All Eyes on China as Firms Worth Trillions Report

(Bloomberg) --

China and Hong Kong are firmly in the spotlight this week, as a slew of earnings and economic data reports will keep investors plenty busy while Japan remains closed for the Golden Week holiday.

The MSCI Asia Pacific ex-Japan Index edged 0.4 percent higher Monday, bouncing back after the regional gauge posted its biggest weekly decline in a month. Japan markets will be closed until May 7.

China Telecom Corp. kicked things off after reporting first-quarter net income of 5.96 billion yuan ($890 million) in Hong Kong on rising handset data traffic, but the real fireworks are slated for after the markets close today as dozens more companies will post their results. In all, more than 60 companies in China and Hong Kong worth some $2.6 trillion will report today, according to data compiled by Bloomberg, including these heavyweights:

NameMarket Cap
ICBC$296 billion
Ping An Insurance Group$225 billion
China Construction Bank$223 billion
PetroChina$191 billion
Bank of China$161 billion
China Merchants bank$130 billion
Sinopec$100 billion

If that’s not enough, investors can also look forward to results from big banks Standard Chartered Plc and HSBC Holdings Plc later on this week, sandwiched around a holiday for much of the region on Wednesday.

Even beyond earnings, there’s still no shortage of other market catalysts to choose from:

  • Hong Kong’s March trade data is expected after the market close Monday, with economists forecasting the picture for exports to contract less than the prior month while imports deteriorate; First quarter economic growth figures will come Thursday, followed by retail sales on Friday
  • China manufacturing and non-manufacturing Purchasing Managers Index values for April are expected Tuesday
  • The next round of China-U.S. trade talks are scheduled to begin on Tuesday in Beijing with significant issues still unresolved
  • The Federal Reserve will announce its next interest-rate decision May 2

What promises to be a busy week for investors comes as some of the steam has left the sparkling rally in China stocks this year. The Shanghai Composite Index just posted its worst weekly slump since October 2018 as Beijing officials signaled they’re less comfortable about adding stimulus to keep the good times rolling.

Even so, some see potential near-term upside as the economic picture has brightened in China after a tough 2018.

Citigroup Global Markets analysts led by Johanna Chua saw a rebound in their Citi Early Growth Trackers for Asia emerging markets, China and India in March, “Suggesting positive momentum on the region’s growth and trade” in a note to clients. The trackers are designed to capture cyclical momentum of economic growth via financial variables and soft economic data.

“Favorable short-term outlook for China suggests overweight EM equities including China,” the analysts said.

Economists surveyed by Bloomberg have also upgraded their forecasts for GDP growth in 2019, now expecting China to expand by a median 6.3 percent this year, up 0.1 percentage point from the previous result.

Stock-Market Summary

  • MSCI Asia Pacific Index ex-Japan up 0.4%
  • Hong Kong’s Hang Seng Index up 0.7%; Hang Seng China Enterprises up 0.8%; Shanghai Composite little changed; CSI 300 up 0.8%
  • Taiwan’s Taiex index down 0.2%
  • South Korea’s Kospi index up 1.2%; Kospi 200 up 1.1%
  • Australia’s S&P/ASX 200 down 0.5%; New Zealand’s S&P/NZX 50 up 0.3%
  • Singapore’s Straits Times Index up 0.9%; Malaysia’s KLCI down 0.3%; Philippine Stock Exchange Index little changed; Jakarta Composite +0.1%; Thailand’s SET little changed; Vietnam’s VN Index up 0.6%
  • S&P 500 e-mini futures little changed after index closed up 0.5% in last session

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