Sinking profits turn China's US$3.5 trillion stock rout into trap

Pessimism has gripped Chinese stocks, leading to a US$3.5 trillion market value loss since May, as weak economic conditions erode corporate profits. The third-quarter reporting season has seen a disappointing start, with companies like battery giant Contemporary Amperex Technology Co Ltd (CATL) missing profit forecasts due to weak demand and fierce competition. Consensus 2026 earnings forecasts for MSCI China Index members have declined over 4% since March, and Hang Seng Tech Index profit projections have plunged more than 13%.