The Star reported that Hong Kong stocks are poised for their worst quarter since 2015 and corporate earnings are unlikely to save them.
After a sell-off erased more than US$600bil from the city’s equities, attractive valuations stood as a potential bright spot. But those multiples don’t look so good when analysts keep slashing their profit forecasts for 2019.
Their call for an average 19% slump in operating income would be the biggest contraction for Hang Seng Index companies since the global financial crisis, data compiled by Bloomberg show.
While a protracted US-China trade war and a weak yuan are to blame for a big chunk of the profit reductions, the latest cuts reveal a deeper issue. With Hong Kong’s slowing economy buckling under the pressure of 11 straight weeks of protests, demand for everything from bank loans to utility gas may be jeopardised.
“The third quarter could be even worse given the local political situation and the trade war escalation, ” said Jackson Wong, asset management director at Amber Hill Capital Ltd. “Potential downside surprises have not been fully reflected in share prices.”
Created by Callmejholow | Dec 09, 2019
Created by Callmejholow | Oct 15, 2019
Created by Callmejholow | Oct 09, 2019