China economic downturn continues as China’s industrial profits fell the most in four years on Monday, dragging profits in coal mining 64.9 percent lower this year when compared with the same period last year. Oil and gas profits fell 67.3 percent while ferrous metal earnings plunged 51.6 percent.
The decrease in profit was as a result of falling product prices due to lower foreign exchange and poor investment returns. Also contribution from investment returns fell as most investors are uncertain of China’s market direction amid economic rout, while investments dropped, devaluation has pushed exchange rate losses higher costing companies 23.9 percent additional operating cost from a year earlier.
The data released shows that industrial profits plunged 8.8 percent in August, though the biggest drops was recorded in oil and gas, coal and metals, according to NBS report it was the biggest decline since October 2011, when the government began releasing monthly data.
Currency devaluation and decline in stock market are slowing down investments and manufacturing sector as shown by three year low in the nation’s official factory gauge last month.
China’s Shanghai SE composite gained 0.27 percent at 03:29:35 p.m. on Monday to bring total lost this month to 4.07 percent. Shenzhen SE A Share Index rose the most, gained 2.41 percent to 1,817.66 at 03:29:47 p.m.
Japanese Indexes are currently trading lower, with Topix 500 Index (TSE) trading at 1,120.59 after losing 1.18 percent.