SMM11, 27 March-the last macro data released in China in the morning showed that the annual profit rate of industrial enterprises above the size of China was 3.6%, compared with 4.1%, the lowest in seven months. In line with the overall weakening trend of macroeconomic data in October.
At the same time, it was noted that the profit of the ferrous metal mining industry fell 15.7% from January to October compared with the same period last year, ranking bottom of all industries, while the non-ferrous metal smelting and Calendering industry fell 20.1% year-on-year, also from the bottom.
From January to October, the profits of industrial enterprises above scale increased by 13.6% compared with the same period last year, compared with the previous value of 14.7%, down 1.1% from the previous month. Li Chao, macro analyst at Huatai, believes that industrial data will continue to fall slowly, and the profit growth rate of industrial enterprises is expected to slow to about 13 per cent by the end of this year. Next year, demand will weaken + supply-side policy will weaken, prices will gradually lose support, and profits will be dragged down. For the profit inflection point, he believes that in the GDP growth rate and PPI trend are gradually weakening, next year it is difficult to see the profit inflection point, the end of next year will have the opportunity to bottom out profit growth rate. From January to October, the mining industry, manufacturing industry, electricity, heat and water production and supply industries all fell in varying degrees.
The recent sharp fall in rebar prices reflects a slowdown in infrastructure demand, which is expected to rebound only slightly this year, dragging down GDP growth in the fourth quarter at a low rate of 6.5 per cent. Under the downward pressure on fundamentals and the continued easing of monetary policy, interest rate bonds (treasury bonds, local government bonds, etc.) are expected to perform prominently. In the stock market, interest rates are optimistic about the growth leader, and the growth rate of investment in high-end manufacturing this year is still significantly higher than that of the manufacturing sector as a whole. For example, the state may continue to increase policy support in aerospace, military, semiconductor, 5G and other high-end manufacturing industries.
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