Industrial profits slumped by 38.3% year-on-year to Rmb410.7bn ($58bn) in the first two months of the year, the steepest decline in a decade, according to data published by the National Bureau of Statistics on Friday morning.
Certain industries have been hit particularly hard by the Covid-19 pandemic. Electronics, autos and electrical machinery industries saw their profits dropping by 87%, 79.6% and 68.2% respectively in the first two months.
“Looking forward, profits will likely stay weak until industrial activities fully rebound, and the high base in March 2019 may also put downward pressure on year-over-year profit growth in March,” Maggie Wei, a China economist at Goldman Sachs, wrote in a Friday note.
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Trump and Chinese president Xi Jinping held a phone call on Friday morning Hong Kong time to discuss the Covid-19 pandemic.
“Just finished a very good conversation with President Xi of China,” Trump tweeted after the call. “Discussed in great detail the CoronaVirus that is ravaging large parts of our Planet. China has been through much and has developed a strong understanding of the Virus. We are working closely together. Much respect!”
The number of confirmed infections in the US rose to 85,991 by Friday noon Hong Kong time, according to John Hopkins University’s Covid-19 tracker, surpassing the 81,782 cases in China.
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Charles Li, chief executive of the HKEX, said in a Tuesday announcement that the Hong Kong stock market will keep operating amid the Covid-19 outbreak.
“Watching the turbulence is uncomfortable,” Li said. “I, too, find the sell-off difficult to watch, but closing our markets, or enacting temporary barriers, is not the solution. Draconian measures often only mask or delay the inevitable response of markets to the prevailing conditions and amplify the anxiety, panic, and fear that we feel.”
In the first two months of this year, 24 companies completed their IPOs on the Hong Kong Stock Exchange, raising a total of $61.9bn, with volumes up 170% year-on-year.
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Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said in a statement following a G20 ministerial call on the coronavirus emergency that investors have removed $83bn from emerging markets since the beginning of the pandemic, the largest capital outflow ever recorded.
Georgieva added that the outlook for global growth is negative for 2020 and the IMF is expecting a recession “at least as bad as during the global financial crisis or worse”.
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China’s Xi urged G20 member nations to cut tariffs and facilitate trade to stop the world from entering a Covid-19-triggered recession. He said this in the Thursday summit of G20 world leaders on the ongoing health crisis.
“The epidemic has hit global production and demand in every way, and countries need to leverage and coordinate their macro policies and prevent the world economy from falling into recession,” Xi said.
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The People’s Bank of China sold Rmb10bn of six month central bank bills through the Central Moneymarkets Unit of the Hong Kong Monetary Authority on Thursday. The note was priced at 2.19% and more than 3.5 times subscribed. Investors included commercial banks, central banks and funds from North America, Europe and Asia, according to a notice issued by the PBoC on Thursday.
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The US and China have made continuous progress in implementing the agriculture-related provisions of the phase one trade deal, the US Department of Agriculture and the US Trade Representative said in a joint statement on Tuesday.