Chinese Investors Take Heart as Earnings Reports Offset High Oil Prices

Chinese stock investors were buoyed this week by some positive company earnings reports, deflecting attention at least temporarily from the ongoing war in the Middle East and persistently high oil prices that are forcing production costs around the world to rise.

The benchmark Shanghai Composite Index rose 0.46 percent this week to end at 4,112, wrapping up April with a gain of 5.7 percent. The Shenzhen Component Index increased 0.43 percent for the week and 12 percent for the month, while the tech-focused ChiNext surged 15 percent this month, a record in almost a decade.

"It's a good week for China's mainland markets when there is good news in some first-quarter reports and no particularly bad news from the war in Iran, although there is no news on when the Hormuz Strait will reopen to oil traffic," said Xiao Jiewen, an analyst with China International Capital.

"Investors may continue their wait-and-see strategy in May, with oil supply entering a critical stage but China's markets sustaining resilience," Xiao said. "Tech shares continued to shine, and they seemed to have become a steady contributor to the market performance."

Shares in AI chip startup Cambricon surged 20 percent to 1,699.96 yuan on Thursday after "China's Little Nvidia" posted a 185 percent surge in first-quarter profit on escalating demand for AI computing power. That shot the company to the top of costliest shares on mainland exchanges, overtaking Yuanjie Semiconductor Technology and pushing liquor distiller Kweichow Moutai further down from its longstanding reign as the mainland's priciest stock.

Shares in PetroChina, Asia's largest oil and gas producer, rose 2.4 percent after the company reported a 1.9 percent rise in first-quarter profit, and China National Offshore Oil (CNOOC) gained 4 percent after reporting a 7 percent increase in profit.

Shares in China State Shipbuilding, the world's largest shipbuilding conglomerate, increased 1.5 percent after the company reported a 252 percent surge in first-quarter earnings, driven by strong ship deliveries and higher prices.

China's five biggest banks all reported growth in earnings for the first three months, and China's three biggest airlines Southern Airlines, China Eastern and Air China – reported a return to profit in the first quarter despite of surging jet fuel prices and disrupted global travel from the war. Middle East. However, shares in all three carriers dropped amid reports of a looming crunch in supplies of jet fuel.

Investors punished companies with poor results. Shares in electric vehicle maker BYD fell 5.4 percent in Hong Kong after the world's biggest new−energy vehicle producer reported a 55 percent plunge in first-quarter profit, its steepest quarterly decline in six years. Chery auto shares fell 5 percent after the company posted a 10 percent drop in first-quarter earnings.

China's mainland markets and the Hong Kong stock exchange were closed Friday for the Labor Day holiday. Chinese mainland markets won't reopen until Wednesday; Hong Kong will reopen on Monday. Hong Kong closed the week down 0.5 percent. Japan's Nikkei lost 0.3 percent for the week, but South Korea's Kospi jumped 1.9 percent on strong performance by memory-chip makers.

On Wall Street, stocks closed the week mixed as strong earnings reports from US AI heavyweights Apple, Meta, Microsoft, Amazon and Alphabet offset concerns about the stalemate in the Iran war and high oil prices. The broad S&P 500 index market index rose 0.3 percent to a record on Friday, the Nasdaq added 0.9 percent to also close at a record, but the Dow Jones Industrial Average slipped 0.3 percent. In Europe, the Stoxx600 closed flat on Friday. Oil prices that surged to an Iran-war high of US$126 a barrel on Thursday pared gains on Friday amid reports of an Iranian counter peace proposal. Global benchmark Brent crude futures ended the week at US$108.17.