I could have titled this “China’s Economy Slows – Tom Friedman of the New York Times hardest hit” – but Liz “Fauxcohontas” Warren likes ’em, too. Wonder why that is? Do they share the same ideology as the ChiComs?
Tut, tut, there, there, you say…I’m just too extreme, aren’t I? [If that didn’t set your sarcasm meter off, it should have.]
Forbes reports something that we have foretold here on these pages:
Chinese companies are warning they will be reporting either losses or declining profits for the first half. Corporate results are forcing stock markets down and pointing to a contraction in the country’s economy.
China Rongsheng Heavy Industries, China’s largest private shipbuilder, lost 19% of its value when it issued a profit warning at the end of last month. Yards in the country are in a terrible state—the industry’s orders for new vessels in May were half of what they were a year earlier—yet Rongsheng’s poor prospects had largely been discounted. The company’s shares tumbled not only because it hadn’t announced any shipbuilding orders this year but also because the U.S. Securities and Exchange Commission implicated Zhang Zhirong, its chairman and founder, in an insider trading scheme relating to the acquisition of Canada’s Nexen by CNOOC, a unit of one of China’s state oil giants.
We can perhaps dismiss Rongsheng as an aberration, but poor results at other companies are indicative of the state of the country’s increasingly troubled economy. Take China Cosco, for instance. The Hong Kong-listed subsidiary of China’s largest shipping company warned that its loss in the first six months of this year would widen to at least 4.14 billion yuan ($648.8 million). In the same period last year, the company was 2.76 billion yuan in the red. China Cosco posted a loss of 2.69 billion yuan in Q1.
Wonder how much of an appetite they are going to have for junk rated Obamabonds now?