sábado, 9 de febrero de 2019

sábado, febrero 09, 2019

Caterpillar’s Stumble Was No Chinese Puzzle

Analysts weren’t pessimistic enough about Caterpillar because the China slowdown story has misled them so many times in the past

By Justin Lahart

Heavy-equipment maker Caterpillar lowered its profit targets for 2019 on slower Chinese growth.
Heavy-equipment maker Caterpillar lowered its profit targets for 2019 on slower Chinese growth. Photo: aly song/Reuters


One message from Caterpillar ’s CAT -9.16%▲ disappointing results: The China slowdown is real this time.

It is something that ought to have been apparent already. China last week reported that its gross domestic product last year advanced at its slowest pace since 1990, and anecdotal evidence abounds that its economy has hit a rough patch. Moreover, Caterpillar is hardly the first company to point to slower sales in China recently. PPG Industries and Stanley Black & Deckerare among those that have highlighted weaker Chinese demand.

Even so, Caterpillar shares fell sharply on Monday after the company reported results that missed estimates and lowered its profit targets for 2019 on slower Chinese growth.

Part of the problem may be that analysts and investors have heard the China slowdown story repeatedly over the past several years. There was a constant refrain that the country’s growth was unsustainable, dependent on debt and overinvestment.




But while China’s growth did face challenges, the country’s leaders seemed able to keep it on a smooth glide path, as in 2015 when they ramped up mortgage lending to offset troubles elsewhere. Betting that a slowdown in China was about to cause real problems for U.S. companies that did business there was consistently a bad bet.

The idea of policy makers putting China’s economy just where they want it looks naive. GDP slowed more than Beijing expected it to in response to its crackdown on the nonbank “shadow finance” system, and the trade fight with the U.S. has compounded the problem.

China’s growth over the past 20 years been astounding and lot of companies placed bets accordingly. Now they may be about to find out what happens when the world’s second-largest economy catches a cold.

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