Investing.com — Chinese stocks face mounting pressure as weakening corporate earnings threaten to prolong a selloff that has wiped $3.5 trillion from the country’s equity market since May.
The downturn pushed China’s CSI 300 Index into a bear market last week, while Hong Kong technology shares approached levels that would erase gains made since Beijing’s major stimulus package two years ago.
Weak consumer spending and intense corporate competition have squeezed profit margins across industries, including banking, electric vehicles and artificial intelligence.
Consensus 2026 earnings estimates for companies in the MSCI China Index have fallen more than 4% since March.
Profit forecasts for the Hang Seng Tech Index have declined over 13% during the same period.
Companies reporting third-quarter results have missed earnings expectations by an average of 9%, putting the index on course for its second-worst quarterly performance against forecasts in two years.
Battery manufacturer CATL reported disappointing quarterly profits, while China Mobile recorded an 8% decline in net income for the first nine months of 2026.
Ganfeng Lithium also missed earnings expectations amid falling commodity prices.
Alibaba (NYSE) has meanwhile sought additional funding for artificial intelligence investments, including a $10 billion share offering that diluted existing shareholders.
Investor confidence has weakened further, with mainland trading volumes near their lowest levels since July 2025 and margin financing falling to a one-year low.
Chinese authorities have deployed state-backed investment funds to stabilise equities, although investors remain sceptical about the prospect of substantial economic stimulus.
China’s economy expanded 4.5% year-on-year in the third quarter, keeping growth within the government’s annual target range of 4.5% to 5%.
However, some institutional investors have adopted a cautiously optimistic stance, arguing that valuations remain reasonable and lower bond yields could encourage equity investment.
Original Article
Chinese equities face prolonged downturn as earnings forecasts tumble
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