Hong Kong
CNN Business
—
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.
More than 4,800 Chinese companies listed in Shanghai, Shenzhen and Beijing have now released their earnings for the first half of the year. It was a bloodbath.
As many as 53% 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% of listed companies saw their profit drop in the first six months.
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 ripple around the world. That’s because Chinese companies are big buyers of commodities, technology and other products on the global market.
“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.
“The key reasons are mobility restrictions and a huge drop in sentiment associated with the demise of the real estate market,” said García-Herrero.
Larry Hu, chief China economist for Macquarie Group, said the poor earnings reflected China’s slowing economy, which was being dragged back by the real estate slump, the worsening Covid situation, and the weakening global economy.
China has so far stuck with its zero-Covid policy, which often leads to strict restrictions on people’s movement and snap lockdowns of cities over a few cases. Travel to and from China is also limited.
Shanghai, the country’s financial hub of 25 million people, was placed under a two-month lockdown earlier this year. Since then, many…
Click Here to Read the Full Original Article at CNN.com – RSS Channel – HP Hero…