China’s 83 centrally-administered state-owned-enterprises (SOEs) reported a 58.8% year-on-year decline in their combined net profit to 130.4 billion yuan (US$18.4 billion) in the first quarter of this year.
Revenue fell 11.8% to 6 trillion yuan for the period, according to the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council.
Peng Huagang, a spokesperson for the SASAC, said 57 of the 83 central SOEs recorded a decrease in their net profits, while the remaining 26 companies recorded a net loss during the first quarter.
Central SOEs faced unprecedented challenges including the novel coronavirus epidemic and slumping oil prices during the first quarter, Peng said.
Peng emphasized that most central SOEs posted better results in March after they resumed their operations and production. He said their combined revenue reached 2.2 trillion yuan last month, roughly the same as that in January.
Last Friday, the SASAC in a video conference called on the central SOEs to beware of imported cases of Covid-19 infections and try their best to reduce the negative impact of the epidemic on their operations.
One-year loan prime rate
The People’s Bank of China (PBoC) announced on Monday a cut to the one-year loan prime rate (LPR) by 20 basis points, the largest reduction since the new rate was set in August 2019. It said the latest move was aimed at lowering financing costs and offsetting downward pressures from the coronavirus pandemic.
The one-year LPR was slashed to 3.85 % from 4.05%, while the five-year LPR was cut by 0.1 percentage point to 4.65%, said the PBoC.
Prior to this, the PBoC cut the one-year interest rate of the medium-term lending facility to 2.95% from 3.15% last week.
The latest rate cuts were in line with market expectations, said some analysts, adding that there was still policy room for more reductions of interest rates and reserve requirement ratios to keep ample liquidity and support smaller companies.
In order to boost the economy, China may have to further cut rates in the coming few months, said Wen Bin, chief economist of China Minsheng Bank.
China’s infrastructure investment is expected to reach 22 trillion yuan to 26 trillion yuan this year, Zhao Yayun, a research fellow at the CITIC Foundation for Reform and Development Studies, told the Securities Daily in an interview.
Zhao said the estimation was made with the proportion of infrastructure investments to the country’s gross domestic product over the past few years.
He said infrastructure investment will pick up significantly in the second quarter as a lot of new infrastructure projects have been launched by local governments.
In a meeting held on April 17, the Politburo of the Communist Party of China’s (CPC) Central Committee called for an increase in effective investment and accelerating the city renewal projects in the country. It also urged government departments to promote technological innovation and industry upgrades, to boost local consumption and to support the emerging sectors.
China’s private equity (PE) market is expected to rebound as Covid-19 wanes and economic activities quicken their resumption and pace across the country, according to a report by Bain & Company, a global management consulting firm.
The country’s PE market saw a 22% decline in average deal volume in 2019, and yuan funds financing further shrank. In the wake of the coronavirus outbreak, the PE market contracted in both deal volume and value in the first quarter. While quarantine measures that dampened work and production will extend to the end of April, the market contraction might continue until the second quarter.
However, a rebound is expected to take place during the second half of this year, backed by pent-up financing needs, said Zhou Hao, Bain partner and report co-author.
Honor, a smartphone brand owned by Huawei Technologies, aims to become the second-largest smartphone seller in China this year, after the company unveiled its latest flagship smartphone, the Honor 30 series.
The goal means that Honor aims to be just behind its sister brand Huawei in terms of smartphone shipments in China, where smartphone sales are recovering as the Covid-19 outbreak comes under control.
“Our latest premium product Honor 30 series is a milestone heralding a new start. We will show a different Honor brand to consumers,” said Honor president Zhao Ming.
Huaxia Bank, a mid-sized Chinese lender, said its net profit rose 5.04% to 21.91 billion yuan for the year ended December 31, 2019, from a year earlier. Revenue rose 17.32% to 84.73 billion yuan for the period.
The bank’s total assets grew 12.69% to 3.02 trillion yuan at the end of last year from a year earlier. The non-performing loan ratio was 1.83%, down 0.02 percentage points from a year ago.
Meanwhile, 12 banks in Hubei province in central China have provided 34 billion yuan of new loans to 802 local companies that were hard hit by the Covid-19 outbreak, according to the PBoC’s Wuhan branch.
Another 20 billion yuan will be earmarked for re-lending to further support companies in the province.
The story was written by Xu Jiangshan and first published at ATimesCN.com. It was translated into English by Nadeem Xu.