27 Apr 2016
China: Industrial profits growth accelerates in March - ING
Tim Condon, Chief Economist at ING, suggests that in China relaxing enterprise cash constraints slows the creation of new NPLs and kicks the can of recognizing existing NPLs, which is the hard-landing threat, down the road.
Key Quotes
“Industrial enterprise profits grew by 7.4% YoY YTD in March, up from 4.8% in February. The 10.3% YoY growth in March alone was the fastest since July 2014. Industrial sales growth accelerated to 2.4% YoY YTD in March, up from 1.0% in February while growth in account receivables remained elevated at 8.3% YoY YTD. Strong profits and sales growth in March are consistent with strong industrial production growth.
The path to a hard landing starts with financial distress in highly-leveraged corporates and runs through a banking crisis. Relaxing enterprise cash constraints slows the creation of new NPLs and kicks the can of recognizing existing NPLs, which is the hard-landing threat, down the road.”
Key Quotes
“Industrial enterprise profits grew by 7.4% YoY YTD in March, up from 4.8% in February. The 10.3% YoY growth in March alone was the fastest since July 2014. Industrial sales growth accelerated to 2.4% YoY YTD in March, up from 1.0% in February while growth in account receivables remained elevated at 8.3% YoY YTD. Strong profits and sales growth in March are consistent with strong industrial production growth.
The path to a hard landing starts with financial distress in highly-leveraged corporates and runs through a banking crisis. Relaxing enterprise cash constraints slows the creation of new NPLs and kicks the can of recognizing existing NPLs, which is the hard-landing threat, down the road.”