Mainland stock markets may have headed higher after the Lunar New Year break, but the chance of a spring rebound might not be easy. That is because most listed companies are likely to surprise the market on the downside rather than upside after the Sino-American trade war hurt corporate earnings last year.

In Hong Kong, listed companies that issued profit warnings, meaning a profit decline of more than 50%, were up 70% in the first five weeks of this year, but companies that issued positive profit alerts, meaning a profit increase of at least 50%, were down 30% in the same period.

The figures were based on a sample of 189 companies, with the number of companies with negative alerts almost equal to those with positive alerts, according to Apple Daily. In another measurement, the Oriental Daily figured listed companies issuing negative alerts totaled 99, of which 51 were companies that changed to losses only last year.

Close to 30 companies were in the red in February, despite a week of Chinese New Year holidays, the paper said. More companies with negative news would follow. The brokerage, insurance, retail and food sectors were among the worst hit sectors, according to analysts.

For example, China Life announced its profit would drop as much as 70%, or by 22.5 billion yuan (US$3.31 billion), last year. Online insurance company Zhongan said its loss would increase no less than 75% to above 1.7 billion yuan.

Plagued by a poor A-share market, more than half of the mainland-listed brokerage told investors they had profit alerts last year. Leading brokerage Citic Securities said its preliminary profit would drop 18% last year to about 9 billion yuan.

But the underdog might become a flying bird this quarter, given Hong Kong and China stock markets had a world-beating rebound in January with an 8% increase in their benchmark equity index. Centron Telecom led the pack of telecom equipment makers such as ZTE with a 2.8 billion yuan loss last year.

Not all companies were doomed last year, however. The iron, petrochemical and cement sectors, for example, had a better year in 2018. China Bluechemical, an associated company of mainland oil giant CNOOC, said it expected profits to surge 25 times to 1.3 billion yuan. Chongqing Iron & Steel also expected a close to 400 times increase last year.

A clearer picture of the financial health of Chinese corporates will come after thousands of state-owned and private enterprises report their results in March and April last year.