The latest financial report analysis from EB SECURITIES strategy team indicates that the earnings recovery trend across A-shares and Hong Kong markets continues to gain traction. The 2026 interim reports reveal significant improvements in profitability, particularly within the upstream and technology sectors.
Upstream and tech profits accelerate in the 2026 interim reports
A-share earnings growth saw a notable rebound in the 2026 interim reporting period. Aggregate data for all A-shares, all A-shares excluding financials, and all A-shares excluding financials and oil & petrochemicals shows cumulative net profit attributable to shareholders grew 19.4%, 20.6%, and 18.9% year-on-year respectively. These figures represent increases of 10.1 percentage points, 5.0 percentage points, and 3.2 percentage points compared with the 2026 first-quarter report.
Across different market segments, the upstream, technology, and financial/property sectors all improved their profit growth in the interim results, while the midstream and public services sectors saw a pullback in gains. Within the consumer space, results were mixed: optional consumer goods saw narrowing losses, but essential consumer goods recorded slower growth.
ROE improvement driven by rising margins and leverage
Return on equity for all A-shares excluding financials recovered in the second quarter of 2026. The TTM ROE reached 8.2% for all A-shares, 7.6% for non-financial A-shares, and 7.3% for non-financial non-oil-petrochemical A-shares, up 0.4, 0.4, and 0.3 percentage points respectively from the first quarter.
DuPont analysis shows that higher net margins and a rising debt-to-asset ratio were the primary drivers behind the ROE rebound for non-financial companies in the interim results. Net margin (TTM) improved to 4.7% for non-financial A-shares and 4.6% excluding oil & petrochemicals, up 0.2 and 0.1 percentage points respectively. Meanwhile, the debt-to-asset ratio increased by 0.7 and 0.8 percentage points, although asset turnover (TTM) declined slightly.
The sectors demonstrating the highest operational momentum in the interim reports include electronics, non-ferrous metals, non-bank financials, basic chemicals, coal, and oil & petrochemicals. Industries showing accelerating net profit growth alongside ROE improvement include electronics, basic chemicals, oil & petrochemicals, and real estate. Others such as retail trading, environmental protection, and non-ferrous metals maintained positive growth with better ROE, while non-bank financials, coal, beauty care, and media turned their profit growth positive and also lifted ROE.
Hong Kong interim results improve, with tech facing headwinds
Hong Kong-listed companies also reported stronger half-year results in 2026. Net profit growth accelerated for the Hang Seng Composite Index, the Composite excluding financials, and the Hang Seng Index. Although the Hang Seng Tech Index remained in negative territory, its contraction narrowed considerably.
Net profit growth for these indices stood at 21.1%, 17.8%, 22.0%, and -6.7% respectively, marking changes of +15.0, +26.9, +15.6, and +12.2 percentage points compared with the second half of 2025. Hong Kong sectors with notable interim momentum include enterprise services, semiconductors, non-ferrous metals, and industrial trade. Accelerating profit growth with improving ROE was seen in enterprise services, semiconductors, non-ferrous metals, non-bank financials, and utilities. Several sectors turned losses into gains while lifting ROE, including industrial trade, pharmaceuticals, transportation, coal, and oil & petrochemicals. Meanwhile, steel, daily consumer retail, medical equipment, hardware, and paper & packaging maintained positive growth with ROE gains albeit slower.
Key risks include potential discrepancies in financial data due to statistical methodology differences, a significant shortfall in economic growth expectations, and unexpected geopolitical conflicts. This analysis was released on September 4, 2026.
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