(Bloomberg) -- Chinese firms are set to report that net income surged by an “eye-popping” rate of 55% in the first quarter thanks to the ongoing economic recovery, with cyclical firms leading gains, according to Goldman Sachs Group Inc.

Some firms within the cyclical sectors could report earnings doubling from depressed levels a year earlier, after commodity prices jumped and foreign demand rebounded, the Wall Street bank’s strategists including Kinger Lau wrote in a Thursday note. The so-called new China sectors, including technology shares, are estimated to see earnings rise by 48% year on year, they added.

“The equity cycle has transitioned to a growth phase where earnings are typically the primary driver of returns,” wrote the analysts. “This could probably be one of the most consequential reporting seasons in recent years.”

Companies representing 64% of the total market value of Chinese-listed firms will report first-quarter earnings over the next two weeks, according to the note. Investors will be watching whether companies can deliver the kind of earnings that justify current valuations, with sentiment fragile over liquidity tightening concerns and increased regulation of the tech sector. The benchmark CSI 300 Index has slumped 15% since reaching a 13-year high in February.

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Value stocks should continue to outperform growth shares as uncertainties remain regarding U.S.-China tensions, rising Treasury yields and policy normalization by Chinese authorities, said Goldman.

Goldman adds earnings of firms within energy, semiconductors, and hardware and materials may surprise investors on the upside, while brokers, real estate, insurance and consumer services companies are poised to miss.

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