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No matter how many times they shake it, China’s Magic 8 ball keeps reading: “Outlook not so good.”

Officials in Beijing are trying their best to reinvigorate China’s stock market, but it might be too little, too late to secure long-term confidence about the nation’s economy. Several key corporate earnings reports are coming out this week, and many businesses are expected to add to the pessimism with glum results and forecasts.

It’s Just Not Enough

Given the troubles on multiple fronts — sagging real estate, high levels of youth unemployment, deflation, sanctions on chip technology, slumping tourism — Beijing has been scrambling. Chinese authorities announced measures last weekend like halving stamp duty on stock trading, slowing the pace of new listings to balance supply and demand, and lowering margin requirements for investors to buy securities.

Those moves sparked an initial rally, but it doesn’t appear to be the exact solution. The CSI 300 index wound up rising only 1.2% on Monday; worse yet, it’s still down more than 22% from two years ago. Beijing is using similar tactics employed during the 2008 global financial crisis and China’s 2015 market turbulence. They didn’t help then, and don’t look likely to do much now:

Many companies reporting their earnings this week are based in the already-struggling property, heavy industry, and finance sectors. Country Garden, once the gold standard for Chinese property developers, expects to report a loss of $7.6 billion in the first half of this year while also holding $200 billion in unpaid bills. JPMorgan estimated that if Country Garden defaults on its debts it could lead to $8 billion worth of defaults among smaller property developers.
Goldman Sachs has lowered its full-year forecast for earnings-per-share growth in China to 11% from 14%. Chief Equity Strategist Kinger Lau told the Financial Times: “Fundamentally we feel pretty confident that things will get even more challenging for the financial and property sectors without a greater policy response.”

Hey, Big Spender: There is some good news, though: China’s consumer sector looks to be heading toward calmer waters. In a Bank of America survey, the share of consumers planning to spend more over the next six months and “trade up” to more expensive brands increased in August compared with two months earlier. Consumer-related stocks rose last week with record-breaking box office numbers and solid earnings that beat expectations for athletic apparel company Anta Sports. Earlier this year, China’s National Bureau of Statistics reported that consumer spending on luxury goods like jewelry and high-priced clothing was bouncing back faster than the country’s overall economy. So while many in China aren’t looking to buy a new house, they could be in the market for a new Rolex.

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