Sunil Jain: 10,4,0?

PERSPECTIVES

It’s not just India that’s seeing corporate earnings collapse. According to a Citigroup report, earnings forecasts for the year for Asia (ex-Japan) have been reduced from 10 per cent at the beginning of the calendar year to 4.4 per cent last month. While Thailand is one of the few markets that has a much higher projected return at 115 per cent for 2008, this is largely to do with the base effect as 2007 earnings here fell more than a third. And while earnings projections could still go down further, what’s interesting is that if you take into account the well-above-historic values of inflation, the real earnings forecast for the region could even be negative, around -3.2 per cent (the real growth in 2007 was 12.8 per cent!). Between January and June this year, the rate of lowering earnings projections was about two percentage points a quarter, now this is up to two percentage points in five weeks. Interestingly, many of the usual stars — media, telecom, real estate — are the ones which have seen the sharpest fall in earnings projections across Asia. While most analysts are still looking at a 15.9 per cent earnings for 2009 — that is, a V-shaped recovery — there’s little in the global economy to suggest such a sharp pick up.
 

Revising Earnings Downwards (2007-08 Earnings Per Share Growth, in per cent)
	China	Hong Kong	India	Indonesia	Thailand
31-12-2007	22.1	-20.4	21.0	11.4	16.7
31-03-2008	18.8	-23.1	22.2	21.5	97.6
30-06-2008	16.1	-24.5	16.0	17.8	113.7
06-08-2008	15.4	-25.4	15.9	15.9	114.8
Source: Citigroup