Evans Chamberlain Asset Management - China Industrial Profit Growth Dips

Industrial profit growth in China at its weakest since March reports Evans Chamberlain Asset Management.

Evans Chamberlain Asset Management analysts say profit growth for China’s industrial companies cooled for the third consecutive month last month, prompting speculation that demand in the world’s second-largest economy is decreasing as trade tensions with the United States escalated.

Evans Chamberlain Asset Management analysts say reduced consumption, growing credit defaults, elevated financing costs and growing tensions between China and the US are expected to squeeze China’s earnings over the next several months even further.

According to data recently released by the National Bureau of Statistics, July industrial profit growth grew from 16.2 percent from a year earlier to 515.12 billion yuan, cooling from the 20 percent growth in June and marking the slowest pace of growth since March this year.

Evans Chamberlain Asset Management analysts say that China is upping its spending on infrastructure in an effort to bolster the economy and boost investment. It is also offering assistance to struggling businesses with high overheads that are unable to easily access financing.

But Evans Chamberlain Asset Management analysts say that it could take some time for the impact of government stimulus and policy easing to be noticeable and that they expect the economy to worsen before it begins to improve.

From January to July this year, industrial companies reported profits of 3.9 trillion yuan. This was an increase of 17.1 from the same time last year.

Evans Chamberlain Asset Management analysts say that oil companies and steel mills have made up approximately 60 percent of profits for this year. Smaller companies are up against difficult business conditions that are causing shrinking profit margins.

Source: Evans Chamberlain Asset Management


Categories: Industry News

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