China’s slow reopening: who are the winners and losers?

IG Financial Analyst @AngelineOng takes a look at the winners and losers so far in H2.

(Video Transcript)

Global companies earnings in China

Now, many global companies from Unilever to Nissan to Caterpillar have warned of slowing earnings in China. Plenty of these companies have said headwinds have come because there's not been so much of that reopening that we were counting on. And Unilever certainly said that they're seeing a very cautious consumer in China, a declining property market and reduced export demand as well.

Unilever

This is according to Graham Pitkiffley, the CFO of Unilever. And his comments mirror many other companies out there that have only seen a rebound, limited to sectors such as travel, dining and luxury goods. Even then, it has been extremely limited to the likes of Starbucks, LVMH and Huel Boss have actually enjoyed this very small trend.

Consumer goods firms

Consumer goods firms, as I mentioned earlier, and those reliant on consumption like Procter & Gamble, L'Oreal, Coca-Cola have all taken a cautious stance. Now, at the same time, the economic clouds are gathering.

Maersk

Many companies like Maersk have lowered their 2023 global container trade forecast. WPP, the world's biggest advertiser, is also warning of a lack of clarity as its clients in the US spent less on advertising. Beijing has rolled out a series of policy measures in recent weeks to shore up its flagging economy.

But recent week data, like in manufacturing, say things are still tough going. And many are hoping that the short-lived bounce in the economic activity in China after it lifted its long COVID lockdowns will slowly peter through. But at the moment, it is not so.

We are now seeing the chickens come home to roost and those that are reliant on Chinese demand, reliant on global demand like DHL, one of the world's biggest shippers, saying that its outlook is also looking increasingly tricky.