China’s tech firms to post slower June-quarter growth on sagging demand

China’s top technology, e-commerce and consumer electronic firms are set to report a sharp slowdown in revenue for the June quarter, as a bruising trade war with the United States weighed on the Chinese and hurt consumer spending.

Revenues at a handful of China’s biggest firms are expected to grow 26 per cent on average in the quarter ended Jun 30 – the slowest in six quarters – compared with the same period a earlier, according to consensus estimates from Refinitiv. This includes China’s e-commerce giant Alibaba Corp and its smaller rival JD.com, firm Baidu Inc, and Tencent Holdings, the world’s largest gaming company.

Net income at these is expected to grow 9per cent, versus a galloping 50per cent increase a year earlier.

The trade war has roiled markets and global supply chains and forced tech companies to rethink production and marketing tactics. A lackluster June quarter is expected to prompt firms to cut costs further to shore up margins.

China’s economic growth slowed to 6.2per cent in the second quarter, its weakest pace in at least 27 years.

“Given the slowing economy and tightening of credit within China, we can expect to see this reflected in … different ways,” said Taipei-based technology analyst Sam Reynolds.

“For the more business-to-consumer focused companies, this will be reflected in slower consumer spending; for the more business-to-business companies (like Baidu) this will be reflected in less ad buys.”

Below are some expected milestones for these firms that are scheduled to report results in the coming weeks, based on Refinitiv :

* JD.com, which is expected to report earnings on Tuesday, could manage to eke out a small profit by curbing costs. But with fewer consumers buying household appliances and electronics, the online retailer is likely to its slowest revenue growth in at least five years.

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* Alibaba’s profit likely grew 27 per cent, its fourth successive quarterly rise. Big promotions are expected to propel its sales 38 per cent higher, but that will be the company’s slowest growth in 14 quarters.

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