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Listed companies’ strong performance mirrors China’s economic growth

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Companies listed on the A-share market reported better-than-expected performance in the first half of the year, a sign that the Chinese economy sustained its development momentum.

During the period, a total of 4 825 A-share-listed companies reported a combined operating revenue of 34.54 trillion yuan (about 5.01 trillion US dollars), climbing 9.24% year on year, the data from the China Association for Public Companies showed.

Their net profits reached 3.25 trillion yuan (about 0.47 trillion U.S. dollars), up 3.19% from a year earlier, according to the data.

Listed companies in general managed to sustain a growth trend despite unexpected challenges such as sporadic COVID-19 outbreaks at home and high inflation overseas, said the association.

The quality of listed companies has steadily improved and their structure has been further optimized, according to the association.

Non-financial listed companies posted higher-than-average growth in operating revenue and net profit during the period. Their revenue and net profit totaled 29.23 trillion yuan (about 4.24 trillion US dollars) and 1.95 trillion yuan (about 0.28 trillion US dollars), respectively, up 10.89 percent and 4.55%.

Since the first quarter of 2021, non-financial firms have consistently posted higher growth in operating revenue than financial firms have, the official data showed, signaling a sound development trajectory of the real economy.

Industry-wise, coal, oil, gas, basic chemicals, power battery raw materials and photovoltaic new energy grew rapidly in the first six months, while firms in sectors such as aviation, catering and tourism faced challenges due to COVID-19 outbreaks and high raw material prices.

The new-energy sector saw booming supply and demand, benefiting from the government’s continued efforts to achieve its carbon peak and carbon neutrality goals, said Chen Li, chief economist with Chuancai Securities.

The rapid development of industries such as new-energy vehicles and wind power led to a high-profit growth of the non-ferrous metal sector, while high inflation overseas and an energy crisis in Europe contributed to the profit growth of firms related to coal, petroleum and petrochemicals, said Chen.

“In terms of GDP contribution, the top three industries were finance, manufacturing and mining. Among them, the net profit of the financial industry was 1.3 trillion yuan (about 0.19 trillion U.S. dollars), accounting for about 40% of the total profit and remaining a major profit driver. However, the proportion of the financial sector’s realized profit narrowed by 2.18 percentage points compared with the same period last year, indicating that the financial sector has intensified its efforts to serve the real economy,” said Cheng Fengchao, member of the Academic Advisory Committee of the China Association for Public Companies.

In the first six months of 2022, the average research and development (R and D) expenditure of listed companies accounted for 1.69% of their operating revenue. The R and D intensity of computing, bio-industry and high-end equipment manufacturing reached 10.29%, 10.1% and 6.84%, respectively.

“In terms of the absolute amount of R and D investment, the total amount of R and D investment of the Science and Technology Innovation Board, the Growth Enterprise Market (GEM) Board and the Beijing Stock Exchange exceeded 120 billion yuan (about 17.39 billion US dollars),” Cheng said.

The A-share market also emerged as a champion globally in the financing scale of initial public offering (IPO) in the same period, according to the data from financial information provider Wind. It raised a total of 311.9 billion yuan via IPO, up 46 percent from a year ago and topping the global chart for financing scale.

Industry insiders have been optimistic about the prospects of the A-share market for a while now, as commodity prices started to decline at the end of the second quarter and the economy continued recovery in the third quarter.

Companies may report notable performance improvement, driven by higher profit margins, according to Sinolink Securities.

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