Iris Pang, economist at ING, notes that China’s industrial profits shrank by 14% year-on-year, year-to-date in February.
Key Quotes
“According to the Ministry of Finance, state-owned enterprises overall grew their profits by 10.0%YoY YTD in February. Central government-owned SOEs performed even better, with profit growth of 14.3%, while local government-owned SOEs suffered a loss of 0.5%YoY YTD. Most of the profit came from the oil and ferrous metals sector.”
“Still, the Statistic Bureau reported that SOEs in the industrial sector saw profits fall 24.2%YoY YTD.”
“Industrial profits at privately-owned enterprises (POEs) fell 5.8%YoY YTD, which suggests that targeted monetary easing by the central bank (PBoC) is having some impact.”
“We expect that falling profits in the industrial sector as a whole should improve, as fiscal stimulus has started to kick in and monetary easing helps small private firms. More downstream sectors should benefit from the stimulus later in the year, and we expect that an increasing number of sectors will show positive profit growth in 2Q19.”
Share
