SHANGHAI (Reuters)- Fund managers and securities analysts have doubled their forecasts for Chinese firms’ profit growth in the second half of 2007 to 50 or 60 percent after China Inc posted spectacular earnings for the first half.
The forecasts, based on a Reuters poll this week, will help to ease concern that China’s stock market may be getting dangerously overvalued as year-to-date gains for the Shanghai Composite Index top 90 percent.
All 10 poll respondents said the index, at 5,185 points at midday on Friday, could end 2007 above 6,000 points — 16 percent above its current level and more than 120 percent above where it started the year.
“The first-half growth of corporate earnings is surprising, but then China’s economy is proving surprisingly strong,” said Ren Chengde, analyst at Galaxy Securities. “This kind of growth makes stock valuations more attractive.”
Combined net profit at 1,503 listed firms jumped 70 percent from a year earlier to 323 billion yuan in the first half, excluding firms which did not report year-earlier figures, the official Shanghai Securities News calculated on Friday, the last day of the reporting season.
That was much better than the 30-40 percent first-half growth which analysts had been expecting just a month or two ago.
