Listed companies' earnings draw concern

More than two-thirds of Chinese companies listed on the two mainland stock exchanges reported an average profit growth of 71% the first six months of this year, a trend analysts believe will exacerbate any market downturn, the Financial Times reported. Chinese markets have risen more than fivefold since July 2005, but if the market dips or levels off, earnings will disappear, as "cross-holdings in the market means profits are often counted twice," said analyst Edmond Huang. Profits from core operations at 900 listed Chinese companies increased 35% during the first six months, while non-operational income rose to 31% compared to 13% for all of 2006. On Friday, Chinese companies listed on the Shanghai and Shenzhen exchanges traded at an average 38 times 2007 estimated earnings.