Declining Profits Of Industrial Enterprises And New Challenges Facing The Market

In November, the total profit of industrial enterprises in China decreased by 4.2% compared with the same period last year, a drop of 2.1 percentage points higher than that in October, and the decline in profits of industrial enterprises has intensified, indicating that China's economy is facing a threat of deflation.

Yu Pingkang, a macro analyst at Huatai Securities, believes that the securities market and the real estate market will benefit significantly from the easing of monetary policy, but the real economy will further weaken and deflation will not improve in the short term.

While regulators are accelerating the pfer of money, we should continue to adopt a moderately relaxed policy.

According to Statistics Bureau, the total profit of industrial enterprises in China in November was 676 billion 120 million yuan, down 4.2% from the same period last year, a drop of 2.1 percentage points larger than that in October.

In the 1-11 month of this year, the total profit of Industrial Enterprises above designated size increased by 5.3% over the same period last year, and the growth rate dropped 1.4 percentage points over 1-10 months.

Haitong Jiang Chao believes that in November, the growth rate of industrial enterprises profit fell to -4.2% in the month, indicating that the operating conditions of industrial enterprises were poor, indicating that the economic downside risks in the long term did not disappear, and there was still room for monetary easing.

Since December, although real estate sales have been improving, it still takes time to improve the pmission to the upper and middle reaches, while the growth rate of electricity consumption has always been hovering around -10%, indicating that industrial growth is still in the doldrums in December, and the risk of economic downfall has not yet disappeared, and there is still room for easing.

It is believed that the continuous decline of profits of industrial enterprises shows the deflation of China's economy.

Among them, the nightmare of upstream and downstream enterprises continues, and early cycle industry profits continue to slump.

Although the demand for property is expected to improve, the improvement of the supply side of new start-up investment needs to be confirmed.

If investment in new construction continues to slump, the improvement of real estate demand will only go to the inventory effect, and it is difficult to pmit to the real estate industry chain, and the profits in the upper and middle reaches will continue to decline.

Profit growth continued to decline: economic downturn and deflation continued

In November, industrial enterprises realized a profit of 676 billion 120 million yuan, down 4.2% from the same period last year, a decrease of 2.1% compared with October, and a 5.3% increase in profit in the 1-11 months, a 2.1% increase in the 1-10 month.

Since the second half of 14 years, the continuous decline of profit growth has been attributed to the drop in volume and price of industrial production.

Continuation of nightmare in the upper and middle reaches: early cycle industry profits continue to slump

Continuation of the nightmare in the upper and middle reaches: the upper and middle reaches continued to increase sharply, and coal (-44.4%), oil (-13.2%) and iron and steel smelting (4.7%) continued to deteriorate.

The emerging manufacturing industry in the downstream is worthy of expectation. Electrical (15.1%), computer (20.7%) and instrumentation (9.1%) are basically stable.

The divergence between upstream and downstream fundamentals and capital market related stock prices is aggravating, especially under deflation. The fall in commodity prices has an impact on the prosperity of the upper and middle reaches.

The nightmare of volume and price drop experienced by the upper and middle reaches is continuing, even though the impact of international oil price rebound on deflation improvement is still very limited.

On the other hand, the performance of the downstream emerging industries shows that while the downward pressure on short-term economic growth is increasing, long-term industrial restructuring is underway.

930 since the new deal, 10-12 real estate sales in March have been gradually warming up, prices have risen slightly, interest rate cuts and other policies have improved the expectations of the housing demand side. Real estate sales data have been the best in nearly a year, and the improvement of the supply side of new start-up investment has yet to be confirmed.

If investment in new construction continues to slump, the improvement of real estate demand will only go to the inventory effect, and it is difficult to pmit to the real estate industry chain, and the profits in the upper and middle reaches will continue to decline.

On the other hand, according to the law of real estate investment lagging behind sales for 3-6 months, and the recent real estate developers in the second tier cities to increase the intensity of housing construction, real estate investment is expected to stabilize around the beginning of the two quarter of next year.

Therefore, real estate investment is still the largest source of short-term economic fluctuations.

The economy is basically looking ahead - entities are weak and deflation intensifies.

Benefiting from the easing of monetary policy, the stock market and the real estate market benefited significantly, but the real economy weakened further. In the 12 months, PMI fell by 50.

Deflation will not improve in the short term, and import deflation caused by the collapse of crude oil will ease but not deflate.

Since asymmetric interest rate cuts in November 22nd, policy divergence has increased in the short term.

On the one hand, deflation is strong, there is no significant improvement in the real economy, and there is continuing easing demand. At the same time, due to the loose expectation of overdraft in the bond market, the interest rate rebounded after the interest rate cut, and the interest rate rises at the end of the year, and there is also a loose demand. On the other hand, after the interest rate cut, asset price bubbles rise, the risk of policy making or the lax risk of the policy easing too fast. At the same time, the Fed's interest rate is approaching, and the RMB depreciation is obvious.

Yu Pingkang believes that when the regulator accelerates the pfer of money, we should continue to moderate the easing policy.