs settling down and a dearth of new economic policies from Beijing, investors are turning their attention to corporate earnings reports to see if the rally still has legs.
So far, analysts seem to believe the results have been positive. Second-quarter profits for mainland-listed companies likely increased 5.1 per cent from a year earlier, rising for a second consecutive quarter, according to Caitong Securities. Meanwhile, Huaitai Securities said it expected overseas-listed Chinese companies to post a collective 13 per cent profit increase in the first half, up from 8 per cent for all of 2024.
Mainland-listed companies snapped a streak of 15 consecutive quarterly profit declines last year after Beijing ratcheted up policy support to bolster economic growth and the property market. A continued earnings recovery would instil more confidence among investors who are groping for fresh catalysts.
Mainland stocks have rebounded significantly from their lows in April after Beijing and Washington struck a tentative trade deal and after that, China reported better-than-expected economic growth for the first half.
“China’s credit cycle is picking up, and it’s also actively pressing ahead with policies to boost consumption and combat [excessive industrial capacity],” said He Kang, an analyst at Huatai Securities in Shanghai. “The improvement in corporate earnings may be sustainable.”
