China's Olympics

Olympics can be famously bad for host cities' financial health: Quebec took 30 years to pay for the 1976 games in Montreal. Beijing, where the 2008 Olympics kick off in nine days' time, is set to go one better and prove sporting events can play havoc with corporate earnings too. Advance hotel bookings suggest disappointing tourist numbers. That is bad news for China's ailing airlines and airports. Beijing Capital International Airport, which serves the host city, on Wednesday announced a drop in first half profits. Airline passenger numbers have been falling on a monthly basis since May. Other industries face an enforced holiday while athletes take to the tracks in order to preserve power, limit pollution and avoid disruptions. Telecoms operators have been banned from carrying out network construction, upgrades or new connections for two months. That is tough for an industry adding around 7m new subscribers a month.

Consumers are hardly helping the cause, either. Couch potatoes have hardly been making sure they watch the games on new TVs; Sony, the Japanese consumer electronics group, this week admitted to lukewarm sales in China. Lenovo, the PC maker, which sits on an impressive roster of Olympics sponsors, is receiving scant bang for its buck. Recently announced fourth quarter earnings fell short of analysts' forecasts and shares are down by a quarter so far this year, underperforming Hong Kong's benchmark Hang Seng Index.

London, host of the 2012 Olympics, can rest assured that corporate pain is not inevitable. Much of China's problems are of its own making. Sluggish tourist arrivals are inevitable when you clamp down on visas. Preserving power is necessary only if plants, faced with soaring input prices and capped electricity tariffs, shut down rather than incur losses. With earnings downgrades on the cards, Beijing's coming-out party looks like being little fun for shareholders.

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