Hottest China Trade May Unravel as Earnings Disappoint Investors
- State-owned utilities, telecom operators miss 4Q estimates
- Hang Seng SOE index is down about 2% from March 6 peak
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Shares of China’s state-owned enterprises have been a hot trade in a mostly lackluster equities market this year, but disappointing earnings are causing investors to reassess their bullish bets.
About three-fifths of the largest constituents in a Hang Seng gauge of state-owned enterprises missed earnings-per-share estimates in the latest results season, according to data compiled by Bloomberg Intelligence. Weighted average earnings were about 4.4% lower than expected, with utilities, telecommunications and consumer staples having the biggest sectoral misses.