Daily News-20190930

 |  Xinhua / ChinaDaily

Today's point


Corporate earnings show some resilience despite macro challenges


China's achievements in tech innovation attract attention in US


Chinese delegation to visit U.S. for 13th round of high-level economic, trade consultations


SAIC begins production at car plant in southeast China



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1. Corporate earnings show some resilience despite macro challenges

A clerk counts cash at a bank in Huaibei, Anhui province. [Photo provided to China Daily]

China's economy is slowing and this can be seen at the company level as well. But despite the downbeat macro sentiment and further concerns over the trade spat with the United States, some bright spots in recent company earnings reports suggest that discerning investors can still cherry-pick interesting opportunities.

China's slowing growth is weighing on the prospects for its companies, but some sectors are proving more resilient than others.

Profits earned by China's largest industrial firms dropped by 1.7 percent from a year earlier in the first seven months of this year, according to official data, but dig a little deeper and the picture is more nuanced.

The profits of domestically-focused private firms in China are holding up better than expected against macro headwinds, rising 7 percent as of July. That compares with a drop of 8.1 percent in profits at State-owned industrial firms.

Some of the better performance of private companies are due to cyclical improvement, but structural changes in the Chinese economy are also adding resilience to certain sectors.

The stark disparity in performance across stock markets on the mainland and in Hong Kong and Taipei this year highlights their compositional differences and shows just how important it is to get the right tactical allocation within the region's markets and sectors. Onshore mainland equities have far outperformed Hong Kong and Taiwan stocks. All are exposed to macro risk, but the returns are mostly being driven by the growth prospects for individual companies.

By now most companies have reported second-quarter or interim results, and analysts have been revising 2019 earnings forecasts downwards as a result. But some sectors have held up better than others.

The consumer sectors have seen the best upward revisions to earnings, and are also among the top performing in the market, showing investors have been rewarding the improvement.

(source: China Daily)


2. China's achievements in tech innovation attract attention in US

Consumers browse jewelry at a diamond company's booth during a diamond fair in Beijing. CHINA DAILY

Chinese millennial consumers — people born between 1982 and 2000 — are taking a shine to diamond-studded jewelry.

The notion of eternal love endowed with diamond rings is being gradually recognized by young Chinese, and more international luxury jewelry retailers are banking on China for their future growth, market insiders said.

Diamond-studded jewelry is being increasingly used to commemorate wedding anniversaries in China. The previous trend was to buy pure-gold jewelry.

The market share of gold ornaments had dropped to 18.4 percent last year from 28.1 percent in 2011, offering growth potential for diamond trade, according to market research provider LeadLeo Research Institute.

"Diamond jewelry is expensive and people buy it less frequently. They usually purchase after careful consideration. So, only renowned brands and top-quality diamonds with beautiful designs are more sought after by consumers," said Li Zheng, research manager at Lead-Leo.

"Young Chinese consumers have become the backbone of diamond jewelry trade, and social media is an important channel for them to get related information, so it's critical for diamond brands to raise their popularity and reputation through social media platforms," he said.

Tiffany & Co, a New York-based luxury jewelry retailer with more than 320 stores globally, said Asia is a vital market that has driven the growth of the company in recent years. It can help to offset the declining sales in North America, where the United States still remains its largest market.

In October, the brand will launch more men's jewelry products to increase value-added products and tap wider consumer groups, in addition to launching more diamond jewelry styles, its fastest-growth category.

(source: China Daily)


3. Chinese delegation to visit U.S. for 13th round of high-level economic, trade consultations 

BEIJING, Sept. 29 (Xinhua) -- Chinese Vice Premier Liu He, a member of the Political Bureau of the Communist Party of China Central Committee and chief of the Chinese side of the China-U.S. comprehensive economic dialogue, will lead the Chinese delegation to visit Washington D.C. for the 13th round of the China-U.S. high-level economic and trade consultations in the week following China's National Day holiday, an official said Sunday.

China and the United States previously held vice ministerial-level trade talks in Washington and conducted constructive discussions on economic and trade issues of common concern, said Chinese vice commerce minister Wang Shouwen, who is also deputy China International Trade Representative, at a press conference.

The two sides also exchanged views on the specific arrangement for the 13th round of China-U.S. high-level economic and trade consultations.

China's standpoint on the consultations remains consistent and clear, Wang said, adding that China has stressed its principles repeatedly.

The two sides should seek solutions through equal dialogues on the basis of mutual respect, equality and mutual benefit, which is in line with the interests of both countries and peoples, as well as the world and people of the world, Wang said.

(source: Xinhua)


4. SAIC begins production at car plant in southeast China

FUZHOU, Sept. 30 (Xinhua) -- Chinese carmaker SAIC Motor on Saturday started production at its new vehicle assembly plant in southeast China's Fujian Province.

MG eHS, a new energy vehicle model of MG Motor now owned by the Shanghai-based carmaker, rolled off the production line at the manufacturing base in the city of Ningde.

MG eHS is the first model for the smart Ningde factory and will later enter the European market, according to the SAIC.

The base mainly produces the ROEWE and MG passenger cars. Its first-phase facility, with an investment of 5 billion yuan (about 702 million U.S. dollars), has an annual production capacity of 300,000 cars.

The factory, which also has a planned same-capacity second phase, is expected to generate an output value of nearly 100 billion yuan after the whole facility begins operation in the future.

Up to now, the first batch of 30 suppliers have been put into operation, creating nearly 10,000 jobs in Ningde, said Chen Hong, chairman of SAIC.

The base will help promote the development of the whole industrial chain of new-energy vehicles (NEVs) and help Fujian become an important NEV production base in southeast China's coastal area, said Huang Maoxing, dean of Fujian Normal University's Economics School.

(source: Xinhua)


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