The on-going non-stop weakness in Chinese equities have been a recurring theme here.

We have noted that, first of all, there is nothing particularly out of ordinary regarding the poor performances of equities if one compared Chinese equities with other stock market bubbles.

We have also noted that corporate profits have been quite weak. Profit warnings filed with Hong Kong stock exchange, for instance, reached record high for the first half earnings season.

The chart below from Goldman Sachs illustrates the point perfectly. It shows that for A-share companies (CSI 300) which have reported their second quarter earnings, earnings growth on a year-on-year basis for second quarter of 2012 is now hugely negative if we exclude the financials.