Comment: Economic growth and policy changes are not sure of Chinas impact on for

Source: Bloomberg

Author: Farah Elbahrawy

Is China a blessing or a disaster for the prospects of Western companies?The possibility of a difficult economic and policy transformation in a difficult step makes it difficult to make such predictions.

The latest financial report season has unprecedentedly highlighting the $ 18 trillion economy in China, and the profitability of the corporate in the market is uneven.For Tesla, Porsche, Porsche, Human Majun, and many other companies, the impact of China's economic slowdown is obvious.For other companies such as Lvmh LVMH and chip manufacturer, other companies, sales in China are still active.

These reports caused the stock price to fluctuate, but it also confirmed that Jemin Chase CEO Jimi Dimon said earlier this month.He said at the time that the potential interests of the US company's opening to China became more complicated, and "the risk return situation has changed dramatically."Compared to the days when global companies are competing for a foothold in the booming Chinese market, the form has undergone tremendous changes.

Jie ZHANG, an analyst of the luxury sector of Paris Stock Research Company Alphavalue, said that analysis of China's effect has always been a tricky work.However, she said that the economic growth and consumer behavior model of the post -epidemic era have become more turbulent.

"Since the crown disease epidemic and control, China's data disclosure has become worse," ZHANG said, and added that the model of predicting sales has completely changed."The performance of the past is becoming more and more complicated."

At the same time, this matter is heavy.Citi Group strategist estimates that if the income from China completely disappears, the earnings of the S & P 500 Index ingredients company will drop by 7%, and the impact of the earnings of the Stock 600 Index ingredients company may be as high as 10%EssenceFortunately, they think this situation is unlikely to happen.

It is certain that companies relying on China's profits have become more pessimistic.Over the past two years, a basket of European -owned enterprises in Europe has decreased by more than 7%, while the overall expected income of the Stock 600 Index has risen by 18%.

This is related to China's slowing economic and weak real estate market.Tong shrinking pressure hit corporate profits.Many people doubt whether the recent package measures are enough to turn the tide.

Although the market cheers for the settlement of the People's Bank of China, this extremely unusual early disclosure also reminds investors that Beijing's decision -making lack of transparency.Sudden changes in regulatory supervision make the assessment of profits related to China more complicated.

Bloomberg Industry research European stock strategist Tim Craighead said: "From the perspective of enterprises and investors, the difficulty is that the continuous rolling policy makes investment in China face high uncertainty."

"If you are a global investor or an emerging market investor and analyzes the company. They are originally on a specific track, but the situation will be difficult to change due to support interruption."

For example, in 2021, China takes severe restrictions on e -commerce, games and online education overnight.Beijing began to investigate the business of foreign companies such as chip manufacturers Meiguang Technology and Apple Partner Foxconn.In September last year, China ’s expansion of government departments' use of iPhone has led Apple's market value to an evaporation of 190 billion US dollars in just two days.

Bloomberg industry research estimates that European companies may suffer further losses.The Stock 600 Index ingredients company has about $ 500 billion in revenue from China.The data of Goldman Sachs showed that the revenue of 8%of the index component company was directly from China, and this proportion was 2%for the S & P 500 index.

If you consider indirect correlation with foreign tourists and joint ventures, Europe may be much higher to China.

For this reason, investors will closely pay attention to the upcoming performance relying on Chinese companies.These include Grand Commodity Corporation Jianeng and British and American Resources Group, as well as Luxury Group Kaiyun and Hermes -more than a quarter of these companies from China.

One of the concerns of the present is that even if the Chinese economy recovers, the fate of foreign companies may not be reversed.This is because local competitors are accelerating the replacement of goods and services provided by foreign multinational enterprises.For example, in the fourth quarter of 2023, BYD's car sales surpassed Tesla.Similarly, China now rules the solar panel industry that once dominated by Germany.

Ninety One Multi -Assets growth director Iain Cunningham said, "If China will realize a very strong recovery, then I believe that many European companies will benefit from it, but the degree may not be as high as the past."