Tags: China | weakness | earnings | economy

WSJ's Lahart: China's Economic Weakness Crimps US Company Earnings

By    |   Friday, 24 July 2015 06:04 AM

Many economists don't believe the 7-percent economic growth figure that China produced for the second quarter, arguing that Chinese officials fudged the numbers to exactly match their target for the year.

U.S. companies that sell in China have good reason to agree with those economists. These corporations are suffering from the Asian titan's economic weakness, notes Wall Street Journal columnist Justin Lahart.

This week IBM reported that its China sales plunged 25 percent in the second quarter, Whirlpool announced a 3 percent fall and Illinois Tool Works reported a 2 percent decline.

It's no wonder then that U.S. exports to China slumped 6.1 percent in the first five months of the year from the same period last year. And, "that weakness appears to have extended into June, with the ports of Long Beach and Los Angeles reporting a 9.7 percent drop in loaded outgoing containers versus a year earlier," Lahart explains.

Elsewhere on the China front, the recent plunge of Chinese stocks — the Shanghai Composite index dropped 32 percent from June 12 to July 8 — put a fright into U.S. investors. Many were concerned about contagion — that the slide would carry over to U.S. stocks.

But not to worry, says Liz Ann Sonders chief investment strategist with Charles Schwab. "The recent rout in the Chinese stock market is yet another brick in the (Great) Wall of Worry the stock market generally likes to climb," she writes in Barron's.

So what is the connection between U.S. and Chinese stocks? "The correlation is low to non-existent," Sonders says.

"Chinese equities are one of the least correlated markets in the world. When looking at daily percentage point change, there is no relationship between onshore A-shares traded on the Shanghai Composite and US equities, according to Bespoke Investment Group."

China also remains a small market overall for U.S. companies, Sonders notes.

© 2019 Newsmax. All rights reserved.

   
1Like our page
2Share
StreetTalk
Many economists don't believe the 7-percent economic growth figure that China produced for the second quarter, arguing that Chinese officials fudged the numbers to exactly match their target for the year.
China, weakness, earnings, economy
309
2015-04-24
Friday, 24 July 2015 06:04 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved