CHINA’S biggest listed companies Tencent and Alibaba are expected to report a fall in profits and slowing revenue growth in the July-September quarter, affected by the year-long regulatory actions that have swept the country’s tech industry.

“We believe the financial impact of regulatory headwinds in China will be reflected in [third quarter] earnings and [fourth quarter] guidance,” KGI Asia analysts said in a note last month.

Tencent Holdings Ltd., the country’s largest firm by market value and its first big tech name to report earnings Thursday, is expected to post a 12 percent fall in quarterly profit, its first drop in two years, according to Refinitiv data.

The Shenzhen-based gaming giant’s revenue is expected to rise 16.4 percent, the slowest pace since the first quarter of 2019, after the government imposed new limits on the amount of time minors can spend playing video games. China’s gaming regulator also has not approved any new games since August.

During the quarter, China also barred Tencent from signing exclusive music deals, citing anti-competitive reasons.

E-commerce powerhouse Alibaba, which became China’s first regulatory target late last year, is expected to post a 12 percent decline in profit in the quarter. Revenue will likely rise 32 percent, the slowest in a year.

Two quarters ago, Alibaba posted its first quarterly operating loss since going public in 2014.

Its smaller rival JD.com Inc. is expected to post a 71 percent slump in profit and the slowest revenue growth in six quarters.

Slowing retail sales in China due to COVID-19 lockdowns and recent power shortages will hurt Alibaba and smaller rivals, KGI Asia analysts said.

Big e-commerce companies in China are also facing rising competition from short video apps Kuaishou and ByteDance’s Douyin, which have growing e-commerce businesses.

(SD-Agencies)