Whatās Going On Here?Data out on Sunday showed the China industrial sectorās still on the up and up, which mightāve been music to global investorsā ears. What Does This Mean?The monthly profit earned by Chinese industrial companies was 19% higher in August than the same time last year. That brings 2020ās total profit decline to 4%, up from 8% in July (tweet this). And with Chinaās economy ā which remains the only major one expected to grow this year ā still expanding, thereās not much reason to think that momentum wonāt show in Septemberās data too.
Thatās probably helped relax European investors, who were fretting only last week that rising coronavirus cases and new lockdowns would damage company earnings all over again. Seeing as around 35% of the eurozone economy depends on China, its resurgence bodes well for the 19-country bloc. Why Should I Care?The bigger picture: Crash, ban, wallop.
Of course, Chinaās economic relationship with the US is still fraught with controversy. That much is clear from Americaās planned ban of social media app TikTok ā which was overturned at the eleventh hour on Sunday ā and its confirmed ban of telecoms giant Huawei. The latter in particular has rippled throughout Asia: Kioxia Holdings ā the $16 billion Japanese microchip maker part-owned by Toshiba ā just shelved its initial public offering plans, worried that weak demand from major customer Huawei will dent its earnings. That pushed Toshibaās once-hopeful investors to sell the stock, which fell on Monday.
For markets: U OK, SMIC?
Shares of Chinaās biggest microchip maker, SMIC, fell 7% on Monday after it was drawn into trade tussles late last week. The US ā yep, you guessed it ā banned American companies from selling to SMIC without a license because itās worried the firmās products will be used for things they shouldnāt. And seeing as those companies are SMICās biggest suppliers, the move risks leaving the firm unable to make its products and, more importantly, sell them. | 