HONG KONG (MarketWatch) — Chinese industrial companies’ profits jumped in October — rising more than 20% from a year earlier and nudging into positive territory for the first 10 months of the year — bolstering a bullish view on the future of Chinese corporations and the broader economy.
Large industrial enterprises, or those with annual income of at least 20 million yuan ($3.2 million), reported profit of 500.1 billion yuan for the month, a rise of 20.5% from October 2011, the National Bureau of Statistics said Tuesday.
Bank of America-Merrill Lynch analyst Ting Lu said the data added to evidence of a rebound in China’s economy, and he expected other economists “to revise up their growth forecasts soon.”
Lu said the rebound was driven in part by falling raw-material prices, but also by a softer statistical comparison base a year earlier, which added a bit more sparkle to the October data.
He said that the rebound was also supported by a pick-up in exports and a turn in the inventory cycle, with companies now seeking to rebuild stockpiles of goods after hefty drawdown.
“Robust earnings growth in October lends further support to our above-consensus GDP growth forecasts in general and margin improvement views in particular.
Going forward, we expect the street to turn more positive on short-term economic and earnings growth,” Lu said.
In the January-October period, profit for these companies totaled 4.024 trillion yuan, a rise of 0.5% from a year earlier, reversing from a 1.8% year-on-year decline in the previously reported January-September total.
The details showed profit at state-owned industrial enterprises of 1.127 trillion yuan in the in January-October, a drop of 9.2% from the same period last year.
However, private companies’ profit for the 10-month segment rose to 1.262 trillion yuan, up 17% from a year earlier.
Despite the upbeat reading from Lu and others, Chinese stocks drew little support from the news, with the Shanghai Composite Index CN:000001 -1.30% trading weaker at the open before coming under accelerated selling pressure.
By the midday trading break, the index sat at 1,998.20 — below the psychologically important 2,000-point level and down 1% from its Monday close.
marketwatch.com
Large industrial enterprises, or those with annual income of at least 20 million yuan ($3.2 million), reported profit of 500.1 billion yuan for the month, a rise of 20.5% from October 2011, the National Bureau of Statistics said Tuesday.
Bank of America-Merrill Lynch analyst Ting Lu said the data added to evidence of a rebound in China’s economy, and he expected other economists “to revise up their growth forecasts soon.”
Lu said the rebound was driven in part by falling raw-material prices, but also by a softer statistical comparison base a year earlier, which added a bit more sparkle to the October data.
He said that the rebound was also supported by a pick-up in exports and a turn in the inventory cycle, with companies now seeking to rebuild stockpiles of goods after hefty drawdown.
“Robust earnings growth in October lends further support to our above-consensus GDP growth forecasts in general and margin improvement views in particular.
Going forward, we expect the street to turn more positive on short-term economic and earnings growth,” Lu said.
In the January-October period, profit for these companies totaled 4.024 trillion yuan, a rise of 0.5% from a year earlier, reversing from a 1.8% year-on-year decline in the previously reported January-September total.
The details showed profit at state-owned industrial enterprises of 1.127 trillion yuan in the in January-October, a drop of 9.2% from the same period last year.
However, private companies’ profit for the 10-month segment rose to 1.262 trillion yuan, up 17% from a year earlier.
Despite the upbeat reading from Lu and others, Chinese stocks drew little support from the news, with the Shanghai Composite Index CN:000001 -1.30% trading weaker at the open before coming under accelerated selling pressure.
By the midday trading break, the index sat at 1,998.20 — below the psychologically important 2,000-point level and down 1% from its Monday close.
marketwatch.com
No comments:
Post a Comment