STOCK traders in China are so worried about further liquidity tightening that in one case even a more than 10-fold surge in preliminary earnings for a company has failed to elicit a positive market response.

A 1200 percent jump in Tesla Inc. supplier Sichuan Yahua Industrial Group Co.’s first-quarter earnings guidance was followed by a slump of as much as 3.61 percent in its shares Tuesday. In the previous session, Suofeiya Home Collection Co. plunged the 10 percent daily limit after the furniture maker forecast a turnaround to profit. Wanhua Chemical Group Co. also saw its stock lose 6.4 percent amid a broad selloff in materials shares, even after the company said earnings likely more than quadruped in the first quarter.

“The market has reacted negatively to positive earnings because with sentiment as weak as it is right now, funds are not willing to wait around for more good news to come,”said Yan Kaiwen, an analyst at China Fortune Securities Co. “They are opting to cash out sooner while the fundamentals still look good, rather than later.”

Analysts widely expected companies to report a strong rebound in earnings from last year’s low base. The broad market rally from pandemic lows to a 13-year high in February meant that many of these positives were already priced in.

The solid scorecards are now providing traders with a chance to sell, as sentiment remains weak since the CSI 300 Index entered a correction last month on concerns over rich valuations and tightening of liquidity by authorities.

Measures to reduce cash circulating in the economy have started to show their effect, with the increase in aggregate social financing, the broadest measure of credit, missing expectations last month.

The figures were released after the central bank asked banks in late March to curtail loan growth for the rest of this year following a surge in the first two months that stoked bubble risks. (SD-Agencies)