There should be a bottom line for forecast variance

Editor's note: Recently, some domestic listed companies significantly lowered their performance forecasts, sending shockwaves through the stock market and causing investors to panic. Xiong Jinqiu, a finance commentator, told Beijing News. Excerpts:

On April 18, Western Mining Co., Ltd, a listed company in Northwest China engaged in the mining, smelting and trading of metal minerals, released a revised performance forecast announcement, saying its net profit in 2018 dropped by 2.54 billion yuan ($397 million), compared with its previously-forecast net profit decrease of 160 million yuan, mainly due to a 2.52 billion yuan long-term equity investment loss.

The Shanghai Stock Exchange has a clear regulation on the disclosure of a listed company's earnings forecast and corrections, stipulating that a listed company must make public its performance forecast should its annual net profit increase or decrease by more than 50 percent, and under other specific scenarios. And if there is much difference between the forecast performance and actual performance, a prompt performance correction announcement should be published.