COL sees resilient H2 corporate earnings

Leading online stock brokerage COL Financial is bullish on the earnings prospects of listed companies for the rest of the year after second-quarter results proved more resilient than expected despite inflation and higher raw material costs.

April Lynn Tan, chief equity strategist at COL, said corporate earnings could sustain their momentum in the second half as consumer demand remained steady even amid price pressures.

“We’re quite hopeful that it will continue in the balance of the year,” Tan said.

One of the major surprises in the second quarter, she said, was that the impact of the US-Iran war on businesses was not as severe as initially feared.

Raw material prices climbed during the period, while elevated inflation threatened to weaken household spending.

But consumers continued to spend, albeit with a greater focus on essentials.

Companies selling food and cheaper products were, therefore, relatively resilient, Tan said.

“Demand didn’t collapse. It wasn’t as affected as it would have been if prices went up much higher,” she added.

Another factor was the movement of oil prices. After rising sharply in March and April, oil did not climb beyond $100 per barrel, helping limit the increase in raw material costs.

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Companies were also able to implement price increases to cushion the impact of higher costs on their operations.

These factors helped corporate earnings perform better than COL had anticipated during the second quarter, according to Tan.

For the second half, the brokerage is banking on relatively stable oil and commodity prices to support both corporate profitability and consumer demand.

“We’re quite hopeful that the price of oil and commodity prices will stay relatively stable in the second half of the year, allowing the companies to continue earning good profits and allowing demand to remain stable,” Tan said.