Why Chinese Stocks Have Collapsed In One Huge Slide

Chinese stocks have collapsed, and are back at lows not seen since the financial crisis.

Why?

Basically because earnings have collapsed.

Why have earnings collapsed?

Because margins have clobbered. Top-line growth has been OK, but costs continue to rise and companies are getting squeezed like crazy.

These charts tell the story of China Southern Airlines, whose first half profits have fallen 83.7% year-over-year.

As you can see: Revenue growth is ongoing (and even quite high based on global standards) but margins have gotten decimated.

From China Scope Financial…

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Photo: China Scope Financial

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