Bloomberg News

China’s Tight Policies, Cost Increases Hurting Profit, UBS Says

January 31, 2012

Jan. 31 (Bloomberg) -- China’s tight monetary policies and cost increases are hurting corporate profits, according to UBS AG.

Chinese corporate profit growth will be about 15 percent in 2011, compared with analysts’ forecasts for about 20 percent, Gao Ting, chief China strategist at UBS, said in an interview at Bloomberg’s offices in Shanghai.

“The market’s estimates are still too high,” he said. For non-financial companies, fourth-quarter earnings may drop between 5 and 10 percent from the previous year, while first- quarter profit may decline 10 percent on average, he said.

Gao said he’s still “fairly positive” on Chinese stocks this year as the earnings slump may halt by the middle of the year as the economy stabilizes and inflation eases.

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