HONG KONG - Chinese companies, reaping the gains of the country's
stimulus-backed double-digit economic growth and led by the finance and
resource sectors, reported first-half profits and revenues soaring more than
40% compared with a year earlier.
As of August 31, 1,947 listed companies on the Shanghai and Shenzhen stock
exchanges earned a combined 785 billion yuan (US$115 billion) in net profit in
the first six months, up 41.2% from a year earlier. Their revenue jumped 42.2%
to 7.95 trillion yuan in the period, the equivalent of 46% of gross domestic
product, according to the official Shanghai Securities News. Only 247, or 12.7%
of the total, reported a loss, down 5 percentage points from a year earlier.
China's economy, helped by a 4 trillion yuan stimulus package
announced in November 2008 to help the country weather the global financial
crisis, grew 10.3% in the three months to June after an 11.9% expansion in the
first quarter. Companies are expanding and consumers buying more after loans
almost doubled last year to a record 9.6 trillion yuan.
The top 10 most profitable companies, led by Industrial and Commercial Bank of
China (ICBC), the world’s largest lender by market capitalization, accounted
for 54% of the total reported earnings, with a combined 424 billion yuan in
first-half net profit. Others in the top 10 include, PetroChina, the country’s
largest-listed oil firm by capacity, Sinopec, Asia’s top oil refiner, and China
Shenhua Energy, the world’s largest coal producer.
ICBC reported 85 billion yuan profit, up about 28% from a year earlier as loan
interest income grew. The bank, along with other Chinese lenders, is now
raising capital to cushion against any rise in bad loans. ICBC last month won
approval to raise up to 25 billion yuan by selling convertible bonds.
The picture of growth is only slightly less rosy at the other end of the
market. The first-half net profit of the 109 small companies listed on ChiNext,
a Nasdaq-style growth-enterprise market, surged 25% to 3.1 billion yuan from a
year earlier, on a 28% gain in operating income to 18.8 billion yuan.
The strong earnings data has helped the broad CSI 300 Index, covering the stock
prices of companies listed on the Shenzhen and Shanghai markets, to rebound
about 20% since early July to just short of 3,000, after the benchmark dropped
to 2,500 from this year's high of 3,400 in mid-April.
Olivia Chung is a senior Asia Times Online reporter.
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