Analysts: Profit pressure on Chinese firms to continue
22 May 2008
Chinese companies will continue to face cost pressures, pulling down earnings growth, said analysts at a number of investment banks, according to the South China Morning Post. Tight monetary policy, rising food and energy prices and the continued appreciation of the renminbi were all cited as sources of cost pressures. Clive McDonnell, head of equity strategy at BNP Paribas, said his firm was "quite concerned about the outlook for the China market despite the big crash that we have seen." Credit Suisse analysts Peggy Chan and Vincent Chan projected mainland-listed stocks to fall, due in part to an estimated 4% drop in earnings growth. A research note from JPMorgan this week said cost pressures made current valuation levels of Chinese stocks risky.
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