Atlanta Journal-Constitution (April 22)
“The coronavirus has pulverized the balance sheets of many restaurants. But anyone with a drive-thru had a potential advantage as Americans shifted their eating habits and seating positions.” Atlanta-based Chick-fil-A is in that enviable position. Though “the vast majority” of the firm’s 2,000 dining rooms were closed due to the pandemic and remain that way, “sales and profits have soared over the last year.”
Tags: Advantage, Balance sheets, Chick-fil-A, Closed, Coronavirus, Dining rooms, Drive-thru, Eating habits, Pandemic, Profits, Pulverized, Restaurants, Sales, U.S.
The Economist (August 25)
“America’s bull market in equities turned 3,453 days old” on August 22. “Since hitting a low of 666 in March 2009, the S&P 500 index has increased more than fourfold, driven by strong corporate profits, low inflation, stable economic growth and a boatload of central-bank stimulus. Despite five corrections of at least 10%, the index has never entered bear territory, defined as a drop of at least 20%. Most commentators are declaring this to be the longest bull market in history.”
Tags: Bear, Bull market, Central bank, Economic growth, Equities, Inflation, Profits, S&P 500, Stimulus, U.S.
Financial Times (May 20)
“Today, Hong Kong’s future as a global financial centre looks uncertain as the rival Shanghai Stock Exchange grows in size and credibility…. On the face of it, conditions at the HKEX look fine.” Revenues, profits and new listings were all up in 2017. “Yet Hong Kong was only third when it came to money raised in IPOs. Shanghai and New York were ahead by value, while Shanghai and Shenzhen surpassed the number of Hong Kong listings.”
Tags: HKEX, Hong Kong, IPOs, Listings, New York, Profits, Revenues, Rival, Shanghai, Shanghai Stock Exchange, Shenzhen
South China Morning Post (April 2)
Banks and regulators in China have engaged in a delicate dance between reducing non-performing loans (NPLs) and maintaining profits. “That’s why the NPL ratios of the nation’s key banks all hover at about the same level–now around 1.7 per cent of loans,” though “Fitch estimates that the real ratio could be as high as 20 per cent, implying total NPLs of 19 trillion yuan (US$3 trillion).” But the regulator is now becoming more demanding in NPL reduction and unforgiving of gimmicks previously employed to hide NPLs. “Given Beijing’s focus on the stability of the financial system, the flow of NPLs into the market should pick up considerably in the next two to three years, providing ample opportunity for new investors.”
Tags: Banks, China, Fitch, Gimmicks, Investors, Market, NPLs, Opportunity, Profits, Regulators
The Economist (September 17)
“Investors outside China have about $1trn invested in firms that use” variable interest entities (VIEs). These include Alibaba and Tencent. Yet, it remains “unclear if VIEs are even legal in China,” exposing investors to two risks. “First, the VIEs could be ruled illegal, potentially forcing the firms to wind up or sell vital licences and intellectual property in China. The second danger is that VIE owners seek to grab the profits or assets held within. If they refuse to co-operate, die, or fall out of political favour, it is far from clear that firms can enforce VIE contracts in Chinese courts.”
Tags: Alibaba, Assets, China, Contracts, Courts, Illegal, Investors, IP, Profits, Risks, Tencent, VIEs
Bloomberg (August 14)
“The last time Japan strung together this many quarters of growth was back in mid-2006…. The yen has fallen, corporate profits have soared and the economy is running above its potential growth rate. Yet inflation remains stubbornly low, despite massive monetary stimulus from the central bank. Economists are watching intently for signs that the tightest labor market in decades is beginning to bring wage gains.”
Tags: Central bank, Economists, Economy, Inflation, Japan. Growth, Labor market, Monetary stimulus, Profits, Wage gains, Yen
Institutional Investor (December 28)
“U.S. earnings have declined for four straight quarters, and market participants are taking notice.” This decline in corporate profits may “signal a looming recession.”
Institutional Investor (October 18)
Falling U.S. equity prices during the third quarter have “left investors asking whether the terrific run in U.S. equities since 2011 is over. Is the setback a buying opportunity or the beginning of a more serious downturn?” Overall, “we think there are enough positives to keep profits increasing at a high-single-digit rate over the next five to seven years.”
Tags: Buying opportunity, Downturn, Equity prices, Investors, Positives, Profits, Q3, Setback, U.S.
The Economist (September 19)
“Corporate profits more than tripled in 1980-2013, rising from 7.6% of global GDP to 10%, of which Western companies captured more than two-thirds. The after-tax profits of American firms are at their highest level as a share of national income since 1929.” Yet a recent study suggests “the golden age of the Western corporation may be coming to an end.” The McKinsey Global Institute projects “that corporate profits may fall from 10% of global GDP to about 8% in a decade’s time.”
Financial Times (August 11)
Fears are growing of a meltdown in the aluminum market as Chinese output soars and, much like the oil market, supply outstrips demand. “China now accounts for more than half of global supply, up from 18 per cent in 2003 thanks to cheap power and the world’s most efficiently built smelters. Established producers from North America to Russia and the Middle East—facing the lowest prices since the financial crisis, reduced margins and profits—are anxious but do not want to cut capacity for fear of losing market share.”
Tags: Aluminum, Capacity, China, Fears, Margins, Market share, Meltdown, Middle East, North America, Oil, Output, Profits, Russia, Smelters
