Chinese listed companies have exhibited impressive stock returns over the past year, despite only a marginal 1 percent growth in net profits. This trend indicates that the gains in the stock market have been largely driven by increased valuations rather than substantial improvements in corporate earnings. The insights come from a quarterly investor survey conducted by the Cheung Kong Graduate School of Business (CKGSB).
The report noted that net profit growth turned slightly positive, reaching around 1 percent on a trailing 12-month basis by the first quarter of 2026. In contrast, price-to-earnings ratios surged by 31.2 percent, contributing to a remarkable total equity-market return of 32.5 percent during the same timeframe.
Liu Jing, a professor of accounting and finance at CKGSB, pointed out that the market turnover has seen a substantial recovery, reflecting increased trading activity and heightened investor optimism, even in light of modest earnings growth. “If we want a long-term bull market, fundamentals ultimately have to start growing,” Liu remarked during a briefing, emphasizing the need for sustainable growth in the future.
Investor sentiment regarding equities remains largely favorable. The survey revealed that approximately 63.8 percent of respondents anticipate an increase in A-shares over the next year, a rise of 1.4 percentage points compared to the previous survey period. Similarly, 62.1 percent of participants expect gains for Hong Kong equities, up by 1 percentage point.
This survey encompassed responses from 2,100 financial professionals and retail investors across the nation. Meanwhile, signs of recovery in the property market are emerging; however, a broad-based increase in housing prices may still require up to 12 months to materialize.
