Corporate profit pre-announcements have shown a “major deterioration” for the last quarter of 2025.
The latest economic indicators underscore weak consumer demand as some government stimulus programs are scaled back.
Fourth-quarter pre-announcements from more than 2,000 mainland-listed A-share companies show negative alerts outnumber positive ones by 14.8%, versus a net negative 4.8% in the second quarter.
Smaller firms fared worst — particularly in real estate and consumer-focused sectors.
Slowing economic growth is a key drag on profits. China’s growth cooled to 4.5% last quarter, from a year earlier, the weakest pace since the country reopened from Covid lockdowns in late 2022.
Producer prices fell 1.4% in January from a year ago, extending a deflationary streak that began in late 2022, while purchasing managers’ indexes signaled an unexpected slowdown.
The significant miss in both manufacturing and non-manufacturing PMIs suggests insufficient underlying demand.
“Consumption is facing clear headwinds from the scaled-back trade-in stimulus program this year.”
Metal miners are benefitting from surging prices, while companies in the artificial intelligence supply chain and firms supported by the government’s campaigns to rein in a price war are also gaining favour.
Source: Bloomberg
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