Reference News Network reported on April 3 that according to a report by Bloomberg News on April 2, after actions to revitalize consumption brought about a strong earnings season, the prospects for Chinese enterprises have brightened, which may provide much-needed cushioning for the local stock market preparing to cope with U.S. tariffs.

According to data compiled by Bloomberg Intelligence, the weighted average of earnings reported by companies in the MSCI China Index exceeded expectations by 5.1% in the fourth quarter last year.

This result indicates that Beijing's efforts to cultivate consumption as the main growth driver are starting to pay off, raising hopes for the broadening of the stock market rebound led by technology stocks. This is seen as a new sign of the broader recovery of the world's second-largest economy, putting China in a more advantageous position amid Donald Trump's escalation of the trade war.

Marvin Chen, a strategist at Bloomberg Intelligence, said: "The better-than-expected performance in the fourth quarter can be attributed to the stimulus plan announced at the end of the third quarter. Major Chinese technology giants across non-essential consumer goods, technology, and communications sectors drove the earnings surprise."

Reports stated that faced with ongoing real estate downturns and deflationary pressures, Chinese policymakers launched a stimulus package in late September last year, followed by more measures ranging from consumer subsidies to strengthening the social security network.

As Chinese consumers began to open their wallets, major consumer technology companies became the biggest beneficiaries, with companies like JD.com, Alibaba, and Tencent reporting earnings exceeding expectations.

Earlier this year, DeepSeek's cheaper artificial intelligence models redefined the global AI landscape, further fueling investor optimism in the tech industry.

At the same time, electric vehicle manufacturers like BYD, benefiting from high government subsidies for car buyers, achieved higher-than-expected profits.

"We believe that this late earnings turning point is a direct result of significant downward revisions to earnings expectations over the past few years and companies' efforts to improve profitability and shareholder returns," wrote analysts including Laura Wang at Morgan Stanley in a report last week. The institution also raised its expectations for several Chinese stock indices.

Since the release of DeepSeek's artificial intelligence model, the Chinese stock market has been on an upward trend, but in recent weeks, as attention shifted to tariff issues, the rally has cooled down. The MSCI China Index has fallen 6.7% from its peak on March 18, but still has a year-to-date gain of more than 15%.

Morgan Stanley's analysts seem less worried. They believe that, on an incremental basis, compared to the entire emerging market, the MSCI China Index is relatively well-positioned to cope with further U.S. tariff hikes. They wrote in the report: "With limited room for further tariff increases under the reciprocal tariff plan, the revenue from the U.S. accounts for only 3% of the MSCI China Index, the lowest among the top ten emerging market trading partners of the U.S." (Translated by Wang Diqing)

Original article: https://www.toutiao.com/article/7488934480359604786/

Disclaimer: The article represents the views of the author alone. Please express your opinions by voting up or down below.