Hello, this is Kenji from Hong Kong, where we are in the midst of the mid-year earnings season. The overall tone so far seems to be tilting toward the negative side, and the tech sector is no exception. While JD.com pleasantly surprised the market with its results, both Tencent Holdings and Alibaba Group Holding reported zero top line growth for the first time since their listings over a decade ago. Smartphone maker Xiaomi saw its net profit for the first half of the year dip 95%, while component makers such as Sunny Optical and AAC saw their bottom lines cut by half or more.
The weak results are a function of various factors, primarily COVID-19 lockdowns, rising input costs, a tight regulatory regime for the tech sector and heightened geopolitical tensions - all which have combined to decelerate the Chinese economy as a whole.