Hong Kong: China is suffering one of its worst earnings recessions on record as Beijing’s zero-Covid policy and a real estate crisis take their toll on the country’s listed companies, media reports said.
More than 4,800 Chinese companies listed in Shanghai, Shenzhen and Beijing have now released their earnings for the first half of the year, which was a bloodbath, CNN reported.
As many as 53 per cent posted a decline in net profit, according to data from Wind and Choice, two major financial information services in the country. That was almost as bad as 2020, when companies posted their worst earnings season on record as the country came to a near standstill during the initial Coronavirus outbreak. Back then, 54 per cent of the listed companies saw their profit drop in the first six months, CNN reported.
By another measure, though, the start of this year was worse. The number of companies reporting a loss hit a record high of nearly 900 in the first half. In 2020, about 780 lost money.
An earnings crash in the world’s second largest economy can have ripple effect around the world. That’s because Chinese companies are big buyers of commodities, technology and other products on the global market, CNN reported.
“We’ve already seen the impact,” said Alicia García Herrero, chief economist for Asia Pacific at Natixis, a French investment bank.
Prices of oil and other energy commodities have retreated and semiconductor factories have started to see decelerating orders, she added.
Experts blamed China’s strict Covid curbs and a deepening crisis in the property market for the dismal performance of companies, CNN reported.
–IANS
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