Asian companies’ Q2 profits grow at slowest pace in 2 years
Asian companies posted their lowest profit growth in nearly two years in the June quarter and earnings are likely to come under further pressure, weighed down by the escalating US-China trade war and high currency volatility, Reuters analyses showed.
An analysis of about 4,000 Asian companies excluding Japan showed their combined net profit rose 12.98 percent in the June quarter, easing for the third straight quarter and the slowest pace of expansion the September quarter of 2016.
More pressure is building, with analysts slashing their forecasts for the current fiscal year by five percent on average over the last 90 days, a separate analysis of more than 15,000 firms showed.
In the same period, analysts have cut their third-quarter earnings forecasts by 4.9 percent.
China Inc., which has the biggest weighting with over 4,000 firms in the survey, saw profit forecasts slashed by 7.3 percent for the current fiscal year.
By sector, the technology industry is one of the biggest losers, as Washington is set to impose tariffs on $200 billion of Chinese goods that would make imported computer parts and intermediary products manufactured across Asia more expensive.
President Donald Trump warned last week that he was ready to slap tariffs on virtually all Chinese imports into the US, threatening duties on a further $267 billion of goods that include mobile phones, the biggest US import from China.
Profit estimates for electronic equipment and parts industry were slashed by 9.68 percent over the last 90 days, while forecasts for communications and networking segment were cut by 21.84 percent.
“We are concerned by the impacts (of tariffs), either through the currency or through a more direct impact of lower level of exports. On the latter, the technology sector is more at risk,” said Frank Benzimra, head of Asia equity strategy at Societe Generale.