Graph of the Week – Brighter earnings estimates limited to two in China

After lagging most other equity markets over the last 12 months, expectations for forward earnings for the MSCI China index have nudged up. Look more closely and you’ll see that analysts have revised up their estimates for ‘next twelve-month earnings per share’ for just two companies out of the more than 600 index companies that are covered. Both are in the tech sector.  

Estimates had been for a 2% rise in NTM EPS – paltry compared with the 24% increase forecast for companies in the tech-heavy NASDAQ 100 index. Recently, things have improved: since 14 May, estimates for the China benchmark have moved up – the gain is now put at 3% overall.

That is mostly on the back of estimate revisions for just two stocks: PDD Holdings – the online retailer that is the holding company of marketplace Temu – and Tencent Holdings – the internet and tech company. They account for more than two-thirds of the gain. The remaining 632 stocks in the MSCI China index for which estimates are calculated contributed just 0.06% on average.

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