China a sweet spot for US companies’ sales during Q2
Whether they sell construction equipment, semiconductors or coff ee, many major US companies have reported stronger second- quarter earnings and revenue from their Chinese operations in recent weeks.
They are benefi ting from growing Chinese economy and a slide in the US dollar.
Caterpillar Inc, a bellwether for industrial demand in China and beyond, reported its sales in the Asia- Pacifi c region rose 25 percent in the second quarter, thanks to China.
Shipments of large excavators to Chinese customers more than doubled in the fi rst half of the year.
“We now expect demand in China to remain strong through the rest of the year,” Brad Halverson, Caterpillar’s group president and chief fi nancial offi cer, told investors.
Japanese rivals Komatsu and Hitachi Construction Machinery Co reported similar strength in demand for heavy machinery. Komatsu’s China sales almost doubled during the April- June quarter.
“China’s grown pretty well relative to the US over this period and the currency’s relationship has changed in favor of the US companies,” said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.
Chinese companies are also benefi ting from the robust domestic economy. For example, Chinese auto manufacturer Geely Automobile Holdings announced last week that its July sales climbed 89 percent year- on- year.
US companies in China have been collectively reporting better prospects even as they complain that the Chinese authorities are not allowing them enough access to parts of the Chinese market and discriminating against them as they seek to compete against Chinese rivals.
Despite some negatives in the SinoUS relationship, a July report by the American Chamber of Commerce in Shanghai showed that 82 percent of US companies in China expect revenues to increase this year, up from 76 percent a year ago.
“In general China is still a growth market for lots of US goods and services... the Chinese consumer is driving more and more the growth in China itself ( and) that’s a very positive shift in compositional growth for a lot of US companies that do provide goods and services for consumers, as opposed to building skyscrapers,” said Joe Quinlan, head of thematic investing at Bank of America, US Trust.