Asia not exempt from analyst scrutiny, 2020 profit forecasts cut for region

Earnings forecasts have proven to be indiscriminate to borders once again during the coronavirus economic downturn. Analysts have cut Asian companies 2020 potential earnings forecasts dramatically in response to the shutdown of factories as well as social distancing measures brought about by the coronavirus pandemic. Profit estimates have already been cut by 6.4% in this last month alone.

Goldman Sachs has reported to be expecting further negative revisions to the 2020 earnings per share, citing China earnings growth 6pp to -6%, Korea 42pp to -20%, Taiwan 32pp to -30% and India 12pp to -3%.

Australia, Thailand and Indonesia also faced cuts of over 10% each last month.

South Korea had to deal with the biggest hit to earnings forecasts, showing an average cut of 24% in the previous month, perhaps owing in part to the country’s exports dipping to 0.2% year-on-year in March.

With more people forced inside their homes due to either self or government-enforced self-quarantine measures, the consumer sector has faced unprecedented downgrades in earning-potential forecasts.

Energy sector firms also suffered a dramatic cut to earnings forecasts, showing a 23% cut as a result of a huge dip in oil prices recently.

Interest rate cuts, used to prop up struggling economies in times of economic stress will likely have the flow-on effect of diminishing the banking-sector profits of this region as well.

Asia-Pacific shares dropped around 20% in the first quarter of 2020, echoing the largest quarterly decline since September 2008.