Profits for industrial firms in China contracted at their fastest pace in eight months in October, data out on Wednesday showed. The decline came from continuing declines in producer prices and exports and highlighted the continued slowdown of China’s economy. Industrial profits in China in October were at 427.56 yuan ($60.74 billion), a 9.9 percent decline year on year. By way of comparison, China’s industrial profits declined 5.3 percent in September.
The dismal industrial profit report came after the People’s Bank of China warned earlier this week of increasing risks for the economy to the downside, despite the central bank’s current stimulus efforts. Additional stimulus measures are expected to be forthcoming as profit growth will likely stay negative in the coming months.
In other news out of China, the country raised $6 billion in its biggest ever international sovereign bond sale on Tuesday, nearly doubling its original target, as China took advantage of the current low borrowing costs. The market rally this year has sent global bond yields significantly lower, making them a much more attractive option than they were a year ago. The sale was only the third dollar bond sale in the past two years. All bonds offered purchasers between two and three percent yields.
Market Movements
On the currency markets, the dollar was stronger against most of its major trading partners. The greenback advanced 0.08 percent against the yen as of 2:13 p.m. HK/SIN, to 109.12, just off a two-week high hit on Tuesday. The pound sunk against the dollar, falling 0.17 percent to $1.2843, while the euro was down 0.10 percent against the dollar, to $1.1007. The boost to the dollar came on hopes that the trade talks between the U.S. and China would advance. On Tuesday night U.S. President Trump commented that Washington is in the “final throes” of its efforts to mitigate the trade dispute between the two economic powerhouses.
Global stock markets saw mixed trading in Asia, with China’s two benchmarks heading lower, but most other indexes heading higher on Wednesday after a positive close for all three benchmarks on Wall Street on Tuesday. Japan’s Nikkei 225 was up 0.37 percent, South Korea’s Kospi was up 0.33 percent, and Australia’s ASX 200 gained 0.93 percent after the Reserve Bank of Australia’s Governor, Philip Lowe, said that he did not anticipate using QE in the near future, but that he wouldn’t completely eliminate the possibility of implementing such policies if rates fall to 0.25 percent.