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Berkshire Profits Down, China in Midst of a Slowdown

Nov 08,2014  Company News, Market News  Comment: 0

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Houston, TX – (StockNewsDesk) – 11/08/2014 — Berkshire Hathaway, Inc.’s profit for the third quarter declined nearly 9% because of a huge write off that took place in one of the company’s investments. However, the operating results of the company impressed Wall Street. Yesterday, China reported figures that missed forecasts, indicating a weak economy. However, export figures were the only economic signal that kept investors hopeful.

Earnings of Berkshire Hathaway suffered a loss of 9% as the company wrote-off a huge investment for a loss. The company wrote off $678 million on an investment in the retail chain Tesco. The company also suffered an investment loss of over $100 million compared to an earlier year profit of $1.39 billion gain. The net income of the company dropped to $4.62 billion, compared to an earlier year profit of $5.05 billion. On per share basis, the company earned $2,811 compared to the earlier year’s figure of $3,072.

However, operating margins and profits of the company sailed past expectations of the Street. Operating profits of the company increased 29% to $4.72 billion or $2,876 per share against an earlier year’s figure of $3.66 billion or $2,228 per share.

China’s Export up, Growth Targets in Question

Berkshire Profits Down, China in Midst of a Slowdown

China’s Export up, Growth Targets in Question

The Chinese economy reported export and import data affirming that the second-largest economy in the world might be slowing. Exports of the country rose 11.6% compared to earlier reading of 15.3%, while imports declined to 4.6% compared to 7% in September. Though the figures are above analysts’ expectations, Wall Street expected exports to rise by 10.6% and imports to rise by 5.5%.

According to the Chinese administration, export figures might stay sluggish through the next quarter. Because of low import figures, a trade surplus of the country expanded to $45.4 billion, compared to analyst expectations of $42 billion. Recently, the country reported its slowest economic growth of 7.3%, the slowest since the financial recession. Lower domestic demand in the housing sector is largely responsible for lower economic growth. However, lower than expected Purchasing Managers Index (PMI) data of factory and service point towards a slowing economy.

In addition to this, the Chinese administration has pointed out that, given the status of economic indicators, China’s economy is on its way to miss its trade growth target for the third year in a row. Trade growth since 2012 has been descending. Trade growth in 2012 declined 10%, while in 2013 it declined 8%. The target for trade growth in 2014 is 7.5%.

Chinese lawmakers said that if the situation continues to prevail, stimulus measures might be injected into the system.

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