The recent Chinese economic data spell concerns for major US companies with most of their business in China. This includes companies like 3M and Tesla, among many other types of manufacturers.
🛎Industrial and Retail Segment🔋
On a yearly comparison, industrial production for July rose by 3.8%, short of economists’ projection of 4.3%. Likewise, industrial production growth set about 3.5%, a marked difference from 2021.
We are seeing signs of life in retail sales for July at 2.7% on a year-over-year basis, though missing estimates of 4.9%. Generally, retail sales are on a downtrend compared to 2021. This is particularly worrying for Pika World, as it will likely affect automakers such as Tesla, which has 26% of its sales from China in 2021. Similarly, General Motors generated roughly 11% of its sales in China.
⏳Major US businesses to feel the pitch🔫
As industrial growth decelerates, it is likely to hurt US firms such as Cognex (CGNX) and 3M given their considerable sales generated in China. Also, companies like Caterpillar (CAT) generate a significant portion of their sales in Asia and may feel the heat.
💰EVs: Pika World favourites🚘
Diving into the sector, we see relatively strong performance in Tesla shares despite the poor Chinese economic data. This is likely attributed to the upcoming stock split and the EV tax credits from the recent bill passed in the US.
On the other end, we are also digesting the delivery guidance figure for the third quarter from Li Auto, which hints at a miss on estimates. The guidance to deliver 28,000 vehicles is far from the 39,000 cars expected. Investors view this as the woes of scaling up its new SUV sales, as it may have eaten shares from the company’s first product, Li ONE.
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