China's Industrial Profit Growth Cooled In July, Benchmark Indexes Diverged

Li Chen
27 Aug, 2026
Hong Kong

China's indexes diverged as investors reviewed the latest update on industrial profits and Nvidia Corp.'s earnings. 

The Hang Seng Index decreased 0.5%, and the mainland-focused CSI 300 Index inched higher 0.3% as investors debated the economic growth outlook. 

China's industrial profits increased 17.6% to 4.6 trillion yuan in the first seven months of 2026, slowing from an 18.7% rise in the January-June period. 

Industrial profit growth slowed to an annual 11.2% in July, as broader slowdown in the economy weighed on manufacturers. 

Despite slowing economic growth, the latest data confirmed that industrial activity remained resilient, according to the National Bureau of Statistics. 

Profits at state-owned enterprises increased 16.3% to 1.49 trillion yuan, private firms posted a 10.9% rise to 1.14 trillion yuan, and joint-stock companies registered a stronger 23.6% gain to 3.6 trillion yuan.  

By industry, profits in communication and other electronic equipment recorded the strongest gain of 110%, non-ferrous metal smelting and rolling advanced 92%, and chemicals increased 56.6%.  

The hopes for additional stimulus strengthened at the conclusion of the National People's Congress Standing Committee on Friday, as the latest data confirmed the slowing macroeconomic growth outlook.  

Earlier in the month, China's retail sales, jobless rate, fixed-asset investment, and new home prices confirmed a two-speed economy and weakening domestic growth momentum. 

 

China Indexes and Stocks 

The Hang Seng Index decreased 0.5% to 25,530.83, and the mainland-focused CSI 300 Index rose 0.3% to 4,605.41. 

Semiconductor- and AI-related stocks led gainers in Shanghai and Hong Kong trading following the release of Nvidia Corp.'s quarterly results. 

Nvidia said second-quarter revenue more than doubled to $96.2 billion, and the company guided revenue in the current quarter to surpass $108 billion. 

Nvidia's current quarter revenue outlook signaled that the company sees no near-term slowdown in AI spending.  

The Data Center segment revenue reached $89.0 billion, which is an increase of 117% compared to a year ago. 

Net income jumped 126% to $59.7 billion from $26.4 billion, and diluted earnings per share rose to $2.46 from $1.08 a year ago. 

Net profit was boosted by $7.8 billion in gains from Nvidia’s portfolio of stakes in AI companies.

Adjusted earnings per share rose $2.22, sharply higher than the consensus estimate of $2.09.  

The company at the heart of the AI boom and the bellwether for the AI spending frenzy is benefitting from the data center investments by a few large players, including Alphabet, Amazon, Microsoft, and Meta. 

Cambricon Technologies gained 3.3% to ¥1,053.11, Zhongji Innolight advanced 4.6% to HK $1,062.0, and Eoptolink Technology added 3.6% to ¥413.20.