China: Sharp drop in industrial profits - TDS

Analysts at TD Securities note that China’s industrial profits dropped sharply, with January and February profits declining by 14% y/y.

Key Quotes

“This is a sharp drop compared to the 1.9% fall in December 18. The fall in profits reflects a combination of factors including worsening manufacturing sector activity, lower PPI as well as the impact of the Chinese New Year holidays.”

“Weaker profits will likely weigh on investment decisions and growth, while worsening the credit profiles of manufacturers. It may also spur the authorities into hastening infrastructure spending and targetted easing.”