Alarms are echoing in China as Beijing continues its relentless crackdown on the shadow banking system.
Hundreds Chinese companies have issued profit warnings, telling investors that their year-round profits will be below expectations, according to Bloomberg. No less than 440 zombie companies have revealed the bad news Wednesday, always a day before the deadline for such disclosures. The companies cited the country's economic slowdown (which also catalyzes Chinese-owned US real estate sales), as well as recent accounting changes that followed a US $ 2,300 billion stock market sell-off in the year. last.
The change is magnificent: Out of more than 2400 listed companies on the continent, 373 said they would record a loss – and most worryingly, 86 percent of these companies were profitable in 2017.
Other bad news may be on the go: Thursday is the official deadline for companies that want or not expect "substantial changes" in their financial results, so expect to more cuts in orientation.
Meanwhile, fears about the Chinese economy and corporate profitability in record bankruptcy, now that the government no longer supports all businesses, have become a collective concern of market players.
Lv Changshun, a fund manager of Beijing investment management company Dajun Zhimeng, told Bloomberg: "Private companies are particularly vulnerable to economic slowdown. The deleveraging campaign and the deteriorating health of their businesses are normal for any economy that is changing course and slowing down. "
Among those who publish these recommendations is Changan, Ford's largest partner in China, who warned that The 2018 profit was likely to fall by 93%. China Life, a major insurer by market share in China, said its net profit could be 70% lower.
Beijing HualuBaina Film & TV Co., Gosun Holding Co., cloud storage operator, and First Tractor Co., also announced that they would post losses in billions of yuan for the year after profits from 2017. Anhui Shengyun Environment Protection Group and Anhui Ankai Automobile Co. revealed that their net losses would be twice as large as in 2017. The devices of the Guangdong Homa Appliances Co. were suspended during the trading session after Be directed to a loss in 2018 after declaring a few months ago that they would be profitable.
And since the warnings about profits in China – where companies are notoriously denature the financial status of their finances (remember, a week ago, a Chinese company that had declared bankruptcy, had announced that it "had" 15 times more cash than debt, but it could not meet its debt obligations) tend to be an early warning in case of liquidity problems, or worse, insolvency, the market bondholder also suffered aftershocks. The bonds of Chinese furniture manufacturer Yihua Lifestyle Technology Co. fell to less than half of par. Air conditioning producer Zhejiang Dun'an Artificial Environment Co. is subject to negative surveillance. Chinese Credit Agency China Lianhe Credit Rating Co.
Qi He, a fund manager at Huatai Pinebridge Fund Management, suggested one of the reasons why Chinese companies are suddenly "cleansed," saying that "companies whose stocks are already very badly hurt have nothing to lose by lowering their profit forecasts or suffering significant losses in value ". 2018. Many of these companies are "taking a bath" to start new in 2019. "
Yu Dingheng, fund manager at Shenzhen Flying Tiger Investment & Management Ltd., said: "We are witnessing only the beginning of the deterioration of corporate earnings as the economy slows down again. Things will continue to get worse. deteriorate for companies that see their business slow down and even if the macro-economy is recovering, these companies will never be what they were. "
As for the recovery of the Chinese economy, it remains a wish for the moment: after the largest injection of liquidity ever recorded by China (more than 1,100 billion yuan two weeks ago) and after weak Chinese macroeconomic data in recent months, which plunged into China's trade data. ..
… all eyes were on the avalanche of Chinese economic data from last week. The Q3 rebound in macroeconomic data was extremely weak. We reported last week that China's GDP growth in 2018 had slowed considerably. China's annual GDP growth in 2018 was + 6.6% – the lowest annual GDP growth since 1990.
That's why Michael Every, of Rabobank, said earlier today: "It is better that Chinese stimulus measures come soon …"