More than 4,800 Chinese companies listed in Shanghai, Shenzhen and Beijing have announced earnings for the first half of the year. It was bloody.
But by another measure, the beginning of the year was worse. The number of companies reporting losses hit a record high of nearly 900 in the first half of the year. In 2020, about 780 people lost their money.
A plunge in earnings in the world’s second-largest economy could have ripple effects around the world. That’s because Chinese companies are big buyers of commodities, technology and other products on the global market.
“We are already seeing the impact,” said Alicia García Herrero, chief Asia-Pacific economist at French investment bank Natixis. Factories have started to see a slowdown in orders, she added.
Experts blame China’s draconian coronavirus measures and the deepening crisis in the real estate market for poor business performance.
“The main reasons are travel restrictions and a significant drop in sentiment with the demise of the property market,” said Garcia Herrero.
Larry Fu, chief China economist at Macquarie Group, said the weak earnings reflected a slowdown in China’s economy, dragged down by a downturn in real estate, worsening COVID-19 conditions and a weakening global economy. said that
China’s second quarter GDP expanded by just 0.4% from a year ago, its weakest performance since early 2020. Last month, several large investment banks cut their annual economic growth forecast for China to below his 3%.
“Whether Beijing decides to start easing [zero-Covid policy] From March 2023 onwards, the economy and markets are expected to face difficult times. People are either disappointed by the lack of a real reopening or overwhelmed by his surge in Covid infections,” analysts at Nomura said in a research report on Friday.
top loser
Several other sectors of the economy have already had their worst years on record.
The weaker currency is hurting China’s aviation industry, which has to pay for imported aircraft, parts and fuel in dollars. The cost of servicing dollar-denominated debt will also increase.
Property developers are also seeing their worst performance so far this year as the country’s housing market plummets.
The sector, which accounts for 30% of GDP, has been crippled by government campaigns to curb reckless borrowing in the industry since 2020. Real estate prices are falling, and so are sales of new homes.
The crisis has come a long way in recent years as thousands of disgruntled homebuyers threatened to stop paying mortgages on unfinished homes, rocking markets and prompting businesses and authorities to take action to defuse the crisis. Escalated by the month.
Country Garden, China’s number one developer by revenue, reported a 96% decline in net profit in the first half. This is the largest since listing in Hong Kong in 2007.
The company said it was weighed down by “forces beyond our control, such as the resurgence of the pandemic in various parts of mainland China, extreme weather and a downturn in the real estate sector.”
Source: www.cnn.com
