Credit quality is still an issue and lithium constraints persist
While the Q1 earnings season is just two weeks away in the US, the Q4 earnings season is still ongoing in China. The list below shows the most important earnings releases with large Chinese banks and energy companies dominating the list.
Monday: Nongfu Spring, CITIC Securities
Tuesday: China Construction Bank, Bank of China, BYD, Kuaishou Technology, BOC Hong Kong, Great Wall Motor, Micron Technology, Lululemon Athletica, McCormick
Wednesday: Kweichow Moutai, ICBC, Agricultural Bank of China, CNOOC, COSCO, SD Holding, Haier Smart Home, China Vanke, Ganfeng Lithium, China Longyuan Power Group, BOE Technology, Paychex, BioNTech
Thursday: PetroChina, China Overseas Land & Investment, China Resources Land, CITIC Ltd., Walgreens Boots Alliance
Chinese banks are interesting to watch next week because of the ongoing headwinds in the economy from regional lockdowns over Covid-19, troubles among the real estate developers, and finally general weaker credit in the private sector. As the chart below shows, Chinese banks are consistently expanding their balance sheets faster than the increase in market capitalization suggesting the market is putting a lower and lower earnings power on those new assets, which is another way of showing that credit quality is deteriorating.