(Bloomberg) — China’s earnings season kicks off this week with a look at its struggling consumer industry — and a reminder of the nation’s staggering scale. The results come from the world’s largest manufacturer of electric vehicle batteries, Contemporary Amperex Technology, while the largest beverage company, Kweichow Moutai, reported on Sunday.
As China begins its bi-decade congress of the Communist Party to choose top leaders, any signs of policy change, as they may be, could have a big impact on markets. On the opening day of the week-long conference, Xi gave a two-hour speech that highlighted goals in technology, the environment and national security, but did not set a timetable for when the Covid Zero policy would be changed.
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Key points to watch this week:
Monday: No major earnings are expected.
Tuesday: No major earnings are expected.
Wednesday: Hong Kong Exchanges & Clearing (388 HK) is scheduled to release third quarter results around noon. Known as the HKEX, the city’s stock market could report a 30% drop in profits, according to consensus estimates in a Bloomberg survey. Bloomberg Intelligence attributed this to a decline in income from cash stocks, derivatives, clearing and commodities, adding that tighter cost control and higher investment returns in volume and clearing housing funds may face some pressure on profits. In Hong Kong, proceeds from initial public offerings in the three quarters ended in September fell 71% from the same period last year. Information about its IPO distribution system, Yuan stock listing and talent retention efforts can be considered.
Thursday: Axis Bank (AXSB IN) is likely to report after the market closes. Indian banks are expected to post solid earnings growth sequentially, although increased treasury losses may partially offset gains as bonds continue to underperform. Many of India’s lenders’ margins could widen due to rate hikes amid increased competition as the festive season approaches, with the sector’s liquidity tight despite falling to record lows, according to Bloomberg Intelligence. Axis Bank’s revenue growth may be lower than that of other major banks, but the lender’s focus has shifted from growth to profitability, analysts at Elara Securities wrote. Investors are watching for feedback on Citi’s portfolio acquisition progress.
Friday: Amperex Technologies (300750 CH), the world’s largest maker of electric vehicle batteries, is due to report earnings after the market closes. The Fujian company on Oct. 10 reported as much as a 200% year-on-year jump in net income to 9.8 billion yuan for the third quarter, according to consensus estimates in a Bloomberg survey. CATL, as the battery maker is commonly referred to, cited continued growth in the energy storage industry for the increase in profits. The company’s earnings are expected to start coming in better than consensus expectations, Bloomberg Intelligence’s Steve Man said, adding that demand for electric vehicles remains strong and battery makers and EV makers appear to be able to pass on higher prices. Additionally, it will be interesting to watch the mention of its biggest customer, Tesla, which is scheduled to report its results early in the week.
- Inflation in Focus: Hindustan Unilever (HUVR IN) reports after market close. Lower prices of some commodities, such as edible oil and crude oil, are expected to partially offset the decline in volume growth in rural markets for the Indian unit of the global consumer goods giant. Investors will be watching for feedback on sustained high levels of retail inflation in the domestic economy and its impact on consumer demand, particularly in rural markets amid the monsoon season. Consumer companies have reduced pack sizes and increased prices to protect margins. That, and much-anticipated gains in market share in major product categories are expected to boost its profits by about 11% from a year earlier in the second quarter. The outlook for demand and prices for the rest of the year will be important, with increasing competition from two of Asia’s richest men. Mukesh Ambani’s Reliance Industries announced its entry into the consumer goods business while Gautam Adani’s Adani Wilmar Ltd. strengthening its food operations.
(Updates introduction and information about Kweichow Moutai, Communist Party congress)